Growthpoint vs Redefine likely to be resolved in the courts?

Posted On Thursday, 18 April 2013 11:46 Published by eProp@News
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The battle between listed property heavyweights Growthpoint Properties and Redefine Properties for a R10bn blue-chip retail portfolio flared up anew on Wednesday, with Growthpoint digging in its heels and indicating that it has no intention of giving up on its bid.

Growthpoint vs Redefine likely to be resolved in the courts? Analysts say it is now highly likely that Growthpoint CEO Norbert Sasse and Redefine CEO Marc Wainer will only see the matter settled in the courts, where "nobody can say with a high level of conviction what the outcome will be".

A month ago, Redefine Properties looked to end the escalating bidding war by withdrawing its offer for Fountainhead Property Trust’s portfolio and subsequently acquiring a 46% stake in Fountainhead — a move that makes it difficult for Growthpoint to win a unitholder vote to secure the assets.

Redefine said it had withdrawn due to the negative effects on its ability to run Fountainhead’s business due to delays and uncertainty.

Redefine bought Fountainhead’s management company for R660m last August before opening talks on the trust’s assets.

Growthpoint made its first offer for Fountainhead’s assets in October, and maintained a higher offer throughout the escalating bidding war, which ended with Redefine’s withdrawal last month.

Fountainhead’s assets include premium properties such as Centurion Mall, Brightwater Commons and Bryanston Shopping Centre.

Late last month, Fountainhead board’s independent committee terminated its engagement with Growthpoint on its bid.

However, Growthpoint said on Wednesday that it had referred the matter to the JSE and requested that Redefine be precluded from voting on all resolutions, given the "conflict of interest between Redefine, the management company and Fountainhead unitholders".

The Redefine-owned management company was also a related party in terms of the JSE’s listings requirements.

Growthpoint believes a positive ruling from the JSE will allow it to re-enter discussions with Fountainhead’s independent committee regarding its offer.

Growthpoint has also requested the Financial Services Board (FSB) to investigate Redefine’s initial acquisition of Fountainhead units and determine whether Redefine had contravened the Security Services Act.

Growthpoint executive director Estienne de Klerk said that, given Growthpoint’s significantly higher bid, "we think it’s incorrect that a party — who is conflicted — can block that and effectively deprive Fountainhead unitholders of the opportunity to make more money".

Growthpoint was still eager to acquire the assets, and believed there was "enough substance to the situation for the JSE to rule that Redefine can’t vote their shares", Mr de Klerk said.

Catalyst Fund Managers investment manager Paul Duncan said that the matter was now "likely only to be resolved in the courts" as each party would probably challenge the rulings of either the JSE or FSB.

"I don’t think anybody can say with any high level of conviction what the outcome will be if it goes to the courts because there’s no precedent," he said.

Growthpoint seemed confident of its case, while Redefine had little choice other than to challenge a negative ruling as the company had R660m at stake in the form of the management company.

Mr Duncan said the matter would end up in court "unless there’s a clever way of getting out of this", such as Redefine accepting Growthpoint’s offer for Fountainhead’s assets and offsetting the management company expense with capital gain on its Fountainhead investment.

However, this was unlikely, he said.

Growthpoint also said it was considering various legal alternatives.

It was "prepared to take whatever actions are necessary to get to a point where Fountainhead unitholders are able to consider the Growthpoint offer free of litigation or influence from Redefine".

Source: BD

Last modified on Monday, 20 May 2013 13:12

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