Redefine ceases battle with Growthpoint on Fountainhead assets
Redefine Properties CEO, Marc Wainer says the manner in which it has been dealt with by the independent committee” at Fountainhead “has caused protracted delays and uncertainty.
Redefine Properties on Monday said it has withdrawn its bid to acquire the R10.3 billion property portfolio for Fountainhead in pursuit to raise its stake in the company.
Redefine announced the acquisition of Fountainhead Manco during March 2012, at which time it also announced its intention to acquire the assets of Fountainhead, failing which it would continue to manage and administer Fountainhead through Fountainhead Manco. This was the basis on which Redefine sought, and obtained, approval from the Registrar of Collective Schemes ("Registrar") for the acquisition of Fountainhead Manco.
"The manner in which this transaction has been dealt with by the independent committee of the board and by the Fountainhead trustees, has caused protracted delays and uncertainty, which is now having a significant detrimental impact on the Fountainhead assets and day-to-day running of the business," commented Marc Wainer Chief Executive Officer of Redefine.
"We believe that the process is still several months from conclusion and that it is important to take decisive action to protect and safeguard the interest of all parties," he said.
Wainer explained that three key Fountainhead staff members have recently resigned and negotiations with potential tenants, particularly in relation to proposed redevelopments, are being unduly complicated and delayed, with key decisions around capital expenditure and the like not being timeously made with the urgency required as well as significant advisory costs are being incurred.
As announced previously, Redefine resolved some time ago that, if its proposal to acquire the assets of Fountainhead was not successful, it would seek to obtain a meaningful stake in Fountainhead in order to ensure alignment of interests between Redefine and Fountainhead unitholders.
In pursuit of this strategy Redefine has to date acquired approximately 18% of the Fountainhead units, making it the largest Fountainhead unitholder. Redefine intends, on an accelerated basis, to acquire up to 175 million additional Fountainhead units, in tranches of not less than 1 million, in exchange for 12.15 Hyprop units for every 100 Fountainhead units.
The Fountainhead units will be accepted on a ‘first come for immediate release first served’ basis and the offer will remain open for acceptance until the earlier of the offer being filled or the close of business on 12 March 2013.
In addition, Redefine has decided to bolster the executive capacity and property experience on the Fountainhead Manco board, in line with the Registrar’s requests and to ensure that the board is able to deal proactively and urgently with the challenges facing Fountainhead and its portfolio.
In this regard Redefine has passed a resolution to appoint three executive directors, Marc Wainer, David Rice and Mike Lewin, to the board of Fountainhead Manco. In order to ensure the retention of an appropriate balance between executive and non-executive directors, Redefine has also appointed Mr Lyndon Kan to the board as an independent non-executive director. All appointments are subject to the requisite approval of the Registrar.
Redefine is confident that the appointments will significantly strengthen the board’s executive capacity and property experience.
Redefine has also consistently stated that it will, if required, take all appropriate and available steps to protect the value of its equity in Fountainhead Manco. Redefine’s senior counsel have advised that the Growthpoint offer, and any other similar offer, lies outside of the administration of Fountainhead, and therefore the Fountainhead Manco board is not entitled to entertain, agree to or seek to implement the proposal.
"We trust that the board will act decisively to end the current uncertainty by withdrawing from its engagement with Growthpoint and trust that it will not continue incurring significant advisory costs to the detriment of Fountainhead unitholders." Wainer concluded.
Redefine shares closed 0.9 percent lower at 9.79 rand. Growthpoint declined by 0.2 percent, while Fountainhead gained 0.4 percent.
