This article is from the Australian Property Journal archive
THE Challenger Kenedix Japan Trust has recommended investors accept the takeover bid by Challenger Financial Services insurance arm Challenger Life Company Limited.
The independent directors have unanimously recommended the proposal in the absence of a superior proposal.
CLC has offered CKT investors a cash price of $1.00 per CKT unit, representing a premium of 49.0% over the adjusted closing price on December 08 of $0.67, being the last day prior to this announcement.
However, the independent expert, Deloitte Corporate Finance Pty Ltd, has provided an opinion that the offer, while not fair, is reasonable and is in the best interests of CKT unitholders.
CKT fund manager Brett McCarthy said whilst CKT’s operational performance continues to be strong, the trust faces a number of external challenges that have contributed to the discount at which CKT units trade relative to net tangible asset backing.
“Market conditions in Japan remain difficult, with continued pressure on asset values reflected in updated November 2009 valuations reducing the appraisal value of the portfolio by 4.7%, which translates into a reduction in pro-forma NTA to $1.80, compared to $2.02 at 30 June 2009.
“These asset devaluations have reduced covenant headroom, and together with a more constrained lending market in Japan, will most likely require CKT to raise additional equity prior to the refinancing of existing debt facilities in 2012.
Chair Brenda Shanahan said given the challenges facing CKT, the CLIL board has been proactive in considering a range of strategic options to maximise unitholder value including maintaining the status quo, a recapitalisation via an equity raising and / or selected asset sales, an orderly wind up, a merger with another REIT and inviting proposals for the acquisition of CKT.
Propertyreview.com.au