Kirkcaldie board ups ante in fight with Brierley

Ron Brierley raised his offer to $3.00 a share yesterday, one cent above the liquidation value of the shares under the board's low scenario. Photo / Natalie Slade

Kirkcaldie & Stains' board has emphasised the prospect of an increased payout to shareholders as it urges them to reject an increased bid for the department store's remains by veteran corporate raider Ron Brierley.

Brierley raised his offer to $3.00 a share yesterday, one cent above the liquidation value of the shares under the board's low scenario.

The board had initially set out a range of values for the money to be returned from liquidation, from its low scenario of $2.99 to a high scenario of $3.49. However, today's announcement emphaises the prospect of a higher payout range - between $3.08 and $3.58 depending on the outcome of a deal on its lease of its Pantry premises.

In a statement to the NZX on April 18, Kirkcaldie's said it had entered a conditional dead of surrender of its lease for the Pantry premises on April 15, dependent on the landlord entering a new lease with a prospective tenant, and separately on David Jones reinstating the wall between their premises and the premises of the Pantry lease by May 31.

The statement added that this would mean the low scenario increasing by 9 cents to $3.08, but made no reference to the high scenario range increasing to $3.58. Brierley has also extended his offer until June 12.

In a statement to the NZX, the Kirk's board said this "provides shareholders with a more useful period to reflect on the offer". They said that over the next six weeks there are strong prospects that Kirk's position in relation to leases will be clarified. Kirkcaldie has three leases to exit - the Petone lease, the Pantry lease and the Thorndon Quay lease.

The $2.99 low scenario was calculated assuming the company would have to pay out the full terms on all three leases, which in Petone extends until April 2023 at a cost of about $1.4 million, making it the company's most significant ongoing liability.

In his offer note to the NZX yesterday, Brierley warned Kirk's shareholders that "liquidation is more than a year away and, if it becomes controversial, costs could skyrocket above the $100,000 provided".

Kirk's chairman Falcon Clouston disputes that, saying the board aims to commence liquidation in under a year "and to position the company for an early and substantial distribution of surplus cash.

The board is also unaware of any matter which would make a liquidation controversial". Investors struggling to get to grips with the complex leases and offers will also have to deal with another matter; that under the terms of the agreement to sell its Lambton Quay store to David Jones, Kirkcaldie & Stains has to change its name prior to the completion of the refurbishment and the new David Jones store opening for business.

The Kirk's board said it had "started the process of consultation with David Jones as to the possible names and timing for the required change. We will keep you informed in order that any change of name does not cause confusion".

Shares in Kirkcaldie & Stains were unchanged at $3.13 and have risen by 100 percent since the start of the year.