THE largest unitholder in MacArthurCook Industrial Reit (MI-Reit) has slammed the firm’s proposal to raise cash by offering new units to certain big investors at a hefty discount.
The move has been branded ‘a totally unfair, value-destructive proposition’ by Mr Chris Calvert, the chief executive of the manager of Cambridge Industrial Trust.
Cambridge, which owns 10 per cent of MI-Reit, wants to oust MI-Reit’s manager and install itself so it can push through a ’superior’ plan it has yet to outline.
The initial showdown will come at the Nov 23 meeting where MI-Reit will ask unitholders to back deals aimed at meeting its immediate cash needs.
MI-Reit’s manager told unitholders in a statement yesterday that it has debts of $226 million due before Dec 31, plus a $90 million obligation to buy 1A International Business Park from Eurochem Corp by the same date.
‘MI-Reit does not have the money to repay the debt or to buy the property,’ it said. ‘Unless we obtain funding, there is a significant risk that MI-Reit will fail.’
A key part of the capital raising involves AMP Capital Holdings acquiring 16.1 per cent, or 78.6 million new units, via a placement at 28 cents per unit. This is a 31.7 per cent discount to the closing price of 41 cents on Nov 5.
About 142.9 million new units will also be issued to certain cornerstone investors, including 9.8 million to AIMS Financial Group.
AIMS is a substantial unitholder of MI-Reit and owns the Reit’s manager.
Cambridge said the proposal by MI-Reit’s manager to issue new units to AIMS Financial Group at 28 cents a unit represents a 41.5 per cent discount to its assessed value.
It has assessed MI-Reit in comparison with its own value. This values each MI-Reit unit at 1.1 Cambridge units, or about 47.9 cents given Cambridge’s market price.
This is a 34.9 per cent premium to MI-Reit’s closing price on Friday of 35.5 cents.
The price is also at a ‘massively value-destructive 70.2 per cent discount’ to MI-Reit’s net asset value of 94 Singapore cents a unit, it said.
Mr Calvert said AMP wants to put four properties into the trust that it is struggling to sell in return for units in MI-Reit.
In his opinion, the assets were not likely to add value to the portfolio, he said.
Cambridge wants to turf out the AIMS-owned manager and install its own. It has asked MI-Reit’s manager to hold an EGM on Dec 4 to allow unitholders to vote on the proposal.
‘We are looking for another 40 per cent of the unitholders to support our proposition,’ said Mr Calvert. ‘There are clearly a number … who have indicated that they will be supporting us.
‘We intend to put a superior proposition to MI-Reit unitholders.
‘If we can’t, one of our options is to wind up the trust… rather than have unitholders accept such destruction to their value,’ added Mr Calvert.
Securities Investors Association of Singapore chief executive David Gerald said: ‘We think MI-Reit unitholders need to ask what is the proposal that Cambridge is bringing.’
Source: Straits Times, 17 Nov 2009
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