SKYCITY stands by its takeover offer
Fri, 6 Aug 2004
SKYCITY STANDS BY ITS TAKEOVER OFFER FOR SKYCITY LEISURE SKYCITY Entertainment Group today released the report of independent valuer, Lonergan Edwards & Associates, relating to its takeover offer for SKYCITY Leisure Limited. Lonergan Edwards' report values the SKYCITY Leisure Mandatory Convertible Notes (MCNs) at $1.98. SKYCITY does not agree with the valuation recommendations.
SKYCITY Entertainment Group believes its offer, supported by two previous independent advisors' reports*, of $1.60 for MCNs and 0.82c for ordinary shares, was fair and reasonable.
"We reached a view of the value of the company and bid accordingly. That view was subject to independent valuation and two valuers supported our bid as representing fair value. Despite the fact that Lonergan Edwards has taken a more optimistic view of the value of SKYCITY Leisure we remain entirely comfortable with our original offer. It's fair to say that SKYCITY would not have offered the price Lonergan Edwards has recommended," said SKYCITY Entertainment Group Managing Director, Evan Davies.
Lonergan Edwards was appointed by the Takeovers Panel, to undertake an MCN valuation, following objections by some noteholders to SKYCITY's original offer, as provided for in the Takeovers Code. The valuation in the Lonergan Edwards report represents final pricing for the MCNs not acquired by SKYCITY under the original offer. SKYCITY is therefore obliged to pay noteholders, whose holdings were compulsorily acquired, the Lonergan Edwardsrecommended price. This involves an additional $939,634. This amount lifts the total price paid for the acquisition of the shares and MCNs in SKYCITY Leisure Limited, that SKYCITY did not originally own, from $14.3m to $15.2m.
"We are obliged to pay the additional monies and will be doing so next week," said Mr Davies.
SKYCITY held a controlling interest in the company - formerly Force Corporation - from March 2001 and managed its day-to-day business operations following approval of a Management Services Agreement at SKYCITY Leisure's 2002 annual meeting. Prior to the takeover bid launched in April for the shares and MCNs it did not already own, SKYCITY Entertainment Group's interest in the cinema exhibition company was 74.4%. SKYCITY moved to compulsory acquisition of the remaining shares in May, after reaching 95.8% ownership.
At the time of announcement of the takeover offer SKYCITY's Managing Director, Evan Davies said the takeover bid was a sensible commercial decision for SKYCITY. "The decision to acquire the remaining equity in Leisure will enable the ownership and management structure to be streamlined." SKYCITY Leisure has been de-listed from the NZX.
*Independent valuation reports completed by Grant Samuel & Associates and Deloittes Corporate Finance.