Augusta drops legal action against NPT

NPT chairman Sir John Anderson

Augusta Capital has dropped its High Court proceedings seeking orders requiring listed property investor NPT to call a meeting of shareholders to discuss its hostile bid, with a notice of meeting to be issued in February.

A hearing had been set for Feb. 10. Augusta wants to oust NPT chairman John Anderson and directors Jim Sherwin and Tony Sewell, replacing them with its own chairman Paul Duffy and independents Bruce Cotterill and Allen Bollard. It was seeking a shareholder meeting to vote on the board and use the forum to propose buying three buildings worth $329 million so Augusta could buy the management contract.

Augusta's proposal, along with an alternative deal from Kiwi Property Group which has won the backing of the target's board, will be put to shareholders at the meeting.

NPT chairman Anderson said in a statement that the board and management were pleased the matter, which he described as an "unfortunate distraction", had been concluded.

"The proceedings were not constructive," Anderson said. "We are very committed to engaging with shareholders as soon as possible on the very important matters before the company."

Auckland-based Kiwi Property plans to sell the North City Shopping Centre in Porirua and Majestic Centre in downtown Wellington to NPT for cash and shares worth $230 million, with NPT raising $100 million of new equity as well as a $50 million issue to Kiwi Property for a 19.9 percent stake to help fund the deal.

"We will make every effort to hold this shareholder meeting in February, but are conscious that the process of due diligence of the Kiwi Property assets, negotiation of terms, and preparation of the shareholder information memorandum may mean this is not possible," Anderson said. "In the event of a delay, we certainly expect to be in a position to issue a notice of meeting in February, with a view to holding the meeting soon thereafter."

If the Kiwi Property transaction is backed by NPT shareholders, it would expand the company's portfolio to $400 million from its current $170 million, and more than double distributable income to $16.8 million by 2020 from $5.8 million in the 2017 financial year.

That compares to the Augusta bid which would increase NPT's assets under management to about $505 million, which Augusta estimates would more than triple net profit by 2020 to about $18.3 million. Augusta would look to pocket base fees of $1.7 million in 2018, rising to $2.5 million by 2020.

NPT internalised its management contract in 2010, paying $2.5 million to end a relationship with National Property Trust Ltd, a vehicle in the group of failed lender St Laurence. That came at a time when the structures were seen as unfairly rewarding external managers at the expense of investors by basing fees on the value of gross assets under management.

Augusta took a 9.3 percent stake in NPT on Sept. 16, in a deal with the Accident Compensation Corp, buying shares at 73 cents apiece, above the then market price of 64 cents.

NPT shares last traded at 66 cents, down 3.6 percent in the year, while Kiwi Property shares were at $1.44, having increased 6.3 percent in the year. Augusta shares last traded at 97 cents, virtually unchanged in the past year.

(BusinessDesk)


6 · Got a question about this story? Leave it in Comments & Questions below.


This article is tagged with the following keywords. Find out more about MyNBR Tags

Post Comment

6 Comments & Questions

Commenter icon key: Subscriber Verified

A great result for NPT shareholders and investors after a badly planned and executed Augusta strategy.

The focus will now go on Augusta who need scale to continue their growth plan or the wheels might start getting squeaky. Maybe Kiwi Income could make a bid for Augusta and do the minority Augusta shareholders a favour

Reply
Share
  • 0
  • 0

Rookie mistake Scribe. Under the board proposal a large cash issue will be undertaken. The key issue is what is the rights issue price. Only then can you determine what deal is better for existing shareholders.

Reply
Share
  • 0
  • 1

Only one Rookie here Doctor - you

I agree with Brent Sheather in asking how that is relevant?

Reply
Share
  • 0
  • 0

Hmmm I don't follow .how is the rights price relevant given that it's a prorata issue...be great if you would explain that one thanks.

Reply
Share
  • 1
  • 0

Sure Brent. NTA 72 cents , large rights issue at 62 cents. Share price heads to 63, rights worthless. If you don't take up, your NTA diluted.
You are an existing shareholder and basically get a large rights issue at a discount shoved down your throat. If you think this is great for existing shareholders , good for you! If the npt directors can do a rights issue closer to NTA that would be different. The doctor will take a wager with the rookie scribe that the rights issue price will be at least a 10% discount to NTA. Biggest discount to NTA of listed property stocks.

For the record the doctor does not like either proposal , both rubbish. Liquidation at 72 much better option. But the amatuers are running things unfortunately.

Reply
Share
  • 0
  • 0

That's a reality/risk with most companies and if you believe as I do that markets are efficient most of the time the share price is a closer approximation to fair value than the Nta which does not deduct the npv of overheads.the rights issue price given that reality is therefore not an issue.if the price ex rights were to fall materially I'm sure given the new outlook buyers would come in to remove the discount.

Reply
Share
  • 0
  • 0

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot

Forex

Sym Price Change
USD 0.7284 0.0000 0.00%
AUD 0.9610 -0.0014 -0.15%
EUR 0.6506 0.0002 0.03%
GBP 0.5714 -0.0002 -0.03%
HKD 5.6802 -0.0002 -0.00%
JPY 81.0710 0.0590 0.07%

Commods

Commodity Price Change Time
Gold Index 1256.4 6.570 2017-06-23T00:
Oil Brent 45.8 0.340 2017-06-23T00:
Oil Nymex 43.0 0.270 2017-06-23T00:
Silver Index 16.6 0.140 2017-06-23T00:

Indices

Symbol Open High Last %
NZX 50 7553.6 7597.2 7553.6 0.55%
NASDAQ 6234.4 6269.4 6236.7 0.46%
DAX 12758.0 12787.2 12794.0 -0.47%
DJI 21380.9 21421.8 21397.3 -0.01%
FTSE 7439.3 7441.8 7439.3 -0.20%
HKSE 25727.9 25833.5 25670.0 0.60%
NI225 20132.8 20196.4 20132.7 0.10%
ASX 5715.9 5749.0 5715.9 0.08%