Royal Wolf to list on ASX


US owner to stay involved as company seeks growth

By Rob McKay | May 16, 2011

Royal Wolf Holdings will seek more than
$90 million from the market in an initial public offering.

The offer for the Australian Securities Exchange (ASX)
float of the freight container leasing company, owned by US
investment firm General Finance Corporation, closes on May 26.

Royal Wolf Chairman Peter Housden says the cash will be used to reduce existing debt levels, pay accrued trademark license fees to GFN and pay offer fees and expenses.

His firm would also seek growth in the resources and construction sectors, and by continuing to introduce innovative products.

At a time of increased shareholder activism following the Global Financial Crisis, Housden was careful to note possible downsides for the company after the float along with the positives.

"Some of the key risks that Royal Wolf may face include changes in customer demand, damage to Royal Wolf's brand, changes to Royal Wolf's supply chain, difficulties in executing current expansion plans and increased competition from new and existing competitors," he says.

On the upside, Royal Wolf had driven its earnings before interest, tax, depreciation and amortisation from $7.1 million to $24.9 million in the 2009-10 financial year.

Its forecasts for 2011 were upward of $30 million.

"Royal Wolf has achieved this growth by expanding the size of its fleet and breadth of its product offering. It has grown its geographic footprint and expanded the size and diversity of the customer base," Housden says.

"Throughout this expansion, Royal Wolf has leveraged its integrated distribution model, which combines strategically located Customer Service Centres and a focused National Accounts Management Team.

"This integrated distribution model provides Royal Wolf not only with significant operating leverage but also a platform that allows Royal Wolf to tailor its service offering to meet the requirements of local, national and multi-regional clients."

While the float will be viewed as GFN seeking to recoup its investment after holding it the five years seen by observers as a common period, that would not be the end of its involvement.

"GFN has historically provided Royal Wolf with strategic, operational and marketing guidance and intends to continue this valuable relationship going forward," Housden says.

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