Trans Tasman takeover offer unlikely to please

By Chris Hutching

Friday 2nd April 2004

Trans Tasman Properties minority shareholders may have cause to feel they are once again being shortchanged by majority shareholder SEA Holdings.

After years of dissatisfaction and court action from some minorities advocating a takeover, Bermuda-based Hong Kong-listed SEA this week announced that it would launch a full takeover for the 40.03% of shares it does not own.

Trouble is, the 40c a share takeover price on offer is a little short of the net asset backing of 63c a share, ensuring a protracted takeover similar to Shotover Jet where a handful of shareholders have held out.

The minority shareholders have been suspicious that SEA's strategy for Trans Tasman is to repatriate profits overseas at their expense. For example, SEA vetoed a shareholder call to distribute proceeds from the recent sale of Australian property assets.

Minorities have also been unhappy that Trans Tasman executive chairman Don Fletcher has been working as SEA's agent in this country on other potentially lucrative residential property developments, namely Jack's Pt at Queenstown and a plot of land in Northland at Te Arai, both associated with developer/investor John Darby.

Even the way the takeover was announced aroused suspicion because Trans Tasman obtained a trading halt and only announced the bid price at the end of trading. In the interval the share price rose to 45c a share, still well short of asset backing. In one of the court actions brought by minority shareholder John Powell last year he sought to enforce SEA to make a full bid at 55c a share (before the sale of the Australian properties).

Minority shareholders were also quick to point out that Trans Tasman failed to note the 63c a share asset backing last month when it reported a surplus of $40 million, about half of it from the sale of Australian assets. In keeping with past practice, the board declined to pay a dividend.

In a letter to shareholders this week, Mr Fletcher announced the offer would close on May 20 and that the price represented a premium on recent prices. In his letter he noted that not all the Trans Tasman shareholders shared SEA's strategic plan "which has centred around property

investment and development in Australia and New Zealand. During 2003 and 2004, Trans Tasman has articulated strategies which may see increased weighting toward investment and development in the wider Asia-Pacific region as counter-cyclical opportunities arise.

"SEA supports Trans Tasman's initiatives and has on many occasions confirmed its long-term investment commitment to Trans Tasman as a going concern. This cash offer provides the opportunity and liquidity for those shareholders who wish to sell their shares in Trans Tasman other than through the New Zealand Stock Exchange."

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