In preparing the financial statement, Hirepool’s directors considered several uncertainties facing the business and its ability to continue as a going concern, according to auditor PwC’s report.
As of June 30, 2025, the group had total interest-bearing liabilities of $232.1m, which are subject to compliance with quarterly financial covenants that require the company to report specific financial metrics to its lenders every three months.
The lenders in this instance include Westpac New Zealand, Aware Super, ASB Bank and Kiwibank.
The senior debt facility component of that total, meaning the debt with the highest payment priority, equalled $149m.
However, this is classified as a current liability in the consolidated balance sheet at year-end, with an expiry date of June 30, 2026.
The mezzanine debt facility, which is often used to bridge funding gaps for growth, acquisitions, or projects, is set to expire on December 29, 2026.
That figure currently sits at $92,000, although $83m is currently classified as non-current.
But the requirement to refinance the senior debt facility by June 30, 2026, and meet the financial targets set out in its quarterly financial covenants, presented several uncertainties.
“The group’s revenues and earnings have continued to decline during the financial year ended June 30, 2025, due to sector-wide trading conditions,” the auditor’s report said.
“However, operating free cash flow has remained positive, with sufficient surplus to meet debt amortisation commitments and as such, total debt levels have remained stable.”
The report noted Hirepool had undertaken a number of measures to counter its revenue decline including amending its financial covenants with the banks for the remainder of the agreements.
The company’s directors also reached an agreement with its banks on December 19, to extend the senior and mezzanine debt facility expiry dates by six months to December 31, 2026, and June 30, 2027, respectively.
However, the auditors make it clear that should the current trends worsen, there is a risk the cumulative earnings before interest, tax, depreciation and amortisation (ebitda) covenant, in particular, may be breached.
Regardless, the directors said they were of the view that the uncertainties disclosed were not material and remained upbeat about the company’s ability to refinance.
“The directors consider the extension of the expiry date of the senior debt facility gives the group sufficient time to conduct a full refinancing process on acceptable commercial terms.
“The group has engaged a debt advisory firm to manage the refinancing process and the directors are confident the group will be able to refinance its facilities as they believe the group presents a sound lending proposition due to its positive ebitda, its positive free cash flows to meet all interest and principal repayments, and the expected cyclical recovery in the construction sector.”
Hirepool currently has 36 shareholders, although it is 59.71% majority owned by the Australian private equity firm, Next Capital.
Hirepool is not the only hire company under pressure because of the downturn in New Zealand’s construction industry.
Kennards Hire, also Australian-owned, saw its revenue drop from $66.2m in 2024 to $59.5m in the 12 months to June 30, 2025.
Despite an income tax benefit of $296,359 for the year, Kennards still reported a loss of $537,054 – a drop of 114% from its $3.8m profit the year prior.
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