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Tenon shareholders approve US sale

NZ Newswire logoNZ Newswire 18/11/2016 Jonathan Underhill

Tenon shareholders have approved the sale of the wood processor's US business to New York-based buyout firm Blue Wolf Capital, allowing the company to make a $100 million capital return via a share cancellation.

The sale and capital return were approved with a more than 99.5 per cent majority at the annual meeting in Auckland, the Taupo-based company said in a statement. Among minority shareholders more than 98 per cent voted in favour, it said.

The sale for $US110m ($NZ156m) represents a 2016 ebitda multiple of 7.3 times, at the lower end of the range in advisory firm Grant Samuel's assessment.

Tenon, which is controlled by NZX-listed Rubicon, said the capital return of $US1.10 ($NZ1.56) per existing share is expected to be completed by the end of December, with a record date of Dec. 21, subject to receipt of final High Court orders relating to the return. Blue Wolf is buying the North American operations via its BW Empire Holdings unit.

Following the sale, Tenon's remaining business would be its Clearwood unit, which is also in under strategic review and had positive earnings, strong cash flow and limited capex requirements, the company said on Friday.

It will return the capital, $US71.3m ($NZ101.4m), or $1.55 a share at an exchange rate of 71 US cents, by cancelling one out of every two shares held and returning $2.20 per cancelled share.

Blue Wolf made its offer for Tenon's North American operations on Aug. 29.

Grant Samuel expects Tenon will be liquidated above market value of $164m if the US sale goes ahead and the Clearwood business is subsequently sold within its valuation range. In its 2016 annual report,

Tenon's shares last traded at $2.60 and have declined about 7 per cent this year. Rubicon, which owns 59.8 per cent of Tenon, last traded at 22 cents and has fallen 23 per cent so far in 2016.

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