St Lukes Group and Westfield Trust propose amalgamation
31 May 2000
Countries: New Zealand
St Lukes Group, the premier shopping centre company in NewZealand, and Westfield Trust, the largest listed property trust inAustralia today announced a proposal to amalgamate their NewZealand shopping centre interests.
Under the proposal, which is subject to New Zealand High Courtapprovals and approvals by minority shareholders and convertiblenoteholders at meetings to be convened in July, Westfield Trust,which currently has a 46.4% interest in St Lukes Group, willachieve full ownership of the amalgamated company.
Investors in St Lukes Group will receive under the proposal atotal payment of NZ$1.70 in cash for each of their shares andconvertible notes, valuing the company at NZ$725 million.
The amalgamation procedure of the Companies Act (NZ), which isbeing pursued because of St Lukes Group’s complex capital structureinvolving three separately listed securities, requires theagreement of the independent directors of St Lukes Group to theoffer being proposed. The procedure also provides full transparencyand equality of treatment to all shareholders and convertiblenoteholders.
St Lukes Group Chairman, Bill Falconer, said: “The independentdirectors, advised by Ord Minnett, concluded that the price agreedwith Westfield Trust fully values the company taking into accountits future development plans and the future cost of capital.
“It represents a significant premium on recent share andconvertible note prices and is higher than the company could expectto generate itself for some while. The independent directorsconcluded that acceptance of the price offered would be in the bestinterests of shareholders and convertible noteholders.”
The proposed price of NZ$1.70 would result in St Lukes Groupshareholders and convertible noteholders receiving a cash sum thatrepresents a premium of:
- 30% to the volume weighted average price of St Lukes Groupshares over the past month;
- 28% to the volume weighted average price of St Lukes Groupconvertible notes over the past month; and,br>
- 18% to St Lukes Group’s stated net tangible asset backing pershare (at 30 June 1999).
In accordance with the provisions of the Trust Deed of St Lukescapital notes issued in July 1999, the amalgamated company willoffer to redeem the notes for par, which represents a small premiumon the recent trading price for the notes, plus accruedinterest.
Mr Falconer said that St Lukes Group has a major developmentprogram before it requiring around NZ$1 billion of new capital.
“Conditions for raising capital in international markets arelikely to be more favourable in the short to medium term for theamalgamated group which will be better able to access these in acost effective manner,” Mr Falconer said.
As part of the proposal, St Lukes Group shareholders andconvertible noteholders will be offered the opportunity to purchaseunits in Westfield Trust on market, free of brokerage and stampduty costs. This facility will be provided by UBS Warburg andenable eligible St Lukes Group investors to participate in anenlarged, more diverse shopping centre portfolio.
Westfield Managing Director Steven Lowy said: “The amalgamationrepresents a further commitment by Westfield to investment in NewZealand and a vote of confidence in the St Lukes portfolio whichwill be developed to deliver modern, world class shopping andentertainment facilities to New Zealand consumers.
“The Westfield Group has been involved with the properties since1997 and this move is further confirmation that we are positiveabout their prospects.
“The amalgamation is a positive step for Westfield Trustunitholders because it is expected to be accretive to incomedistributions and result in greater geographical diversificationfor the Trust’s high quality shopping centre portfolio.”
Westfield Trust will outlay NZ$569 million (A$457 million) toeffect the amalgamation. The Trust announced today it will raiseA$250 million through a private placement of 84.7 million units toinstitutional investors at a price of A$2.95 per unit. The issue isfully underwritten by UBS Warburg which has also advised WestfieldTrust on the proposal. The balance of the funding will be metthrough existing bank debt facilities.
St Lukes Group will commission an independent expert to assessthe proposal to determine whether it is fair and reasonable tominority shareholders and convertible noteholders, and aninformation memorandum and appraisal report will be circulated withthe notices of shareholder and convertible noteholder meetings.
A meeting of capital noteholders will also be held to vote onthe redemption of the capital notes.
The St Lukes Group development program, which follows majorredevelopment works already underway at the Glenfield and WestCitymalls, includes major capital expenditure at Riccarton Mall inChristchurch, Queensgate Shopping Centre in Lower Hutt and at StLukes, Manukau and Pakuranga shopping centres in Auckland; and thedevelopment of new centres at Newmarket and Albany.
St Lukes Group is the largest shopping centre company in NewZealand with seven centres in Auckland and one each in Hamilton,Wellington, Lower Hutt and Christchurch. The 11 centres have221,000 square metres of lettable area, about 1,000 specialty shopsand generated NZ$1.27 billion in retail sales in 1999.
Westfield Trust is Australia’s largest listed property trust witha market capitalisation of A$5.3 billion at 30 May 2000. ItsAustralian portfolio generated A$7 billion in retail sales in 1999and features 28 shopping centres with 1.85 million square metres oflettable area and over 5,700 specialty shops.
For further information please contact:
Bill Falconer SNZM (649) 3020894
Michael Sharp (612) 93587426 (61) 0419 414 753
Chairman, St Lukes Group General Manager Corporate Affairs,Westfield Bill Falconer CNZM (649) 3020894 Michael Sharp (612)93587426 (61) 0419 414 753 Chairman, St Lukes Group General ManagerCorporate Affairs, Westfield