Waltus limps on to secondary board but completes big deal

By Campbell McIlroy

Friday 1st December 2000

BIGGEST EVER LEASE: Infinity Group takes naming rights on 60 Khyber Pass Rd, Auckland

Waltus Property Investments made a less than spectacular debut on the NZSE's Unlisted Securities Facility this week ahead of a Court of Appeal hearing on Monday which threatens to repeal the merger of its 27 former syndicates.

On the brighter side the company this week concluded the largest commercial office lease it has signed to date, with Infinity Group taking a nine-year lease on four levels and 76 carparks on Khyber Pass Rd in Auckland.

Waltus' issue price of $1 soon dropped to 94c but there were no trades by the close of play on Wednesday due to the fact there were no buyers.

Waltus financial controller Hamish Plimmer said the company's net asset backing put the share price at about 98c, but he expected with all the negative publicity surrounding the company over the past few months, the impending court case and general market view of the property market the shares would be trading at a discount.

The appeal is being brought by a group of minority share- holders opposed to the merger on three grounds.

First, the group plans to argue the correct legal test was not applied by the High Court when it approved the merger.

The group contends a more stringent criteria must be applied when the courts consider whether to allow a merger to proceed or not.

Second, it will argue the Companies Act 1993 did remove unit holders' right to liquidate the syndicates after 10 years because prospectus' issued by Waltus in both 1995 and 1996 promoted this exit option for unit holders.

If the act did remove that right then the group claims Waltus misrepresented this position to investors but if it still existed it claims the outcome of the merger vote could well have been very different.

The third reason for appeal is an argument over when and how buy-out provisions should be exercised.

The appellants say the whole reason for having buy- out provisions is to offer an exit strategy when there is a major change in the nature of the company, and the merger constitutes a major change.

The appeal has been set down for half a day and will be heard in the Court of Appeal at Wellington.

In the meantime the company was satisfying itself with the good news of its latest and largest lease deal.

IT company Infinity Group took naming rights on the former Elders Finance Building at 60 Khyber Pass Rd.

Elders' lease expires on December 20 and this signing enables Waltus to keep the building 100% let.

General manager Ray Di Leva said he was reasonably happy with the rental rates negotiated. Of greater significance was the amount of space the company leased, 4000sq m, and the quality of the tenant, he said. The deal, brokered by Jason Seymour of Colliers Jardine, keeps the Waltus portfolio at 98.1% occupied.

Mr Di Leva said the company was also working on another significant leasing in Hamilton but was not in a position to comment further.

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