04 Jun DNZ Confirms Management Contract Buyout
DNZ Confirms Management Contract Buyout 4/06/2010
The Board of DNZ Property Fund today confirmed that conditional agreement had been reached on a $32 million termination of the existing management contract with the management function of the $700 million portfolio to be brought in-house.
An additional $3m will be paid for the Diversified NZ Property Fund management contract also held by DNZ Management.
Subsequent to a combined payment of $35 million in cash, $10 million is to be reinvested back into DNZ Property Fund.
DNZ Chairman Tim Storey said the board had unanimously agreed to a figure well below either of the previous independent valuations provided by Northington Partners and Deloitte.
“It’s still a significant sum but it is at a level that will ensure real benefits to shareholders. We have also discussed this with MMG Advisory Partners and members of the Money Managers Action Group.”
“Both groups agree we have to move the company forward to begin restoring value. On that basis they accept the management contract has to be bought out and the management function internalised and they have indicated their support for the terms the independent directors have negotiated.”
“Paul Duffy will remain as CEO as we believe his in-depth knowledge is important for our plans to restore a level of shareholder value that is more reflective of the Company’s $700 million property portfolio.”
Mr Storey added that following the successful negotiation over the management contract the Board and the management team had two short-term goals – managing debt to an appropriate level and taking the right steps to ensure the Company is well-placed to continue the task of restoring shareholder value.
“Internalising the contract and adopting a new constitution means we will no longer have two classes of shareholder, removing a significant impediment to any listing plans.”
“Debt will be used to fund the buyout of the management contract and we will continue to manage debt levels through our ongoing controlled asset sales in the short term. We will make a separate announcement shortly on our capital raising plans.”
DNZ Property Fund will hold its Annual Meeting in Auckland, with the date and venue to be finalised shortly.
Mr Storey said shareholders and the market could expect further information in the Notice for that meeting but the recent shareholder briefings and Special Meeting made it clear where the future direction of the Company lies.
Further detail on the contract buyout is available on the DNZ website.
Following the successful contract negotiation the share trading halt on DNZ shares on the Unlisted market will be lifted on Tuesday 8 June.
“As we go through the process of making these significant changes to the Company, the Board urges shareholders to review all available information and to speak to their financial advisers before making any decisions regarding their investments.”
For Further Information Please Contact:
Tim Storey, Chairman, DNZ Property Fund Limited
Mobile: 021 633 089 – Email: [email protected]