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National Property Trust transaction seen as fair by report

Fuseworks Media
Fuseworks Media

Wellington, July 8 NZPA - A report on a proposed buyout of National Property Trust's manager sees value in turning the trust into a listed company with $550,000 of savings in the first year.

The trust is proposing that management rights held by the manager be relinquished for $2.5 million, 31.9 million units held by the manager be repurchased at 51 cents each, and that unit holders exchange their units for shares in a listed company. The two payments to the manager total $18.8 million.

A notice of meeting, a report by Northington Partners on the proposal, and a report from Grant Samuel & Associates on the trust compared to other listed entities are being mailed today.

The trust has previously said that the Cushing family, which was part of a move by 10.31 percent of unit holders to force a meeting to remove the manager, supports the plan.

The manager of National Property Trust, The National Property Trust Ltd, is owned by St Laurence Ltd, which was placed in receivership by its trustee, Perpetual Trust Ltd on April 29.

Unit holders vote at the annual meeting on July 30 on a resolution to develop the details of the plan and will vote by November 30 on the plan.

The Northington Partners report says the conversion of the trust to a company has a number of benefits.

"We suggest that a company structure will allow for an overall improvement in governance and accountability, but also eliminate the potential for any misalignment of interests, real or perceived, between the manager of the assets and the ultimate owner of the assets.

"Once the internalisation of management is complete, the board of NewCo will only be concerned with the interests of the shareholders," the report says.

It acknowledges that some of the benefits of the proposed transaction would be achieved without any payment to the manager but sees implementation risks with the approach.

About $550,000 would be saved in the first year as a result of the proposal.

"We conclude that the proposed transaction is fair to all existing unit holders not associated with The National Property Trust Ltd."

It said key stakeholders in the trust have told the manager that they believe its current position is untenable, and that structural changes are therefore needed.

"Although we have not fully considered all of the restructuring alternatives available to the trust, there do not appear to be any other obvious alternatives to the proposed transaction that are capable of delivering demonstrably better outcomes for unitholders."

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