Symphony's Newmarket takeover invites comparisons with earlier merger attempt

By Chris Hutching

Friday 26th April 2002

Symphony Group is proposing taking over the management of Newmarket Property Trust from Sovereign and buying 19.9% of the fund manager's stake in the trust - just under the threshold that would require a full bid to all unitholders.

More details about the proposal would be revealed over the next week so unitholders will have a better picture of the proposed capital structure, according to Newmarket Property Trust Management managing director David Keys.

The move by Symphony comes three years after the last attempt to build the trust through an unsuccessful merger initiated by National Property Trust, which in hindsight would have given unitholders a chance to exit when the share price was closer to 70c than the 50c in recent trading (the shares were initially floated at $1 each).

At that time, National Property Trust (whose share price was 99c) was offering Newmarket unitholders 75 units for every 100 in the merged new entity.

The latest deal from Symphony offers minority shareholders the possibility of improved performance by enlarging Newmarket's $80 million asset base.

Symphony proposes selling to the trust the AGC building in the Viaduct Harbour in Auckland and Ericsson Hse in Carlton Gore Rd.

From Sovereign's view the deal offers a long-awaited partial exit from an investment it inherited several years ago and which has struggled to perform. Sovereign holds 38% of the trust's units, with property syndicator St Laurence holding the next biggest voting bloc at about 5%.

An appraisal of the deal with detailed valuations will be issued before a unitholder meeting is held in May. Under normal rules, related parties such as Sovereign and Symphony will abstain from voting.

Advice from sharebroker Forsyth Barr Frater Williams may be influential because many clients still hold units, although not as many as formerly. The broker has rated Newmarket as a stock that investors should reduce in their portfolios.

Other mainstream brokers said there was little interest in the stock and few of them bothered to research it.

The Symphony offer price at 43-51.6c is unlikely to boost the languishing share price but a prospectus is expected to highlight future benefits.

The deal has been agreed to in principle by Symphony, Sovereign and the trust's directors.

Earlier this month the manager of the trust announced the sale of the Rialto car park in Newmarket for $7.25 million, to be settled in May, with the proceeds to be used for working capital and to reduce debt.

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