St Lukes Group & Westfield Trust Amalgamation
ST LUKES GROUP AND WESTFIELD TRUST
St Lukes Group, the premier shopping centre company in New Zealand, and Westfield Trust, the largest listed property trust in Australia today announced a proposal to amalgamate their New Zealand shopping centre interests.
Under the proposal, which is subject to New Zealand High Court approvals and approvals by minority shareholders and convertible noteholders at meetings to be convened in July, Westfield Trust, which currently has a 46.4% interest in St Lukes Group, will achieve full ownership of the amalgamated company.
Investors in St Lukes Group will receive under the proposal a total payment of NZ$1.70 in cash for each of their shares and convertible notes, valuing the company at NZ$725 million.
The amalgamation procedure of the Companies Act (NZ), which is being pursued because of St Lukes Group’s complex capital structure involving three separately listed securities, requires the agreement of the independent directors of St Lukes Group to the offer being proposed. The procedure also provides full transparency and equality of treatment to all shareholders and convertible noteholders.
St Lukes Group Chairman, Bill Falconer, said: “The independent directors, advised by Ord Minnett, concluded that the price agreed with Westfield Trust fully values the company taking into account its future development plans and the future cost of capital.
“It represents a significant premium on recent share and convertible note prices and is higher than the company could expect to generate itself for some while. The independent directors concluded that acceptance of the price offered would be in the best interests of shareholders and convertible noteholders.”
The proposed price of NZ$1.70 would result in St Lukes Group shareholders and convertible noteholders receiving a cash sum that represents a premium of:
30% to the volume weighted average
price of St Lukes Group shares over the past
28% to the volume weighted average price of St Lukes Group convertible notes over the past month; and
18% to St Lukes Group’s stated net tangible asset backing per share (at 30 June 1999).
In accordance with the provisions of the Trust Deed of St Lukes capital notes issued in July 1999, the amalgamated company will offer to redeem the notes for par, which represents a small premium on the recent trading price for the notes, plus accrued interest.
Mr Falconer said that St Lukes Group has a major development program before it requiring around NZ$1 billion of new capital.
“Conditions for raising capital in international markets are likely to be more favourable in the short to medium term for the amalgamated group which will be better able to access these in a cost effective manner,” Mr Falconer said.
As part of the proposal, St Lukes Group shareholders and convertible noteholders will be offered the opportunity to purchase units in Westfield Trust on market, free of brokerage and stamp duty costs. This facility will be provided by UBS Warburg and enable eligible St Lukes Group investors to participate in an enlarged, more diverse shopping centre portfolio.
Westfield Managing Director Steven Lowy said: “The amalgamation represents a further commitment by Westfield to investment in New Zealand and a vote of confidence in the St Lukes portfolio which will be developed to deliver modern, world class shopping and entertainment facilities to New Zealand consumers.
“The Westfield Group has been involved with the properties since 1997 and this move is further confirmation that we are positive about their prospects.
“The amalgamation is a positive step for Westfield Trust unitholders because it is expected to be accretive to income distributions and result in greater geographical diversification for the Trust’s high quality shopping centre portfolio.”
Westfield Trust will outlay NZ$569 million (A$457 million) to effect the amalgamation. The Trust announced today it will raise A$250 million through a private placement of 84.7 million units to institutional investors at a price of A$2.95 per unit. The issue is fully underwritten by UBS Warburg which has also advised Westfield Trust on the proposal. The balance of the funding will be met through existing bank debt facilities.
St Lukes Group will commission an independent expert to assess the proposal to determine whether it is fair and reasonable to minority shareholders and convertible noteholders, and an information memorandum and appraisal report will be circulated with the notices of shareholder and convertible noteholder meetings.
A meeting of capital noteholders will also be held to vote on the redemption of the capital notes.
The St Lukes Group development program, which follows major redevelopment works already underway at the Glenfield and WestCity malls, includes major capital expenditure at Riccarton Mall in Christchurch, Queensgate Shopping Centre in Lower Hutt and at St Lukes, Manukau and Pakuranga shopping centres in Auckland; and the development of new centres at Newmarket and Albany.
St Lukes Group is the largest shopping centre company in New Zealand with seven centres in Auckland and one each in Hamilton, Wellington, Lower Hutt and Christchurch. The 11 centres have 221,000 square metres of lettable area, about 1,000 specialty shops and generated NZ$1.27 billion in retail sales in 1999.
Westfield Trust is Australia’s largest listed property trust with a market capitalisation of A$5.3 billion at 30 May 2000. Its Australian portfolio generated A$7 billion in retail sales in 1999 and features 28 shopping centres with 1.85 million square metres of lettable area and over 5,700 specialty shops.
For further information please contact:
Bill Falconer (649) 3020894 Victor Hoog
Antink (61) 0419 261713
Chairman, St Lukes Group Director Funds Management, Westfield