Augusta announces Bid Implementation Agreement
29 January 2020
NZX
Announcement
Augusta
announces Bid Implementation Agreement at $2.00 per
share
Shareholders are advised to take
no action at this stage
• Augusta Capital
Limited (Augusta, NZX: AUG) has entered into an agreement
under which Centuria Capital Group (Centuria, ASX: CNI),
subject to obtaining certain regulatory approvals, will make
a takeover offer for 100% of Augusta shares (Offer).
• Centuria is an ASX-listed specialist property
investment management company with A$7.3 billion of assets
under management.
• The price of the Offer will be
NZ$2.00 per Augusta share. Shareholders who accept the Offer
will be able to elect to take either cash or Centuria scrip
in consideration for their Augusta shares. Shareholders may
also decide to not accept the Offer.
• The Offer will
value Augusta’s issued equity at NZ$180 million with an
enterprise value of NZ$204 million . The Offer price
represents an attractive premium to recent trading.
• The Independent Directors of Augusta have agreed to
unanimously recommend the Offer subject both to the Offer
price being in (or above) the range of an Independent
Advisers Report (IAR) and to no superior proposal
emerging.
• Executive Directors Mark Francis and Bryce
Barnett, who collectively own 23.3% of shares in Augusta,
have undertaken to accept the Offer and accept Centuria
scrip. They have also entered into three-year employment
agreements with Augusta. Centuria has informed Augusta that
other shareholders of Augusta, accounting for 12.9% of
Augusta ownership, have also undertaken to accept the Offer.
• The Independent Directors of Augusta believe that
the announcement today and the expected Offer will not
adversely affect the funds managed by Augusta or the
proposed issuance of securities in the Augusta Property and
Tourism funds being initiated by Augusta.
• The
Independent Directors of Augusta advise shareholders to take
no action at this stage and to wait for the issuance of the
Target Company Statement (which is expected to be released
within the next 10 weeks).
Augusta has today announced
that it has entered into a Bid Implementation Agreement
(BIA) with Centuria under which, subject to certain
approvals being received from regulatory authorities,
Centuria will make an Offer for 100% of Augusta’s shares
in accordance with the New Zealand Takeovers Code.
If the Offer proceeds, the price of the Offer will be NZ$2.00 per share. All Augusta shareholders will have the option to take cash or receive Centuria scrip to an equivalent value based on the volume-weighted average price (VWAP) of Centuria’s shares in the 5 trading days prior to this announcement, being A$2.40 per share leading to a scrip ratio of 0.807 Centuria shares per Augusta share .
Shareholders may decide to not accept the Offer. However,
if 90% of shareholders decide to accept the Offer, Centuria
may exercise its right under the Takeovers Code to acquire
all remaining shares in Augusta.
A copy of the BIA is
attached to this
announcement.
Independent
Directors Committee Recommendation
An
Independent Directors Committee, consisting of Paul Duffy
(chair), Jonathan Ross, Fiona Oliver, Mark Petersen and
Kevin Murphy, was formed by the Board of Augusta to deal
with all aspects of the process leading to the BIA and the
expected Offer from Centuria.
If the Offer is made in
accordance with the terms set out in the BIA, the
Independent Directors Committee has agreed to unanimously
recommend the Offer to Augusta shareholders subject to the
Offer price being in (or above) the range of the IAR and no
superior offer emerging.
The Independent Directors Committee believes the Offer price values the current Augusta business plan in its entirety and is a strong offer for Augusta shareholders for the following reasons:
• Valuation: The price of
$2.00 per share represents:
o A 20% premium to
Augusta’s closing share price on 28 January 2020;
o A
28% premium to Augusta’s 30-day VWAP prior to this
announcement;
o A 34% premium to Augusta’s 60-day VWAP
prior to this announcement; and
o An attractive
acquisition multiple. The enterprise value implied by the
Offer is 17.9 times FY19 EBIT and the Offer values Augusta
equity at 25.9 times FY19 NPAT (Augusta previously announced
on 27 November 2019 that FY20 outcomes are likely to be
materially similar to the FY19 outcomes).
• Optionality: Centuria’s Offer
consideration provides Augusta shareholders with an option
to have further exposure to the Australasian property
management industry by becoming shareholders in Centuria, an
experienced specialist property investment manager with a
35-year track record.
o Please see information
related to Centuria and its recent transactions further
below.
• Certainty of value: The option of 100% cash consideration provides Augusta shareholders with certainty of value and the opportunity to realise their investment in Augusta in full for cash.
• Presents a good opportunity for long-term shareholders: The Offer price captures the benefits of Augusta’s strategy and recent performance improvement.
The Independent Directors Committee makes no recommendation as to whether shareholders should take scrip. However, the offer of Centuria scrip gives investors access to:
• Greater scale, diversity and financial capacity: Centuria is a substantially larger and more diversified Australian property investment manager with the financial capability to underwrite new investment offerings. If the transaction is completed, Centuria will provide Augusta shareholders who accept scrip with an improved ability to execute opportunities in New Zealand and an exposure to the wider Australasian property management industry.
• Enhanced continuity and leadership for investors in Augusta funds: Executive Directors, Mark Francis and Bryce Barnett, who collectively own 23.3% of shares in Augusta, have undertaken to accept the Offer and accept Centuria scrip. They have also entered into three-year employment agreements which provides continuity of leadership for the benefit of Augusta staff and fund investors.
A full assessment of the Offer and the scrip proposal will be set out in the Target Company Statement which will include the IAR.
Augusta Independent Chairman, Paul Duffy, said: “The Board’s Independent Directors are satisfied that Centuria’s offer for Augusta represents an attractive opportunity for Augusta shareholders to either realise full value for their Augusta investment or to remain invested through Centuria’s scrip offer and become part of a substantially larger, diversified Australasian property investment manager.
“Importantly, there is an alignment on strategy and
values between our two organisations. If the transaction
successfully completes, I believe Centuria will bring added
capability to support the launch of new investment offerings
over the coming years, which our longstanding investors
would continue to benefit from.”
The Offer will be conditional on receipt of Overseas Investment Office approval and is subject to Centuria receiving 90% shareholder approval. At Centuria’s discretion, this latter condition can be waived if acceptances over 50% are received. Because Centuria requires certain regulatory approvals before it can make the Offer, the Notice of Offer (Notice) is expected to be made within six to eight weeks from the date of this announcement.
Mark Francis, Founder and Managing Director, and Bryce Barnett, non-independent Executive Director, who collectively own 23.3% of shares in Augusta have undertaken to accept the Offer and accept Centuria scrip (to which escrow arrangements have been agreed). Both parties have also agreed new employment arrangements with Augusta on substantially the same terms as their current arrangements which will become effective from the transaction completing.
In addition, Centuria has informed Augusta it has secured agreements from other investors amounting to 12.9% of Augusta shares to accept the Offer.
The Offer will be funded by Centuria via its existing debt arrangements, an equity placement being completed today and through the potential issuance of scrip as consideration in the Offer. Neither the issuance of the Notice nor the Offer itself is conditional on finance.
The Independent
Directors Committee advises Augusta shareholders to take no
action at this stage and wait for the issuance of the Target
Company Statement which will be released shortly after the
Offer is received. The Target Company Statement will set out
a full assessment of the merits of the Offer and include the
IAR.
Background to the Offer
and the role to date of the Independent Directors Committee
Centuria approached Augusta with an indicative
proposal in October 2019. Having received commercial and
legal advice, the Independent Directors Committee worked
with Centuria with a view to ensuring that the Offer price
of the indicative proposal reflected the full value of
Augusta. Once this was achieved, limited due diligence was
undertaken. In January 2020, Centuria confirmed its offer
and the BIA was entered into.
The Independent Directors
Committee is being advised by Cameron Partners and Chapman
Tripp.
Key milestones and
indicative timing for Offer process
The expected
process and an indicative timetable from here is as
follows:
Action Indicative
timings
Centuria seeks required waivers 6-8
weeks from now
Notice of Offer lodged by Centuria 6-8
weeks from now
Offer document dispatched by
Centuria Within 2 weeks of Notice of Offer
Target Company
Statement and IAR dispatched by the Independent Directors
Committee Within 2-4 weeks of Notice of Offer
Minimum
period Offer must remain open 20 working days from Offer
Document being dispatched
Maximum period Offer must
remain open 90 working days from Offer Document being
dispatched
The Independent Directors Committee will update shareholders on the process as it develops. The Independent Directors Committee recommends that shareholders take no action at this stage and wait for the issuance of the Target Company Statement which will be released either simultaneously with, or shortly after, the formal Offer document is dispatched by Centuria. The Target Company Statement will set out a full assessment of the merits of the Offer and include the IAR. It will also set out the process to follow if shareholders wish to accept or not accept the Offer. Shareholders are encouraged to seek their own independent, professional investment advice in relation to the Offer.
Business
operations of Augusta
The Independent Directors
Committee of Augusta has confirmed that the announcement
today and the Offer does not adversely affect the funds
managed by Augusta, including:
• Asset Plus which owns
a nationwide diversified portfolio of properties spread
across the main centres of Auckland, Wellington and
Christchurch, with select provincial exposure; and
• Augusta Industrial Fund which owns a portfolio of
strategically selected assets providing both tenant and
location diversification within the industrial property
sector.
The Board of Directors of both funds have been
notified of the BIA and will issue their own statements to
the investors in these funds.
Furthermore, the
Independent Directors Committee has confirmed there will be
no impact on the proposed issuance of securities in the
Augusta Property and Tourism funds currently contemplated by
Augusta. Further detail in relation to both funds, including
timings will be provided to the market in the first half of
February.
Interim dividend
The Augusta quarterly interim dividend for the
period to 31 December 2019 is expected to be paid in
February. The dividend payment remains subject to the usual
Augusta Board approval process and will have no impact on
the $2.00 per share Offer price.
Further information for
Augusta shareholders
As the takeover process
progresses, the Independent Directors Committee will keep
shareholders updated on any significant developments. To
assist with communications to shareholders, the Independent
Directors Committee has established a page on the Augusta
website www.augusta.co.nz/takeover where all NZX
announcements and media releases related to the Offer will
be made available. Shareholders are encouraged to email the
Independent Directors Committee at takeover@augusta.co.nz if
they have any queries about the Offer.
ENDS
All media enquiries should be
directed to:
Hugo Shanahan
hugo@senateshj.co.nz
+64 275 111
561
About Augusta Capital
Limited (NZX: AUG)
Listed
on the NZX, Augusta actively manages approximately NZ$2
billion of assets – involving office, retail and
industrial properties throughout New Zealand and Australia.
Founded by Mark Francis in 2001 – Augusta’s evolution
reflects a proven skill and experience in identifying value
and moving decisively to turn-around under-performing
assets.
Augusta has evolved from its origins as a single
asset property syndicator – today Augusta is one of New
Zealand’s largest and leading property funds management
specialists. Augusta's growth strategy is underpinned by an
active management approach – where the scale and diversity
of the offerings continue to expand as it grows its funds
under management.
About
Centuria Capital Group (ASX:
CNI)
Centuria
Capital Group (Centuria) is included in the S&P/ASX300
Index and enjoys a market capitalisation in excess of
A$1billion. As an established fund manager overseeing $7.3
billion of assets under management, Centuria focuses on a
clear and simple strategy of aiming to deliver income and
capital growth from compelling real estate and investment
bond sectors for a broad range of investor profiles.
Centuria formed in 2007 when the Over Fifty Group joined with Century Funds Management, which was founded by John McBain and Jason Huljich. John and Jason are the Joint CEO’s of Centuria and have extensive experience in overseeing real estate funds management, investment management, M&A and investor relations.
Centuria’s funds management platform includes Centuria Real Estate Funds (specialising in listed and unlisted real estate funds) and Investment Bonds. Over the course of the Group’s history, Centuria has focused on utilising in house real estate expertise to identify, transact and manage investment funds in these sectors.
Listed Real Estate Funds
• Centuria Metropolitan REIT (ASX: CMA):
CMA is Australia’s largest ASX listed pure play office
REIT and is included in the S&P/ASX300 Index. CMA owns a
high-quality office portfolio valued at $2.1 billion with
assets located throughout Australia. Centuria is a hands-on,
active manager and the fund provides investors with income
and the opportunity for capital growth.
• Centuria Industrial REIT (ASX: CIP): CIP
is Australia’s largest domestic pure play industrial REIT
and is included in the S&P/ASX 300 Index. CIP owns a $1.6
billion portfolio of high-quality industrial assets
throughout Australia. CIP is underpinned by a quality and
diverse tenant base, and it too provides the opportunity for
income and capital growth from its portfolio of industrial
assets.
Unlisted Real Estate
Funds
• Centuria Unlisted Funds: Centuria
currently manages $2.0 billion of assets across a range of
closed-ended funds and the open-ended Centuria Diversified
Property Fund (CDPF) on behalf of an extensive range of
retail, high net worth and wholesale investors. As one of
the longest standing divisions within Centuria’s
organisation, Centuria has developed a long track record of
identifying, establishing and overseeing unlisted fund
opportunities on behalf of a broad range of investor
profiles.
• Centuria Heathley: Formed in 1977,
Heathley Limited has established and managed over 50
investment funds for its investors. In 2019, Centuria
acquired a 63.06% economic interest in Heathley Limited,
forming Centuria Heathley. Centuria Heathley is a specialist
healthcare real estate funds manager focused on cost
effective models across the healthcare chain. Centuria
Heathley leverages its depth of knowledge, relationships and
skill set in the health and aged care property sector to
drive attractive, consistent and reliable income and the
potential for enhanced capital growth for its
investors.
Investment Bonds
Centuria Investment Bonds: Centuria
currently manage $0.9 billion of investment bonds that give
investors with medium-to long-term goals the capacity to
make tax-effective investments outside superannuation.
Centuria has two investment bond products including Centuria
LifeGoals providing opportunities to invest in 22 high
quality externally managed funds and Centuria Investment
Bonds, a selection of Centuria managed funds.
More
information regarding Centuria Capital Group is available
from
www.centuria.com.au
ends