Vital Healthcare independent directors say talks falter over $2 mln gap
Aug. 3 (BusinessDesk) – Negotiations to internalise Vital Healthcare Property Trust’s management contract have stalled over a $2 million price gap, say the independent directors of the Australia & New Zealand Banking Group-owned manager.
Bill Thurston and Graeme Horsley would have agreed to pay ANZ Bank’s OnePath $6 million to relinquish the contract, they said in a letter to unit holders released to the NZX today. OnePath wasn’t prepared to go lower than $8 million, down from the $14 million it originally mooted.
“The independent directors remained of the view that whilst this may be where OnePath sees value, the price would still not likely be acceptable to unit holders (based on feedback), and therefore unlikely to be approved given the requirement for a 75% majority of those voting,” the letter says.
“A price of $6 million would achieve the goal of internalising the Trust’s management on an equitable basis and lead to a seamless transition that substantively includes the existing management team,” they said. It would also “avoid any unnecessary risk and potential disruption to operations, tenant and financier relationships and future unit holder returns.”
Unitholders are now awaiting an independent report by Grant Samuel & Associates which will be followed by a special meeting to vote on the proposal.
The trust’s manager will also put two external proposals to unit holders – even though it supports neither.
A proposal from Ascot Property Management, whose directors include Sandy Maier, “effectively involves a $1.4 million incentive payment for it to expedite an internalisation process, and replace the current management team with an Ascot-led group.” The independent directors’ letter says this “exposes the trust, its assets and unit holders to unacceptable levels of financial and operational risk.”
A separate resolution put forward by Accident Compensation Corp. and others to remove the manager at no cost will be put to unit holders even though the independent directors see little chance of success. That’s because it would require approval of the trustee, which has indicated there are no grounds to dump the manager.
“In spite of this, the special meeting for consideration of these resolutions must proceed at the expense of all unit holders and as such will take place in the latter part of August or early September 2011, subject to regulatory approvals,” Thurston and Horsley say.
Units of Vital Healthcare were unchanged at $1.16 today, valuing the trust at $339 million. It manages $520 million of property assets.