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42 Below founders in new global marketing foray

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, March 28 NZPA - The founders of New Zealand vodka company 42 Below are off on another global foray, this time in the markets for scented candles and body washes.

A plan to list Australian-based Ecoya on the New Zealand sharemarket, unveiled on Friday, will raise the company's profile and help build the brand.

"Ecoya is a growth business with a short operating history," the prospectus says.

Ecoya is raising $10 million from the sale of shares at $1 each. The shares have warrants attached which allow investors to buy more shares at two future dates.

An oversubscription facility increases the size of the float by $3m if there is enough demand.

Based on the $10m figure, the float incurs costs of $1.226m, and $1m of the money raised will be used to repay a loan to Bank of New Zealand, which expires in April.

The Business Bakery LP, a company associated with 42 Below founders Geoff Ross, Grant Baker and Stephen Sinclair has also been funding Ecoya.

The Bakery's stake falls from 75.9 percent to 56.5 percent as a result of the float.The Bakery also has a consultancy agreement under which Ecoya pays $A400,000 a year to it.

Paunui Holdings Pty, a company associated with former 42 Below executive Craig Schweighoffer, receives a consultancy fee of $A183,540 per year. Mr Schweighoffer will own 10.8 percent of the company post-float.

Ecoya is forecasting a $2.3m loss in the year to March 2010, rising to a $5.145m loss in the year to March 31, 2011 when it is projected to have cash of $2.05m.

It will not pay a dividend, or make any distributions to shareholders "for the forseeable future".

The company is seen as an opportunity to invest early in an attempt to develop a brand in the $US22.2 billion global body and bath market and $US5b home fragrance market.

"Ecoya's success depends to a significant extent on its ability to develop and protect its brand in New Zealand, Australia and the overseas markets in which it operates," the prospectus says.

The company is betting that consumers are becoming more house proud and are paying more attention to their home's style, and that they are entertaining more at home.

Ecoya is developing an environmental platform with strong design and luxury elements in what the company calls the "eco luxe" market segment.

"The board believes that the company's Australian origins adds to the brand story as Australia is perceived as a fresh new world region."

The company sells products in Australia's upmarket David Jones stores and in stores in New Zealand like Ballantynes in Christchurch. It has made sales in Shanghai and is forecasting its first sales in the United States in May.

Its product range includes scented candles, travel candles and diffusers, hand washes, body lotions and soap. This will expand to include outdoor candles, room sprays, shower gels and body butter.

The company has identified "emotional brand credentials" that include that it is based in Sydney's Botany Bay where Captain Cook first landed.

Ecoya's factory is located on Sir Joseph Banks Drive.

Ecoya will seek an association with brands in fashion, music and design.

"This was part of the 42 Below success," the prospectus says.

The average gross margin of the products sold is 49 percent.

Ecoya "went for a public offer because being publicly listed will help the company build the brand profile", the prospectus says.

The float is the first on the New Zealand share market this year and has been welcomed by NZX chief executive Mark Weldon.

Air New Zealand chief executive Rob Fyfe is a director and shareholder.

The offer price implies a $33 million boost for the company, which will list on the NZX under code ECO.

42 Below was sold to Bacardi in 2006.

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