Trans Tasman rebels poised to vote down the takeover move

Friday 18th May 2001

By Nick Stride

A group of Trans Tasman Properties shareholders led by Guinness Peat Group and Grantham Mayo van Otterloo will torpedo an effective takeover bid by SEA Holdings at Monday's special meeting.

The junk-bonds-for-equity deal needs approval from holders of 75% of the votes cast but Hong Kong-based SEA, which has 55%, isn't allowed to vote. That means holders of only 11.25% of the votes can stop the deal. GPG has around 3% and Grantham Mayo has 6.3%. It is understood enough of Trans Tasman's large institutional shareholders are opposed to the deal to secure a "no" vote.

The deal is billed as a "capital reconstruction" but is effectivelty a takeover as it involves SEA gaining all the shares in exchange for 10-year 10% "secured bonds." It has been recommended by Trans Tasman's independent directors and pronounced fair by a Grant Samuel appraisal report.

But analysts said yesterday SEA's opponents weren't happy with the prospect of being issued with "junk" bonds in place of their shares, and want SEA to mount a proper takeover bid at a fair price.

A series of three meetings will be held at Auckland's Ellerslie Convention Centre. The annual meeting will be at 10am, a noteholders' meeting at 11am, and a special meeting to vote on the capital reconstruction at midday.

The 75% approval is needed both from shareholders and from holders of the mandatory convertible notes.

Shareholders can torpedo the "takeover" aspect of the deal but the noteholders may still choose to swap their MCN's for the new bonds.

Trans Tasman estimates its net tangible asset backing is 70c although industry observers doubt it is so high. Even so, the shares have been trading at around 23c so SEA's proposal would allow it to capture the company's assets at a huge discount. GPG also owns more than 5% of Trans Tasman subsidiary Australian Growth Properties and observers believe it is planning separate shareholder action at AGP.

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