This story was originally written by Pattrick Smellie for BusinessDesk
Hands up if you didn’t know New Zealand had a publicly listed racing car track.
No need to be embarrassed.
Bruce McLaren Park, on the outskirts of Taupō, was listed on June 24, 2019, on the Unlisted platform under the ticker TMP.
But it hasn’t exactly lit the sky since.
In fact, the shares have only traded once in all that time, on Nov 29, 2019, when a parcel of 10,000 shares changed hands at the listing price of $1 a share.
Its largest shareholder, at 10%, is the Rotorua Energy Trust and the share register, currently 179 shareholders holding 118 allocations, has barely changed.
Chancers and tyre-kickers
That hasn’t stopped various chancers and tyre-kickers from offering shares for as high as $1.30 and making bids as low as 10 cents a share over the 20 months of TMP’s listed history.
It has also caught the eye of a couple of would-be alternative owners, based on this week’s disclosure that a hostile takeover bid had been received from an unnamed “New Zealand-based motorsport enthusiast”, pitched at 40 cents a share.
TMP chairman Chris Abbott instantly dismissed the bid as “extremely opportunistic”.
Two days after the unsolicited offer via NZ Business Finance Brokers was revealed, someone offered 75 cents a share for TMP scrip, the first action on the USX listing since someone offered 20 cents a share back on Oct 23 last year.
Once again, no shares changed hands.
However, it did prompt an update from Abbott suggesting that there had been “regular approaches … to purchase the company’s facilities and business” and that “some of these discussions are ongoing”.
The good oil
Assisting in the talks with other bidders is Australian-based Miles Advisory Partners, a creature of expatriate Kiwi Tim Miles, who started out as an apprentice mechanic in Ashburton, decided he’d never get rich pottering about tuning race cars and did an MBA instead.
Fast-forward a few years and he was chief executive of one of Australia’s largest retail banks, St George, before his current incarnation as a merchant banker.
Who better to advise TMP than an expat former Aussie bank boss with Castrol 5W-40 racing oil running in his veins?
The 40 cent bid values the Taupō facility at just $2.6 million, compared with its current market capitalisation – assuming the last trade at $1 a share is a true reflection of value – of $6.4m.
The company’s books say shareholders’ equity at Nov 11 last year was $10.8m, or $1.68 a share, and a registered valuer said the whole shebang had a net tangible asset value of $11.2m at March 31 last year.
Of course, there’s been covid-19 since then, which has affected activity at the track, but Abbott reckons maintenance is up to scratch and rejects suggestions that it lacks bookings or has deferred debt servicing.
“All promoters operating in the market today hire the company’s facilities on a regular basis with bookings so far out to February 2023,” Abbott said in a statement to the USX on Monday. “The company is up to date with its debt servicing obligations.”
Racing red
There is, of course, some indication that running a motor racing track is not a massive money-spinner.
The statutory accounts for the last two financial years show losses before interest, tax and other adjustments of $106,877 in the year to March 31, 2020, and $41,396 a year earlier. Annual revenues and costs in those two non-covid years sat at about $1.5m.
Meanwhile, Abbott is casting doubt on the NZBFB offer’s compliance with the requirements of the Financial Markets Conduct Act.
He’s also a bit bemused by a line in the offer document suggesting a successful takeover would allow the new owner “to work collaboratively with the Taupō Car Club”.
This is either a hint as to the bidder’s identity or an indication they know nothing of the apparently feisty political dynamics of the central North Island car enthusiasts’ scene.
According to Abbott, relations with the local car club have never been great.
TMP is on better terms with a relative behemoth of the listed company world, Contact Energy, which is talking about using the facility as a testing ground for hydrogen-powered vehicles.
Contact is building a pilot hydrogen production plant in partnership with Obayashi, a Japanese industrial conglomerate, to test the economics of making so-called ‘green’ hydrogen using geothermal energy from the nearby Tauhara steamfield.
Longer-term, Abbott believes autonomous cars will eliminate driving as anything other than a recreational activity, which will occur at tracks like the Taupō facility.
Pet food billionaire
Abbott goes back a long way with the track and facilities at Taupō, having founded the company in 2003 that built them and remaining involved until 2007.
The track hosted A1GP World Cup of Motorsport events for three years until 2009, attracting 33,000 spectators to the 2007 debut.
However, there followed a period of “appalling” management, Abbott told BusinessDesk, before shareholders persuaded him to return and lead a turnaround in 2015.
That followed an attempt by Australian pet food billionaire Tony Quinn to buy the park for $3.5m against a valuation at the time saying it was worth $6m.
With the turnaround achieved, TMP was encouraged to the view that a public listing would create some liquidity for shareholders and give access to capital.
Being too small for the NZX mainboard, it flirted with the NZAX secondary board, which then closed, leading it to the USX.
Abbott concedes listing can’t really be said to have worked for shareholders so far, but he’s encouraging them to keep their scrip in their pocket and let the Miles Advisory work play out.
The firm does about two or three deals a year in NZ and has been on the case for the last six months, he says, examining the other potential bidders who’ve come out of the woodwork from time to time.
“Some were flaky but there was serious money behind others.”
He remains hopeful of “an offer well above the price in NZBFB’s offer”, but as with anything in life, “this is not guaranteed”.