Augusta Capital has dropped its High Court proceedings seeking orders requiring listed property investor NPT to call a meeting of shareholders to discuss its hostile bid, with a notice of meeting to be issued in February.
A hearing had been set for Feb. 10. Augusta wants to oust NPT chairman John Anderson and directors Jim Sherwin and Tony Sewell, replacing them with its own chairman Paul Duffy and independents Bruce Cotterill and Allen Bollard.
It was seeking a shareholder meeting to vote on the board and use the forum to propose buying three buildings worth $329 million so Augusta could buy the management contract.
Augusta's proposal, along with an alternative deal from Kiwi Property Group which has won the backing of the target's board, will be put to shareholders at the meeting.
NPT chairman Anderson said in a statement that the board and management were pleased the matter, which he described as an "unfortunate distraction", had been concluded.
"The proceedings were not constructive," Anderson said. "We are very committed to engaging with shareholders as soon as possible on the very important matters before the company."
Auckland-based Kiwi Property plans to sell the North City Shopping Centre in Porirua and Majestic Centre in downtown Wellington to NPT for cash and shares worth $230 million, with NPT raising $100 million of new equity as well as a $50 million issue to Kiwi Property for a 19.9 per cent stake to help fund the deal.
"We will make every effort to hold this shareholder meeting in February, but are conscious that the process of due diligence of the Kiwi Property assets, negotiation of terms, and preparation of the shareholder information memorandum may mean this is not possible," Anderson said.
"In the event of a delay, we certainly expect to be in a position to issue a notice of meeting in February, with a view to holding the meeting soon thereafter."
If the Kiwi Property transaction is backed by NPT shareholders, it would expand the company's portfolio to $400 million from its current $170 million, and more than double distributable income to $16.8 million by 2020 from $5.8 million in the 2017 financial year.
We are very committed to engaging with shareholders as soon as possible on the very important matters before the company.
That compares to the Augusta bid which 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.
NPT internalised its management contract in 2010, paying $2.5 million to end a relationship with National Property Trust Ltd, a vehicle in the group of failed lender St Laurence. That came at a time when the structures were seen as unfairly rewarding external managers at the expense of investors by basing fees on the value of gross assets under management.
Augusta took a 9.3 per cent stake in NPT on Sept. 16, in a deal with the Accident Compensation, buying shares at 73 cents apiece, above the then market price of 64 cents.
NPT shares last traded at 66 cents, down 3.6 per cent in the year, while Kiwi Property shares were at $1.44, having increased 6.3 per cent in the year. Augusta shares last traded at 97 cents, virtually unchanged in the past year.