TTP about-face on future plans

Trans Tasman Properties is planning to spin off its New Zealand assets and move its primary listing to London to raise capital to finance its Hong Kong property developments.

The proposal comes just months after chairman Don Fletcher assured shareholders the company had no intention of quitting its New Zealand listing, despite moving its head office to Singapore at the start of the year.

The company, 61.3 per cent owned by SEA Holdings New Zealand, yesterday said it was proposing a "reconstruction" involving the separation of its Australasian and Asian assets.

Its Asian assets would be held in a new company, initially called Newco, which would be domiciled in Bermuda and listed on the London Stock Exchange Alternative Investment Market (AIM). The Australasian assets will continue to trade on the NZX as Trans Tasman Properties.

All or some of Newco's shares will be offered to shareholders in exchange for existing shares on a pro-rata buyback basis.

"The separation will provide a clearer focus for each company and the respective management teams," Trans Tasman said.

While the rejigged Trans Tasman Properties would remain in New Zealand, "it's fair to say about 75 per cent of the assets will shift offshore if the shareholders agree", said Fletcher.

Asked if yesterday's announcement was at odds with his earlier assurance given at Trans Tasman's AGM in May, Fletcher replied: "Yes, to some extent."

However, he said he was comfortable with his apparent about-face. "Circumstances change, it has become evident that we have the opportunity to grow in Hong Kong and China, and it's my job that we position the group for that growth.

"I did not have it in mind at the AGM but, upon examining it over the last few months, I've come to the conclusion that it's the right deal to put to shareholders."

Last year, Trans Tasman sold 11 properties in New Zealand for a total of $261 million and bought a shop and three development sites in Hong Kong.

Fletcher said Trans Tasman's ratio of assets in Asia had increased as the company moved capital to Hong Kong in preparation for construction at its three big developments.

The move to the London market was driven by "capital requirements going forward".

Fletcher said testing of the New Zealand market showed little appetite for large capital raisings for offshore investment, whereas the London Stock Exchange had been "aggressive" in attracting the company.

Trans Tasman shares, which have consistently traded below their net asset backing in recent years, closed 3c higher at 49c yesterday.

Hamilton Hindin Greene broker James Smalley said the proposal was "a no-lose situation" for investors.

"This can only be seen as positive. It means management is acting proactively to try and increase the value of their holdings by offering exposure to other investors."
State of play

January: Trans Tasman Holdings moves its head office to Singapore.

May: Chairman Don Fletcher tells the company's annual meeting there are no plans to quit its New Zealand listing.

Yesterday: Trans Tasman announces plans to shift most of its holdings to the London Stock Exchange.