Shareholder group joins battle

John Hawkins. Photo / Dean Purcell

The Shareholders Association has stepped into the messy Vital Property Trust squabble, calling for its manager to be paid $8.5 million less than the deal now on the table.

John Hawkins, association chairman, wants a $5.5 million severance payment to ANZ Bank's OnePath, a much-reduced figure on the $14 million deal now before investors but more than three institutions are demanding after they suggested zero.

"In our view, a figure of $5.5 million [before any tax considerations] to buy out the management contract seems a reasonable balance point. If the independent directors are able to obtain agreement from OnePath at this level, the association would vote any proxies we hold in their favour," Hawkins said yesterday.

Vital's management payout to OnePath became messy when rival real estate manager Ascot stepped into the fray and then a group of powerful institutional investors with a 15 per cent stake demanded the manager be sacked and no severance payment be made.

Ascot - led by ex-South Canterbury Finance chief Sandy Maier, David Glenn and Craig Priscott - wants to reduce the $14 million internalisation proposed by Vital's manager to between $3.1 million and $4.5 million.

Ascot wrote to Vital unitholders seeking support and Hawkins raised the prospect yesterday of Ascot winning the battle.

"If the Ascot proposal receives votes representing 75 per cent of units, it would result in the manager being dismissed for a one-off payment of $3.1 million. Ascot would be appointed to run the trust short term, subject to the trustee agreeing, while making arrangements to internalise the management.

"Ascot would be paid under the existing fee structure for acting as manager - approximately $4.2 million annually. Ascot have advised the association they would not seek any additional bonus payments that might accrue as a result of increases in the unit price. Once internalisation is completed, Ascot would step away taking a one-off fee of $1.4 million for facilitating the deal," Hawkins said.

On July 14, Accident Compensation Corporation, Westpac Banking Corporation and BT Private Selection and NZ Superannuation Fund, collectively holding 15 per cent, demanded a meeting, criticised the $14 million deal and said $2 million would be sufficient to cover management costs while internalisation was effected.

Ascot's Priscott claimed victory in driving down the price and said he was delighted at the Shareholders Association's moves.

MAKING AN OFFER

Vital Property Trust

* 14 properties worth $517m.
* Management by ANZ's OnePath.
* $14m to exit management proposed.
* Shareholders Association wants $5.5m.
* Ascot wants $3.1m-$4.5m payout.
* Institutions want manager sacked, no payment.
* Investors yet to decide when they meet.