Rescued from a disastrous period under private equity control, the revived Godfreys vacuum and cleaning products chain is planning to float on the Australian Stock Exchange (ASX) with a $100 million capital raising. The public float should provide a healthy profit to founder, John Johnston, and Tom Krulis, who bought Godfreys from Pacific Equity Partners (PEP) in 2012, and will provide funding for further development of the chain. Along with the RedGroup book chains (Borders, Angus &
Robertson), a debt laden Godfreys was one of the unsuccessful retail investments PEP tried to sell off in mid-2011.
PEP and CCMP Capital Asia acquired Godfreys from private companies owned by the families of Johnston and Krulis in 2006 for $300 million, but saw their capital substantially wiped out in a debt for equity restructure in in January 2012.
Securing the future
The deal cut direct debt commitments from $210 million to $20 million and returned Krulis to the role of CEO.
Godfreys has been returned to profitability under Krulis, but the proposed public float will raise questions about growth prospects for the specialist chain which has around 200 stores throughout Australia and New Zealand.
It is understood the public float aims to secure the ownership and management of the retailer into the future in view of Johnston’s age (Johnston is now in his 90s) and other investment interests of existing shareholders, which include equity positions in Petstock and The Shaver Shop.
Godfreys has appointed Commonwealth Bank and Credit Suisse to advise on the proposed public float.
Godfreys chairman and experienced retail executive, Rod Walker, will also play a key role in the float following his involvement with PAS Group, which listed on the ASX two months ago.
Godfreys has some similarities to Beacon Lighting, which listed earlier this year, although Godfreys has a higher ratio of franchises to corporate stores than Beacon.
Beacon Lighting’s maiden result for the 2014 financial year was a 13 per cent lift in sales to $150.3 million and a 25 per cent lift in earnings to $11.8 million.
Sales and earnings for Godfreys have not been released, but Krulis has used the chain’s old formula of aggressive advertising and deep discounting to rebuild revenues and attract customers lost to other retailers, including Harvey Norman.
A key part of the turnaround was rebuilding strained relationships with franchisees and suppliers, developing online retail, launching new products, and restructuring ranges.
It is expected the listing will be timed for late October or November, provided financial market conditions remain buoyant.
