Trans Tasman shareholders urged to accept SEA bid

The three independent directors of Trans Tasman Properties (TTP) have all recommended shareholders accept a 55c a share takeover offer from SEA Holdings NZ.

SEA, which owns nearly 53 per cent of TTP, first offered 51c a share in early July.

On Monday SEA lifted the offer after independent adviser Ferrier Hodgson valued the shares in the 51c to 59c range, with a base case valuation of 52c a share.

In a letter published today, the independent directors -- John Ferner, Carl Peterson and Warren Wilton -- said based on their discussions with SEA they did not consider it likely SEA would increase the offer price.

But that possibility could not be ruled out, given SEA's intention to privatise TTP.

The 55c offer was a 20 per cent premium to the 46c volume weighted average price of TTP shares in the year to June 15, the day before SEA issued its takeover notice, the independent directors said. On June 15 the closing price was 46c.

The offer is due to close on August 7 and is conditional on SEA gaining control of 90 per cent of TTP's voting rights.

If it is successful SEA intends to compulsorily acquire any shares it does not then own and de-list TTP from the NZ stock exchange.

Ferrier Hodgson calculated the net tangible assets of TTP to be about 63c a share, but said that did not take into account the substantial administration and overhead costs of TTP.

It also did not include potential development profits available to TTP if it successfully developed any of its properties, Ferrier Hodgson said.

Since 1995 TTP had steadily transformed itself from a passive property investor, deriving most of its revenue from rents, to an active property developer.

As such, it was significantly different from other property-owning entities listed on the NZ stock exchange, Ferrier Hodgson said.

At June 30 TTP's properties had a combined book value of $79.3 million, while total net assets were put at $104.5 million.

Most of TTP's property assets were medium to long-term development projects.

As such their value was highly dependent on rezoning applications, construction costs and property market conditions in the next five to 10 years, Ferrier Hodgson said.

It had properties in the Auckland Viaduct area, Queenstown commercial area, residential and rural areas of Christchurch, and a strata title commercial development in Sydney.

The target company statement, dated yesterday, shows the Accident Compensation Corporation holding 5.5 per cent of TTP's shares.

The second largest shareholder is listed as New Zealand Central Securities Depository Ltd with 23.7 per cent. That company did not appear in the Ferrier Hodgson report as one of TTP's 20 largest shareholders as at June 23.

Slightly more than 155 million TTP shares are now on issue, of which nearly 825,000 are to be bought by TTP and cancelled as a result of minority buy-out rights.

The takeover bid is SEA's second, after an unsuccessful attempt in 2004 which ended with SEA holding 61 per cent of TTP.

In January 2005 TTP moved its head office to Singapore having bought three substantial development sites in Hong Kong.

Then last December shareholders voted in favour of a special resolution to reconstruct the group and list the group's Asian assets held by wholly-owned TTP subsidiary Asian Growth Properties (AGP) on a London Stock Exchange market.

All shareholders were offered AGP shares in exchange for their TTP shares and elected to convert 424 million of them, reducing the number of shares on issue in TTP to 156 million, SEA's shareholding in TTP was reduced to slightly below 52 per cent.

In May TTP's head office moved back to Auckland.

- NZPA