Perth-based family business Kailis Organic Olive Groves is seeking $30 million to fund the acquisition of Great Southern's olive assets.
Perth-based family business Kailis Organic Olive Groves is seeking $30 million to fund the acquisition of Great Southern's olive assets.
The initial public offer of 30 million shares at $1 each comes four months after Great Southern receiver McGrathNicol opted to wind up the olive schemes by the fallen agribusiness.
The shares will not be listed on the local stock exchange.
In December, McGrathNicol had not been able to achieve a favourable outcome with Kailis Organic, which in joint venture with Sumich Olive Group of Companies, was proposing to buy the olive assets.
Great Southern collapsed about a year ago, owing hundreds of millions of dollars to investors and, together with the collapse of Timbercorp, cast a shadow over managed investment schemes.
In a statement today, Kailis Organic said that the purchase price of the Great Southern assets was $19.7 million, as negotiated with the liquidator, Ferrier Hodgson, of Great Southern Olive Companies.
In its prospectus, Kailis Organic said that the estimated and operational costs incurred on the olive assets by Great Southern Group, the previous owner of the assets, was at least $103 million.
Included in the purchase is 1,795 hectares of planted and irrigated olive groves located north, south and east of Perth, which Kailis Organic has managed for Great Southern for the past five years.
The olive trees being acquired were planted in stages between 2001-01 and 2008, with the average age of the trees being three to four years. Olive trees do not reach maturity until they are about 10 years old.
The acquisition also includes water licences, associated infrastructure, plant, equipment and a processor at the Dandaragan grove, which are all at an 82 per cent discount to the sunk costs incurred by Great Southern, Kailis Organic said in its prospectus.
Other groves included in the purchase are Preston Valley, Twin Brooks and Avon Valley.
Kailis Organic managing director Mark Kailis told WA Business News the company was buying the olive assets on its own, without Sumich Olive Group.
He added that since the collapse of Great Southern last year, Kailis Organic had used its own money to keep the properties operational.
"We've had some assistance from the liquidators, but it's pretty much been us, we're harvesting the crop this year with our own money," Mr Kailis said.
"As managers and former buyers of the fruit, we really have had an interest in keeping the properties viable as an ongoing concern with respect for the growers. When that looked like that wouldn't continue, we then made an offer to buy the properties outright."
The balance of the IPO will be used for working capital and to expand Kailis Organic's operations further, as part of the company's aim to become an international organic olive group.
"The acquisition will not proceed unless the company obtains access to funding of $30 million, which could also include debt facilities of up to $12 million," Kailis said in a statement.
The IPO is the first time in the family's history that investors have had an opportunity to become involved in the Kailis brand, which started in the 1920s.
Mr Kailis said that since Kailis Organic was started in 2001, it was always the intention to make the company public, however further discussions at a board level was needed should the company take a further step and list on the local stock exchange.
Kailis Organic currently sells its extra virgin olive oil to more than 250 Australian retail outlets and in seven export markets including Germany, China and the UK.
The offer, which has a minimum subscription of $21 million, is due to close on May 21.
