DNZ Property elects to buy out management contract

Monday 17th May 2010

DNZ Property Fund, the property investor that had a capital raising exercise slapped down by shareholders last year, will buy out its controversial management contract with Paul Duffy and Alastair Hassell.

Chairman Tim Storey said the new board unanimously decided to internalise the company’s management structure and “do away with the previous A and B shareholders structure, which is a major impediment to listing the company.”

The price will be “considerably below the bottom end” of the two independent valuations by Deloitte and Northington Partners, and the price agreed with the manager last year, he said. The two firms put the value of the contract at between $40 million and $51 million, and Hassell and Duffy offered to end it for some $43 million in November.

The contract came to the fore during the company’s unsuccessful bid to float on the NZX when shareholder MMG Advisory rallied investors to shoot down the proposal. The rumblings caused new director Simon Botherway to step down from the board, and resulted in a special general meeting that elected MMG’s David van Schaardenburg last week.

“We heard the issues but we also clearly understood that shareholders want us to move forward and put the company on a footing that will lead to improvement of value in their shares and a sustainable dividend policy,” Storey said in a statement.

As part of the deal, Duffy will stay on as chief executive, and it will use its asset sale programme to buy out the contract.

DNZ Property Fund grew out of the relationship between Dominion Funds and Money Managers, and has a portfolio value of some $700 million. Storey said the company will put forward an equity raising proposal at its annual meeting in June or July.

Businesswire.co.nz

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