Guinness Peat leads raid on Trans Tasman

By DANIEL RIORDAN

Trans Tasman Properties' institutional investors, led by Sir Ron Brierley's Guinness Peat Group, want the company wound up and its assets of $1.3 billion returned to shareholders.

The institutions' first step will be to block at Monday's annual meeting a proposal by Trans Tasman's controlling shareholder, Hong Kong-based SEA Holdings, to recapitalise the company.

The equity-to-debt recapitalisation would leave SEA, which now owns 54.8 per cent of Trans Tasman, with 100 per cent control.

GPG's New Zealand chief, Tony Gibbs, would neither confirm nor deny that GPG was leading the institutions' opposition to the recapitalisation, but he said GPG would be voting against the restructuring on Monday.

GPG was keen to see the company wound up, but he would not comment on what plans were in train to do so. "That's next week's story."

The Business Herald understand the institutions have the numbers to win on Monday.

To go ahead the recapitalisation requires approval from 75 per cent of voting shareholders.

Because SEA is not allowed to vote its 54.8 per cent stake, the recapitalisation can be blocked by shareholders who collectively own more than 11.3 per cent of the total shares on issue.

Institutions hold close to 16 per cent of Trans Tasman and are also understood to have the support of several major private investors.

The biggest institutional investor is US-based Grantham Mayo Van Otterloo & Co, with 6.3 per cent.

On March 9 (the date cited in Trans Tasman's last annual report) GPG held 2.9 per cent of the shares, National Mutual (AXA) 1.96 per cent and ACC 1.5 per cent.

Several other institutions - including Guardian Trust, Armstrong Jones and Trustees Executors - each held less than 1 per cent.

Investment managers at institutions contacted by the Business Herald declined to comment on their plans for Monday.

But one manager, who did not want to be named, said he was considering supporting a breakup.

Trans Tasman executive director Rod Hodge said he was unaware of the institutions' plans and would not comment further.

One recent independent valuation of the company (endorsed by directors) put its worth at 70c a share, but another valuer came up with 30c to 40c a share.

Independent analyst (and Herald columnist) Brian Gaynor has described the recapitalisation as an effective takeover by SEA and, in its kindest interpretation, "extremely cheeky."

Under the scheme, shares and convertible notes owned by investors other than SEA will convert to secured bonds issued by Trans Tasman. Shareholders will receive 35c worth of bonds for every share.

The bonds will pay 10 per cent interest a year and convert to cash in June 2011.

Noteholders will receive 35 $1 bonds, maturing in 2007, for every $1 convertible note.

Ordinary shareholders were being offered 35c cash in 10 years for a company with a book asset backing of 70.2c a share on December 31.

Mr Gaynor said the best outcome might be for noteholders to accept the proposal and for ordinary shareholders to take a longer-term view and reject it.

The company has been described as New Zealand's biggest private sector landlord, owning 32 commercial buildings as well as several major properties in Australia through its 50 per cent-owned subsidiary Australian Growth Properties (AGP).

Formed in 1995 by the merger of Tasman Properties (formerly Robert Jones Investments) and SEABIL New Zealand, it has been one of the market's worst performers, and has lost money for the past three years - $970,000 in 1998, $5.4 million in 1999 and $9.1 million last year.

On March 9, it had 13,400 shareholders and 2100 noteholders.

On December 31, it had total assets of $1.3 billion, shareholders' equity (including its interest in AGP) of $612 million and cash of $18 million.

Its shares closed yesterday at 23c, giving it a market capitalisation of $172.5 million.