Shares in tourism company Experience Co (ASX: EXP) have been propelled higher today by the $17.5 million sale of Great Barrier Reef Helicopters (GBRH) and Cairns Canyoning, representing a major step in a strategy to divest non-core assets.
The Cairns Canyoning business and assets have been sold back to the business operators, while the GBRH transaction with Gold Coast-based Morris Group is due for completion in January 2020.
The helicopter business will add to Morris Group's portfolio of businesses including Sirromet Wines, the Good Times Pub Group and mail processing business Pronto Direct, as well as the Carrara Markets and Performace Driving Centre on the Gold Coast.
With its origins in the skydiving business, Wollongong-based Experience Co listed in 2015 and expanded its offerings into hot air ballooning, canyoning and rafting, as well as various marine-based tours in North Queensland.
But two fatal skydiving accidents in Australia and New Zealand in late 2017 and early 2018, combined with the revelation of just how susceptible some of its new ventures were to poor weather, dampened investor sentiment towards EXP.
As a consequence the EXP share price fell steadily from 88 cents in mid-December 2017 to a low of 15.5 cents in August this year.
By the time the company hit what the Experience Co board now hope was rock bottom, former Tourism Australia boss John O'Sullivan had been appointed CEO a few months prior to turn the company around.
His assessment of the group and a strategic review led to a simplification plan that would harness the business' core strength - skydiving.
The group has also appointed Nash Advisory to run a divestment process for more non-core assets: Raging Thunder Adventures (Tully River) and RnR White Water Rafting (Barron River); Cairns Hot Air Balloon Co; Byron Bay Ballooning Co; and Hunter Valley Ballooning Co.
"We are delighted to today announce an update on the key pillar of the business simplification process being the divestment of non-core businesses," says O'Sullivan.
"It is particularly pleasing to hand the Cairns-headquartered GBRH and Canyoning businesses to the Morris Group and Cairns Canyoning respectively which have established a tourism and hospitality presence in the region.
The board hopes the divestment strategy improve the return on invested capital.
""The Group continues to execute the outcomes of the strategic review announced on 20 November 2019," says O'Sullivan.
"The completion of the divestment of GBRH and other non-core assets provides the business with flexibility to pursue growth opportunities better aligned to our core business, expertise and with a focus on return on invested capital."
EXP shares rose 9 per cent in morning trading, but the gains now stand at 2.27 per cent with EXP trading at 22.5 cents.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support