The shareholder taking legal action to try to stop Swedish giant EQT taking over Metlifecare for $1.27 billion says investors were not fully informed about the deal which was also too cheap.
Craig Priscott of ResIL Investments' company holds 1000 shares. He is being advised by lawyer Timothy Lindsay and he is making a "principled opposition" to the deal on behalf of the investors with 15m shares who voted against the deal a fortnight ago.
In a summary of ResIL's objections, Priscott said:
• "That the information provided to shareholders did not include all necessary and material information, such that shareholders could not make a fully informed decision as to the merits of the scheme;
• "$6 per share is not a reasonable price;
• "That Metlifecare bondholders are materially prejudiced by the scheme."
Priscott's company has lodged a notice of objection in the High Court to the scheme of arrangement which will give effect to the takeover of Metlifecare by Asia Pacific Village Group, owned by Sweden's EQT Infrastructure.
But a Metlifecare director Mark Binns, who backed the takeover, said: "This is a very, very small objector. Don't really understand why they are doing it. I am not the expert but the argument looks weak to me."
An EQT spokesman said they agree with the views expressed by Metlifecare's director Mark Binns.
The company said: "Metlifecare is considering the notice of opposition and will provide further market updates on the scheme process as are appropriate."
Priscott cited others opposing the takeover: "The New Zealand Shareholders Association, Salt Funds Management, and Mint Asset Management. This level of opposition is unusual for a scheme of arrangement but warranted in these circumstances. It is notable that those opposing the MET Scheme are primarily NZ-based shareholders with medium-term investment horizons. The MET Scheme is supported, however, by substantial foreign interests with a very short term agenda."
Metlifecare had sought to "trivialise ResIL's opposition in the media", he said.
Priscott's company has asked the Takeovers Panel to refuse the deal.
He cited an earlier offer at $7/share which was subsequently shelved, citing the lower price even though house prices had increased, interest rates had fallen and the share price of four listed competitors to Metlifecare had increased by on average 14 per cent lately.
"There was poor disclosure around the macro context in which the $6 Scheme was forced
upon Metlifecare by EQT, in particular the uncertainty around Covid-19 and house prices, the closed borders precluding alternative bidders, and in particular the significant presence of hedge funds on the Metlifecare register that were desperate to sell after the failed $7 Scheme. These factors skewed the deal in favour of EQT and against Metlifecare shareholders," Priscott said.
The role played by the hedge funds in the formation of the $6 scheme was not disclosed
at all in the scheme booklet, or in NZX releases.
"In particular, it appears from media reports that these hedge funds were so desperate to exit, that they sought to place inordinate pressure on the MET directors to conclude a transaction with APVG, at almost any price," Priscott said.
There was also a material prejudice for bondholders because if the scheme was implemented, they will end up losing many protections they currently enjoy: no requirement for independent directors, less disclosure as the shares will no be longer listed, and the new private equity owner might materially increase debt levels, Priscott said.
If the takeover goes ahead, those close to the deal have indicated Metlifecare could be delisted from the ASX and NZX before the end of this month.
Shares are trading on the NZX around $5.95 and on the ASX for between A$5.30 and A$5.60.
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