NPT board considers other offers following Augusta's hostile bid

Listed property investor NPT's board, which Augusta Capital is attempting to oust, says it is considering other proposals and has asked NZX for guidance on aspects of its rival's expansion plan for the trust.

Augusta last month announced it is seeking a special meeting of NPT shareholders where it wants to dump chairman Sir John Anderson and directors Jim Sherwin and Tony Sewell, replacing them with its own chairman, Paul Duffy, and independents Bruce Cotterill and Allen Bollard.

Augusta would also use the forum to put a proposal in front of the property group's shareholders for NPT would buy three buildings worth $329 million so Augusta could buy the management contract to build "a meaningful listed entity that generates greater returns than are being realised," it said.

NPT's board says it was already considering other proposals about the time that Augusta presented its proposal.

"Due consideration will be given to all of these proposals. NPT has engaged with external expert advisers to provide a robust assessment of the merits of each proposal," the company says.

Since the Augusta proposal was disclosed to the market, new parties have expressed interest in submitting proposals and the board is open to reviewing these as well, it says.

"The board is committed to ensuring that through this process of evaluation the best interests of the company and all its shareholders will be foremost in its mind. Once all aspects of the proposals have been fully assessed the board will be in a position to provide a further update to the market."

Augusta paid a 14% premium to take the stake in NPT at 73c a share in September, saying at the time it saw value in acquiring a cornerstone stake from the Accident Compensation Corp. Augusta shares last traded at $1.02 and are up 2% this year, while NPT stock gained 2.9% to 70c and has barely budged in 2016.

Augusta wants NPT to buy three office buildings, one of which is under construction, worth a combined $329 million at the net tangible asset price in an uncontested process and would support a $185 million issue of new equity to help buy the assets.

Augusta also wants to buy NPT's management contract for $3.5 million, a premium to the $2.5 million paid to internalise it in 2010, with an initial five-year term and automatic right renewal.

The expanded property portfolio would increase NPT's assets under management to about $505 million, which Augusta estimates would more than triple net profit by 2020 to about $18.3 million. Augusta would look to pocket base fees of $1.7 million in 2018, rising to $2.5 million by 2020.

The vote will largely hinge on whether Augusta can win over NPT shareholders Salt Funds Management, ANZ New Zealand Investments, and Westpac, which collectively own about 46% of the property investor.

Augusta, whose biggest shareholder is managing director Mark Francis with about 17%, counts all three fund managers as substantial shareholders, with ANZ topping up its stake in Augusta to about 12%.

(BusinessDesk)