Cullen unhappy with PRG appraisal

By Phil Boeyen, ShareChat Business News Editor

Thursday 25th October 2001

Eric Watson's private investment company, Cullen Investments, has lashed out at an appraisal report that values Pacific Retail Group (NZSE: PRG) considerably higher than its offer for the company.

Cullen Investments subsidiary, Logan Corporation, has offered $1.76 per share for PRG but financial advisor, Andersen, recently put the value of the retail group's shares at between $2.13 and $2.95.

In its appraisal report Andersen said that neither Logan's offer for the shares nor the options is fair but noted that they did provide an exit mechanism for existing security holders at a price which is 21% above the pre-bid share price.

However Cullen Investments has come out swinging at the report, claiming that the assumptions underlying the appraisal are unverified.

Cullen Investments Group MD, Phil Newland, says he is surprised at the valuation range and curious as to its foundation.

"On meeting with the independent directors yesterday to discuss the basis for the reported valuation, which varied considerably from our own view, we discovered that Andersen had relied on projections and assumptions which had not been subjected to full board scrutiny or approval. We regard that omission as significant.

"To the extent that the projections do not represent the considered view of the full board and have not been independently verified, there is a risk that minority shareholders acting on the notice and the report may not have accurate advice upon which to base their decision to accept the offer."

Mr Newland says Cullen does not intend to vary its offer beyond its current level of $1.76.

"We are happy with the level of acceptances to date and note that the offer is not conditional upon a minimum level of acceptances."

Cullen Investments says it asked the independent directors to get independent verification of any projections and assumptions before mailing the report to shareholders.

"Notwithstanding that request, they determined to mail the report in its current state," says Mr Newland.

Logan Corporation currently owns 68% of PRG but there have been a number of market mumblings that its bid is cheeky given the company's future prospects.

Cullen Investments claims Andersen's report, which is due to be mailed to shareholders today, bases its valuation on three year management projections which have not been presented to, considered or approved by the full PRG board.

Comments from our readers

No comments yet