ApexHi – offers R896m for MICC portfolio

Posted On Thursday, 14 October 2004 02:00 Published by eProp Commercial Property News
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Interview with Marc Wainer.

Marc Wainer

Listed property stock heavyweight ApexHi offers R896m to acquire the property portfolio of fellow company MICC Property Income Fund – against rival  Vukile Property Fund’s attempt to acquire MICC. Lindsay Williams asks Marc Wainer, chairman of ApexHi, to explain

LINDSAY WILLIAMS: What is the situation as it stands now in this little triangle of potential deals?

MARC WAINER: If we go into the history of it, initially Vukile - in early September - notified shareholders of its intention to make a firm offer for all of the shareholding in MICC on the basis of the twelve Vukile units to ten MICCs. Certain shareholders were rather unhappy with that proposal, and approached ApexHi to find out if we would consider making an offer.

LINDSAY WILLIAMS: You’re talking about MICC shareholders?

MARC WAINER: MICC shareholders were unhappy. You have a related-party situation in the form of Sanlam. Although we haven’t seen it, the shareholders - some of whom were on the board and have subsequently resigned - say that there were excessive fees being charged in terms of that transaction. So we looked at the portfolio. We said: "Look, this is a fit with ApexHi."

Based on public available information we sent an offer through to the MICC board on 23 September, which communication acknowledged and said they would revert to us shortly. Some… almost three weeks later, we were somewhat concerned that they hadn’t communicated to their shareholders that there was another potential offer for the portfolio… our offer, I must stress, is for the assets, whereas the Vukile offer is for the shares.

So you have a situation, right now, where Vukile is able to approach MICC shareholders and offer to buy their shares on a basis… These shareholders have been left in the dark, in terms of the ApexHi offer - which is why we have chosen, today, to publish the terms and conditions of our offer.

At the end of the day it will obviously be up to MICC shareholders to decide which of the offers they prefer… The shareholders who approached us claim that they have about 30% of the shareholding in MICC. If our offer is not successful - for the properties - we’ve indicated that we may well be prepared to purchase, from those shareholders, their 30% shareholding. This gives rise to an interesting situation in that Vukile could end up owning 50% or 55% of MICC, and Apex High, 30% or 35%.

LINDSAY WILLIAMS: Wouldn’t that be a bit messy though?

MARC WAINER: That would be a bit messy. It becomes interesting because the company, then, wouldn’t meet the JSE’s criteria in terms of liquidity - spread of shareholders - so I think it’s one of these issues which is just going to have to play out, and we’ll have to see what shareholders think about the offers. We do understand that MICC has asked the corporate sponsors or advisors to advise them on the merits of both offers. But, because of the time that it was taking, we just felt that MICC shareholders should exercise caution, and should be advised that there is this alternative to the Vukile offer.

LINDSAY WILLIAMS: Your point of view? Obviously you’re going to be biased, but try not to be if you can - which is the best fit?

MARC WAINER: It’s very difficult to say… I’ll tell you why - ApexHi’s offer is slightly below what the Vukile offer seems to be on the surface. Vukile’s offer says it’s 12:1 and that works out at R6 a share. Our offer works out at R5.88 a share, so if you look at it - the face of it - ours is 12 cents lower.

The reason shareholders approached us, they said: "Well, look Vukile’s a new listing, we don’t know if it’s got a track record - and it’s so illiquid, we don’t know if that R5 share price can hold up."

Point number one - ApexHi is the most liquid share in the property sector. The second point - what happens to the distribution? The year-end is September - there’s 35 or 36 cents of distribution, in terms of our offer, that would still accrue to MICC unit holders, as would any further distribution going forward to the effective date.

I don’t know what the situation is with the Vukile offer which has a 30 November date. So, it would appear that their price includes the distribution. So it’s not R6, it’s R6 - less 36 or 37 cents.

LINDSAY WILLIAMS: I think we’ll have to revisit this one.

MARC WAINER: Full details, which we don’t have… I can’t tell you which is the better offer - and I should imagine this is why they’ve appointed independent advisors.

Last modified on Tuesday, 13 May 2014 16:28

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