Pharmacy chain in 7m share issue

Life Pharmacy shareholders have voted to issue 7 million new shares to Gullivers Travel Group founder Andrew Bagnall, opening the way for him to gain control of the company.

At Life's annual meeting yesterday, shareholders voted to issue the new shares at 75 cents each to Segoura, owned by Mr Bagnall.

The $5.25 million investment gives Mr Bagnall a 19.4 per cent stake in the company, making him the biggest shareholder.

He is entitled to appoint two directors and has an option to buy up to 50.01 per cent of Life in the next two years at 75 cents a share in the first year and 82.5 cents in the second.

Mr Bagnall was expected to take up the option to subscribe to 50.01 per cent, Life chairwoman Liz Coutts said. Mr Bagnall was unavailable for comment.

Life Pharmacy Ltd owns the Life Pharmacy brand and has 49 per cent shareholdings in 17 pharmacies, repreenting 16 of the 21 Life-branded stores.

Apart from Mr Bagnall's investment, which Ms Coutts described as a "significant war chest", securing his expertise in franchising is seen as a coup by the company.

Ms Coutts said the company had been searching for a cornerstone investor with retail or franchise expertise since the company listed.

Rather than handing Mr Bagnall control of Life, Ms Coutts said: "It's more a matter of we need more money as we effect our strategy."

She told shareholders the focus would now be on expanding the company's franchise business, which last year accounted for $3.8 million from a total operating revenue of $5 million.

She would give no further details.

Shareholders also approved the issue of options to buy 1 million shares at 75 cents a share to Life's incoming chief executive, Philip Ingham.

He is the former chief of global merchandise development for health and beauty retailer AS Watson Health and Beauty, part of Hong Kong-based Hutchinson Whampoa.

Warren Flaunty, a shareholder with a 10 per cent stake in Life, said the recent changes bode well for the company's future, but shareholders would be looking for a turnaround on last year's performance.

For the year to March 2007, Life reported an after-tax loss of $6.56 million after a reduction in the group's investment in associates of $6 million.

This compares with a $1.1 million net profit the previous year.

Revenue fell from $5.5million in the year to March 2006 to $5.02 million for the 2007 year.

Shareholders' equity was $22 million, compared with $28 million for the 2006 year.

This year, Life failed in two bids, including a takeover attempt to secure a stakeholding in Pharmacybrands, the company that owns the Unichem, Amcal and Dispensary First brands.

Ms Coutts said a lack of ready funding was the reason for the failed bids, and the latest share issue would ensure future takeovers had a greater chance of success.

Shares closed up 5 cents yesterday at 72c.

There were 315,000 shares traded.

Shares have traded between 50c and 95c in the past 12 months.

- © Fairfax NZ News