International investment funds Harmony Capital Partners and Stark Investments are poised to make their second joint move into Western Australia after being selected as the preferred bidder for beef processor EG Green Group.
International investment funds Harmony Capital Partners and Stark Investments are poised to make their second joint move into Western Australia after being selected as the preferred bidder for beef processor EG Green Group.
In a report sent to creditors this week, the administrator of EG Green, Ferrier Hodgson partner Martin Jones, said he had accepted the Harmony/Stark proposal ahead of competing bids from Elders and Victorian beef processor, Tasman Group.
Creditors, who will meet later this month to vote on the proposal, will also be given the option of backing a scheme of arrangement put forward by the Green family, which formerly owned the 86-year old Harvey Beef business.
US-based Stark, which manages in excess of $9 billion, and Singapore-based Harmony, which focuses on “turnaround” opportunities, were advised on their EG Green bid by corporate finance firm Mainsheet.
They are bidding to acquire EG Green’s main assets, primarily its abattoir at Harvey and surrounding land, and plan to invest in excess of $10 million upgrading the boning room and other aspects of the plant.
They have offered $23 million plus payment for stock.
The administrator is expected to sell other assets, including three properties and the mothballed Lakes Road abattoir near Mandurah, to other bidders.
Mr Jones said he was currently negotiating the sale of the Lakes Road abattoir to South Australian company, T&R Pastoral.
The return to creditors will depend on the proceeds from all of the asset sales and the trading performance of the business during the period of administration.
Mr Jones has estimated the return will be 93.6 cents in the dollar.
He said the advantages of the Harmony/Stark bid included the high level of return, the high certainty of completion, their financial expertise, and their ability to invest capital in the business.
Harmony and Stark made their first investment in WA last month, when each spent $5.1 million acquiring a 19.9 per cent holding in drilling contractor Brandrill.
They acquired the shares from another international investment fund, London-based Mizuho International, which rescued Brandrill from administration in 2004.
Stark and Mizuho were also involved in the financial rescue of biotechnology company Chemeq early this year.
Mizuho subsequently sold all of its Chemeq convertible bonds to Stark, which now holds bonds with a face value of $60 million.
Not all of Stark’s investment plans in WA have come to fruition.
It joined with ANZ Bank to back private Welshpool company NRW in its bid for Henry Walker Eltin’s contract mining business.
However, Henry Walker Eltin administrators, McGrath Nicol partners Joseph Hayes and Scott Kershaw, announced last month that the successful bidder was Leighton.
