DNZ's $130 million capital raising runs into opposition

Financial specialist MMG Advisory Partners is opposing DNZ Property Group's $130 million capital raising and listing on the NZX next month.

Investors in the unlisted DNZ have received letters from MMG, formerly Money Managers and now under new ownership, telling them the deal is bad.

The mainly retired investors in DNZ - the revamped Dominion Funds - bought into the business via Money Managers but now DNZ wants to list a week before Christmas and almost double the number of shares on offer.

Money Managers copped flak over many of its schemes in the past few years but the revamped MMG has now turned watchdog and sharemarket activist on the DNZ deal.

MMG said it was "strongly opposed" to the equity capital raising and the $43 million buyout of Paul Duffy and Alastair Hasell's management contract which will set a New Zealand record, $10 million higher than any previous sales.

DNZ, with assets of $730 million, has a punitive debt burden and MMG wanted it to sell property instead of listing.

Existing shareholders will see their five DNZ shares consolidated into two in the new deal. The listing was good for Duffy and Hasell "but comes at a cost to existing shareholders like you", MMG said.

Shaun Anastasi, MMG's communications manager, said 18 months of attempting to persuade DNZ to take a different approach had failed.

"The benefits of DNZ's offering are heavily weighted in favour of the management company and new investors. That comes at the expense of our own clients who make up the bulk of DNZ investors.

"Not only will the terms of the IPO have a negative impact on our client's capital in the short to medium term, they are particularly problematic for many of our retired clients who rely on DNZ dividends for their personal spending needs.

"We believe that our clients deserve better, particularly given the support they've shown DNZ and its management," Anastasi said.

DNZ's prospectus says it is floating to pay Duffy and Hasell and axe debt.

Buying out Duffy and Hasell will cut costs and align manager and shareholder interests. Improved governance, stronger shareholder rights via a new constitution and enhanced liquidity when shares trade on NZX are other reasons cited.

Tim Storey, DNZ's chairman, said directors believed the deal would provide new and existing shareholders with opportunities and benefits.

DNZ PROPERTY GROUP

* NZX listing on December 17.
* Aim is to raise $130 million.
* Offer is fully underwritten.
* Prospectus issued this month.
* 188.5 million shares already issued.
* 158.5 million new shares are offered.
* 26.2 million shares will go to managers.
* That will result in 373.2m shares trading.
* $306.1m market capitalisation expected.