Airwork launches $40m IPO

Rotor blades and turbo engines are the buzz behind the latest sharemarket float with aviation services company Airwork looking to raise capital and list on the NZX before Christmas.

The Auckland-based company, majority-owned by entrepreneur Hugh Jones, has registered a prospectus for an initial public offering and plans to list on the NZX on December 19.

Airwork intends raising up to $40 million from the float, including $15 million of new capital and $5 million to repay subordinated debt to Airlift Holdings, a company associated with Mr Jones.

Any proceeds in excess of $20 million will be used to purchase shares held by Mr Jones.

A minimum of $30 million is to be raised, meaning Mr Jones may receive between $10 million and $20 million from the float.

Mr Jones currently owns about 90% of the company and this will come down to about 60% as he steps back from day- to-day management of the business.

The offer price has been set at $2.60 a share, with a maximum of 15.38 million shares to be issued, giving the company a market capitalisation of $130.6 million following the offer.

Airwork is fundamentally an engineering business with a range of other operations, including both fixed wing and helicopter leasing businesses.

It has operations in Western Australia (servicing the resources sector), Papua New Guinea and central Africa.

Airwork has an operating fleet of 29 helicopters, of which 25 are owned and four are operated. The company has helicopter maintenance contracts with public and private organisations including the Westpac rescue helicopters in Auckland and Wellington.

It also has 20 fixed wing aircraft including nine Boeing 737s.

The company operates the heliport at Mechanics Bay next to the Auckland container terminal.

Chris Hart recently moved to the chief executive role, having spent eight years as chief operating officer at the company.

Mr Jones says listing on the stock exchange is the best way to secure the company’s future.

“The IPO will see me sell down only a portion of my shares - I am not ready to sign out just yet - and as a director will, with my fellow board members, support Chris Hart in his new role as chief executive. The IPO gives Airwork a strong foundation to grow and succeed and I still intend to be part of that,” he says in a covering letter to the prospectus.

Forecast dividend
According to the prospectus, Airwork is forecasting operating revenue of $125 million in the year to June 2014, up from $118 million reported in 2013.

Earnings before interest, tax, depreciation and amortisation are forecast at $39 million, up from $37 million, and the company expects to post a net profit after tax of $8 million, up from $6 million.

The offer price implies a gross dividend yield of 6.4%.

The company is forecasting a full year dividend of 14c a share in 2014. 

Forecast net debt at June 2014 is estimated at $62.7 million.

The prospectus highlights some new developments, including Airwork recently gaining certification by the European Aviation Safety Agency for its helicopter engine and component maintenance services.

The company recently was awarded a contract to maintain 14  helicopters for the ADAC Luffrettung GmbH, one of the largest emergency air service operators in Europe.

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