Bank of Queensland announced today that it would acquire equipment financing company UFJ Finance Australia Limited (UFFA).
UFJ Finance Australia Limited, formerly known as Sanwa Australia Finance Ltd, also headquartered in Brisbane, provides equipment and vendor financing solutions to a range of clients in Australia and New Zealand.
At December 31, 2002, UFJ Finance Australia Limited had total assets of approximately $768 million including approximately $677 million of lease receivables. In addition UFJ Finance Australia Limited had approximately $286 million of securitised receivables under management.
The portfolio of managed receivables is diverse in terms of industry, equipment type and geography with approximately 28,000 contracts and 15,000 customers. The largest customer represents approximately 1% of the portfolio and the average customer exposure is approximately $64,000.
Bank of Queensland will purchase UFJ Finance Australia Limited for approximately $13 million, including a premium of $7 million over the net book value on completion. This represents a price multiple of 1.1 times estimated normalised book value at acquisition.
Bank of Queensland Managing Director David Liddy said the acquisition of UFFA, which will operate under the BOQ banner, fitted very well into the Banks stated strategy.
This is a business we understand and in which we have a core competency. This acquisition allows us to build the scale of our existing equipment financing business and build a stronger presence in business banking, Mr Liddy said.
Diversifying and strengthening product lines in this way further reduces our dependence on the housing and mortgage market, improving the combined groups financial strength and stability.
The acquisition of UFJ Finance Australia Limited will increase our business banking book by more than one third and significantly add to the Banks internal business resources, he said.
Mr Liddy said the acquisition provided an excellent masthead to undertake its stated strategy to consolidate its position in Queensland, and selectively expand interstate, and complemented the recently announced acquisition of third-party ATM provider, ATM Solutions Pty Ltd.
This will provide geographic diversity of earnings while strengthening our position in the Queensland market.
"When combining the results of UFFA for the 12 month period to 31 December 2002 with those of the Bank for the 12 month period to 28 February 2003, the acquisition is EPS accretive," Mr Liddy said.
The Bank will fund the acquisition price and refinance the existing borrowings of UFJ Finance Australia Limited through a combination of ordinary equity, reset preference shares and debt funding comprising:
- approximately $30 million in ordinary equity through an underwritten placement to institutional investors;
- approximately $62 million in ordinary equity through an underwritten renounceable rights issue to shareholders;
- $25 million in reset preference shares through an underwritten placement; and
- the remainder of funding requirements through a bridging debt facility. It is anticipated that the bridging debt facility will be refinanced through a combination of securitisation of receivables and existing debt facilities of the Bank.
The Bank today has requested a trading halt in its securities to facilitate the placement to institutional investors.
Upon recommencing trading, the Bank will announce the final price of the placement, together with pricing and other terms of the renounceable rights issue.
Standard and Poors, Moodys and Fitch have each affirmed the Banks existing credit ratings following the acquisition.
Guidance on full-year results
Mr Liddy said that, since the Bank's half year results for the period to 28 February 2003 were announced in April 2003, the Bank had continued to experience strong asset growth while meeting its sound credit selection criteria.
Net profit after tax for the year ending 31 August 2003 is expected to be towards the upper end of broker analysts' forecast range of $41.9 million to $44.5 million, he said.
ABN AMRO Bank acted as financial advisor and Minter Ellison as legal advisor to Bank of Queensland. ABN AMRO Bank will provide the bridging debt facility and ABN AMRO Rothschild will underwrite the combination of the placement, rights issue and the reset preference shares".
UFJ Finance Australia Ltd Fact Sheet
- UFJ Finance Australia Ltd is an equipment financier providing lease and non-lease finance to Australian businesses.
- It is being sold by UFJ Australia Ltd, a wholly-owned subsidiary of UFJ Holdings Inc, which is itself a result of a merger between the Japanese banks Sanwa, Tokai and Toya.
- UFJ Finance Australia Ltd has approximately 80 staff and a head office in Brisbane. It also has offices in Sydney, Melbourne, Perth, Canberra, Rockhampton, Townsville and Auckland.
- Upon conclusion of the purchase, UFJ Finance Australia Ltd will operate under the Bank of Queensland banner.
- UFJ Finance Australia has approximately 28,000 contracts and 15,000 customers.
- At December 31, 2002, UFJ Finance Australia Limited had total assets of approximately $768 million including approximately $677 million of lease receivables. In addition UFJ Finance Australia Limited had approximately $286 million of securitised receivables under management.
- The largest customer represents not more than 1% of the portfolio and the average customer exposure is approximately $64,000.