Minorities win Metlifecare row
Metlifecare’s minority shareholders scored a $26 million victory yesterday, when it and the two retirement village firms it was seeking to buy were forced to shave almost a quarter off their original asking price.
The win emerged after a special meeting in Auckland, where shareholders voted in favour of an all-scrip acquisition of Vision Senior Living and Private Life Care Holdings (PLC) worth $87.3m. The deal will make Metlifecare one of New Zealand’s biggest private retirement village companies.
The figure was notably shy of the $113m price tag originally attached to the deal, and came after a six-week, behind-the-scenes stoush in which Metlifecare’s board and institutional shareholders fought over the perceived value of the smaller firms.
Metlifecare said the price offered a cheap way for it to balance its village profile by adding mature villages, plus those now in development, with the firms priced at about a 44 per cent discount to their net tangible assets.
However, shareholders were particularly concerned about Vision, which brought with it high debt and significant assets still in the development phase. Their continuing resistance forced Metlifecare to twice revise the deal.
After last year’s recapitalisation, Metlifecare was in great shape with an asset base that was generating strong recurring cashflows, Chris Gaskin, of Devon Funds Management, which owns a 6.3 per cent stake in the firm, said.
‘‘We were therefore reluctant to vote for the merger, unless it offered compelling value and strategic merit for Metlifecare shareholders.’’
The fate of the deal was put into the hands of minorities, after Metlifecare’s majority shareholder, Retirement Vil-
Special meeting: Anantomy of the offers Deal 1 lages Group (RVG), sat out the vote over related party conflicts through subsidiary Retirement Villages New Zealand, which owns PLC.
RVG is owned by Australian-listed FKP, whose managing director and chief executive, Peter Brown, serves as Metlifecare’s chairman. Vision, meanwhile, is owned through a private equity structure by Goldman Sachs and Arrow International.
‘‘We’ve been engaged very closely with our institutional shareholders throughout the process, and we’ve remained in communication with them, and the result that we’ve achieved is one that aligns the interests of all of the shareholders,’’ Metlifecare managing director Alan Edwards said.
The addition of Vision’s bank liabilities will now push the firm’s total debt levels from $184m now to $202m, representing 22 per cent of total assets.
In addition to the lower price, Metlifecare will also appoint two additional directors to its board as part of the deal.
Separate from the Vision and PLC deal, Metlifecare also told investors yesterday that a preliminary valuation of its properties by CBRE, a commercial real estate services company, showed that its net asset value was likely to fall up to 20 per cent from $578m at December 31 to $462.4m.
Metlifecare shares yesterday rose 4 cents to close at $2.20, on news about the meeting, about on par with where they were a year ago.