Eastpack Launches Takeover for Aerocool
Tuesday 5 November 2013
Eastpack Launches Takeover for Aerocool
Leading kiwifruit post harvest supplier EastPack Limited has today issued a takeover notice to Aerocool's directors stating its intentions to make an offer to acquire the company for cash consideration of 90 cents per share.
The takeover offer is in response to Aercool's proposed amalgamation with Apata.
EastPack's offer is conditional on Aerocool growers supporting the change of ownership and confirmation that Aerocool has no more than $3.5 million of total secured bank debt. Under the Takeovers Code, EastPack must now wait a minimum of 14 days before it can make its offer.
EastPack, New Zealand's largest post harvest kiwifruit operator following its merger with Satara earlier this year, has a 3.5 per cent shareholding in Aerocool.
EastPack Chairman Ray Sharp said EastPack has tabled what its directors believe is a more favourable proposal in the best interests of all shareholders than amalgamation with the more highly geared Apata.
"We understand the primary motive of Aerocool's major shareholders is to achieve economies of scale and operational benefits from being part of a larger group, however we do not want Aerocool to pursue a sub optimal transaction on the basis that its board feels amalgamation with Apata is the only option available to them," Mr Sharp said.
"We have reviewed the documentation in relation to the amalgamation with Apata and sought independent advice from Grant Samuel & Associates. Our adviser has raised concerns regarding the level of indebtedness at Apata and believes that the proposed changes to the constitution will negatively impact on the realisable value of Aerocool shares."
Mr Sharp said a takeover offer that is conditional on a maximum amount of total secured bank debt was unfortunately necessary because of the lack of current financial disclosures in the documentation sent to shareholders in relation to the Apata amalgamation.
"As an Aerocool shareholder, EastPack does not wish to see the value of its investment impaired by the proposed amalgamation with Apata - and I'm sure neither do other Aerocool shareholders."
EastPack believes an exchange ratio of one Aerocool share for one Apata share is unfair from the perspective of Aerocool shareholders.
"As an Aerocool shareholder we are not willing to accept a 13 percent reduction in net asset backing per Aerocool share when Apata shareholders are benefiting from a 17 percent increase in net asset backing per share; and an increase in the total secured bank debt of the company from approximately $1.00 per tray to $1.88 per tray without clearly demonstrating how the company will service this level of debt going forward.
"We accept that shareholders may in due course choose not to accept EastPack's takeover offer but we encourage them to challenge their directors to justify why they should prefer an amalgamation with Apata on those proposed terms," Mr Sharp said.
The Aerocool board advised that they consider the indicative independent valuation that they obtained as part of the Apata due diligence process, which included a maximum value of 35 cents for Aerocool shares, more likely represents the fair value than historic trading figures.
"The EastPack offer would give small, non grower shareholders the opportunity to realise 90 cents cash per Aerocool share rather than roll the dice with Apata in the hope that bringing two, smaller post harvest operators together will deliver adequate cash returns to retire in excess of $13 million of secured bank term loans," Mr Sharp said.
EastPack believes the Apata proposal will lead to an untenable position for minority shareholders and accordingly will be voting "no" at the special meeting tomorrow. "We will not remain as a shareholder if Aerocool proceeds with the amalgamation and will exercise our right to receive a fair and reasonable price for the shares we currently hold," he said.
"We are also prepared to take up the challenge of ensuring that all minorities who elect to vote against the proposed amalgamation with Apata exercise their buy out rights receive a fair and reasonable price."