Friday 7th April 2017
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Augusta Capital has paid a 17 percent premium to double its stake in real estate investor NPT, putting more clout behind its bid to replace the board and block a deal giving management control to Kiwi Property Group.
Auckland-based Augusta bought about 15.5 million shares at 68 cents apiece from investors including the Accident Compensation Corp and the New Zealand Superannuation Fund, lifting its ownership of NPT to 18.9 percent from 9.3 percent, notices to the NZX show. That was a premium to the 58 cents that NPT shares closed at yesterday. Today the stock rose 5.9 percent to 62.5 cents.
The acquisition comes ahead of a special meeting on April 21 where NPT shareholders will be asked to vote on approving a deal to buy two buildings from Kiwi Property for $230 million. The purchase would be funded through a sale of $93.9 million of stock and the issue of shares at 61 cents apiece to Kiwi Property, which would end up with a 19.99 percent stake. In addition, Kiwi Property would buy NPT’s management contract for $6 million.
The Kiwi Property deal trumped an alternative proposal put forward by Augusta, which was subsequently withdrawn. Augusta still wants to spill NPT's board, which is also on the agenda for the meeting this month.
"This week’s acquisition of shares in NPT is consistent with our long-standing plan to grow our funds management business and significantly, it strengthens our position ahead of the NPT special meeting," Augusta managing director Mark Francis said in a statement. "We believe the current board is completely out of touch with its shareholders in recommending this deal." Augusta Capital wants to remove two of the current board members and had sought the ouster of chairman John Anderson, who has since stepped down.
Augusta has the support of fellow NPT shareholder Salt Funds Management, which owns 16.9 percent and has been critical of the Kiwi Property deal, calling it an "unacceptable transfer of value" from NPT shareholders to Kiwi Property. Salt Funds managing director Matt Goodson has written two open letters criticising the deal over the mismatch between the price being paid for the buildings and the discount Kiwi Property would get in buying back into NPT. He has said he'd prefer NPT to externalise its management contract or sell assets to return capital to investors above the Kiwi Property transaction.
NPT's board has pushed back against shareholder opposition, playing down Salt Funds' concerns and saying that the only thing that had materially changed since Kiwi Property's deal was the fall in NPT's share price.
Augusta's Francis said his firm intends to vote against the Kiwi Property deal, saying it's "skewed heavily in their favour" and that it falls short of "what we consider to be fair and reasonable for NPT shareholders".
Augusta bought into NPT in September last year, buying a 9.3 percent stake from ACC's investment arm at 73 cents a share, a 14 percent premium at the time.
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