Tourism Holdings (ASX: THL) faces a crucial juncture with a revised NZ$3.10 per share takeover offer from a BGH Capital-led consortium, juxtaposed against a cut to its FY26 profit guidance and an increase in projected net debt.
The consortium currently holds approximately 19.9% of THL shares and is proposing an all-cash acquisition.
The offer is conditional on several key factors including satisfactory due diligence, the finalisation of debt arrangements, and approval from the BGH Investment Review Committee to submit a binding proposal.
Furthermore, the offer requires a unanimous recommendation from the THL Board to accept, in the absence of a superior proposal, and an independent adviser concluding the proposal is within or above its valuation range.
Shareholders holding about 16% of THL have already indicated their support for granting due diligence access and engaging with the consortium.
The revised offer is set to expire at 5:00pm (NZT) on 12 June 2026 if THL has not responded.
FY26 Guidance Lowered as Debt Rises
In a separate announcement, THL has revised its FY26 guidance, lowering its expected underlying net profit after tax for continuing operations (excluding the recently divested UK & Ireland business).
The updated forecast is now AUD$40m-AUD$43m, down from the previous range of AUD$43m-AUD$47m.
The company also anticipates a significant increase in year-end net debt, which is now forecast to be between AUD$460m-AUD$470m at 30 June 2026, a rise from the previous guidance of below AUD$400m.
THL attributes the higher net debt to several adverse factors including softer vehicle sales volumes, particularly since early March 2026, impacts from the Middle East conflict on sales, and softer Australian domestic rental conditions.
Foreign exchange headwinds account for approximately AUD$10m, and adverse working capital movements, including a longer-than-planned Australian inventory release, add approximately AUD$20m to the debt figure.
Despite these challenges, THL confirms it remains comfortably within all banking covenants, with aggregate facility headroom exceeding AUD$300m.
Interim Performance Shows Resilience
In the first half of FY26, THL reported a statutory NPAT of NZ$29.6m, marking a 17% increase.
Underlying NPAT also saw a rise of 11% to NZ$29.5m.
Total revenue for the period grew 4% to NZ$477.3m, primarily driven by an 11% increase in rental revenue, while RV sales revenue experienced a 4% decline.
The company's net operating cashflows demonstrated robust improvement, climbing 67% to NZ$40.5m.
This strong cash generation supported a 20% increase in the interim dividend, which was paid at 3.0 cents per share.
Strategic Initiatives Progressing
THL has been actively progressing its strategic initiatives to enhance performance and streamline its operations.
These include a conditional agreement to sell its UK & Ireland business for circa NZ$58.3m, a move that simplifies its international portfolio.
Domestically, the company has closed its Brisbane manufacturing factory and consolidated its Australian production into its New Zealand operations.
THL has also exited underperforming dealerships to improve retail working capital.
These actions are designed to improve operating leverage, reduce costs, and enhance the overall efficiency and focus of the business for future earnings growth.
