Argosy internalisation offer “fair”; trustee won’t dump manager
by Paul McBeth
Aug. 9 (BusinessDesk) – The independent report for Argosy Property Trust unitholders backs OnePath NZ Ltd.’s controversial offer to sell the trust back its management contract for $20 million.
Investment bankers Grant Samuel say in the report the terms of the proposed internalisation by ANZ-owned OnePath is “fair” and “in the best interests of unitholders.”
The independent adviser valued the contract at between $19.7 million and $23.7 million if it was sold to a third party today.
“We recommend that unitholders accept this price to internalise the rights to manage the Trust and do so without the disruption and costs associated with any alternative proposals,” independent directors Peter Brook and Trevor Scott said in a statement.
“The report supports our view that the best value option for unitholders is to achieve internalisation as proposed by the independent directors.
”OnePath was forced to slash its proposed fee of $32.5 million after Argosy’s independent directors refused to endorse the deal amid opposition from unitholders including the Accident Compensation Corp., Guardians of New Zealand Superannuation and Westpac Banking Corp.
The report was less convinced about a unitholder-driven bid to dump the manager, saying Argosy could face an extra $7.9 million bill, not counting potential legal costs, business disruption, lost tenants and any other internalisation costs.
The report was included in the notice of meeting, which will put forward OnePath’s internalisation offer, plus other resolutions proffered by activist unitholders to force out the manager.
The trustee, New Zealand Guardian Trust Co., said it believed the manager met the terms of the trust deed and would be unlikely to act on any resolution to push out the company.
Unitholder and rival DNZ Property Fund Ltd. has been lobbying to merge the entities, and will put forward resolutions at the meeting to pursue that goal.
The Grant Samuel report said it was difficult to evaluate the bid without a specific offer, though it could well cost more than OnePath’s $20 million fee. DNZ’s bid to force a special meeting of unitholders was thrown out by the High Court last month, with Judge Raynor Asher saying it would create unnecessary costs.
OnePath receives an annual fee of 0.6% of the trust’s gross assets under the deal, and internalising management follows a trend among listed property entities of axing the cost of external managers.The units slumped 7.5% to 74 cents amid the sharemarket rout after Standard & Poor’s cut America’s credit rating to AA+.