Metlifecare open to change

All options are on the table as far as potential changes to Metlifecare’s capital structure including ownership, chairman Gregory Flood told shareholders yesterday.

The NZX-listed retirement village operator has hired investment bank Goldman Sachs to carry out a strategic review of its capital and ownership structure and look at ways to improve its share trading liquidity.

This has led to speculation the company may consider a share issue with its largest shareholder Retirement Village Group possibly selling down its 82% stake.

Mr Flood told shareholders at yesterday’s annual meeting in Auckland to expect an announcement on the outcome of that review within the next 10 days.

“We haven’t locked Goldman’s down in any way but what I can say is all of those things will be canvassed in the review.

“What the outcome of it might be I can't say until the board decides and on any sell down, I cant comment, that’s up to the board of RVG.”

RVG is a joint venture between Macquarie Bank and Australian property company FKP, whose $341 million takeover bid for Metlifecare fell short of the 90% compulsory acquisition target back in 2005 when Fisher Funds rejected the $3.90-a-share offer.

Fisher continues to hold 8.7% of the company.

Metlifecare, which has 16 retirement villages aimed at the upper end of the market, reported a profit of $20.8 million for the year to June, down from $67.5 million in 2010.

The company reduced bank debt by $44.5 million to $124 million during the year after selling its Merivale village in Christchurch just a fortnight before the February earthquake struck.

However the company’s share price of about $2 continues to trade at a significant discount to net tangible assets of $4.29 a share.

Mr Flood told NBR the business was travelling well and the board wished to close the gap between share price and NTA.

“Given that we are now in a position now where our debt has been reduced substantially in the last 18 months, where our operating numbers are going very well, sales seem to be travelling well, it’s a time to review our growth options and review our dividend policy and see what options are available to try to get our share price closer to NTA.

“The market for us is quite healthy at the moment. We’re seeing some quite good monthly results and have for a number of months now.

“It’s hard to say what the reason is. We got hit very seriously by the tax changes on the depreciation last year – our market dried up for a period of time - but the market has now recovered.

Metlifecare makes most of its money (revenue last year of $65 million) through sales and re-sales of its retirement units.