This article is from the Australian Property Journal archive
THE ongoing tussle between Cromwell and its takeover target Investa Office Fund has entered another round.
Cromwell, the largest single shareholder in IOF, has used its 9.83% stake in the fund to vote against an internalisation of some of the office fund’s management platform, in another show of its desire to have IOF under its control.
Cromwell has a $2.7 billion takeover proposal rebuked by IOF last year, which was revised upwards to $3 billion and has the two groups in ongoing – if frigid – discussion.
It yesterday described the IOF proposal as a “worst of all worlds” outcome for IOF investors.
IOF is pursuing a $45 million proposal to acquire a half-stake in the Investa Office Management platform, which oversees around $10 billion in office and commercial assets and is owned by the unlisted Investa Commercial Property Fund.
“The proposal is a compromised, related party transaction which materially benefits ICPF while offering limited value and marginal accretion for IOF investors at a cost of at least $45 million,” Cromwell said.
“There is little, or, at best, marginal, financial benefit to IOF investors: management’s own estimates indicate the proposal will add just 0.2 cents per security to funds from operations from 2018. The platform has a high cost structure resulting in minimal accretion despite being wholly debt funded – it is a structure that benefits management rather than investors.”
Investa told shareholders in recent weeks that it unanimously recommended shareholders approve of the move at a vote on May 31st.
The proposals “will facilitate greater alignment of the Management Platform with IOF’s strategic objectives, while securing a half-interest in the Management Platform for the benefit of IOF unitholders,” chairman Richard Longe said.
Longe said the proposal would not “preclude Cromwell or any other party putting forward a proposal for consideration prior to the IOF unitholder meeting to consider this proposal, or even following implementation of the proposed joint venture.”
Australian Property Journal
