AMP fuels Capital speculation by announcing end to speculation

Published 19 February 2006

AMP Property Portfolio Investments Ltd fuelled more speculation on Friday by announcing an end to speculation.

“Expect no new offer within the next 12 months,” if AMP doesn’t reach the 90% threshold for compulsory acquisition under the current offer, general manager Stephen Costley roared.

The current offer closes on Sunday 26 February – no more extensions – and Mr Costley said AMP held 89% of Capital. The aggressive tone was a fair indication that AMP yet again wanted to bully recalcitrant shareholders into meekly selling, as happened when the AMP unit announced a cut in dividend ratio and on the numerous occasions it’s warned the share price is likely to drop post-bid.

Mr Costley’s statement on Friday was a sign that that last 1% could be elusive, leaving AMP with the nuisance of things like listing fees & the issues associated with governing & operating a listed body instead of a private company, which are likely to cost more than a raised buyout price.

What are those last shareholders holding out for? Are they hoping to needle AMP? Are they hoping that by being difficult they’ll get some better under-the-table settlement? And in response, will AMP stubbornly resist dealing with recalcitrants if somehow the way is cleared for full Capital ownership? One can speculate. “While we are now only 1% away from the 90% threshold for compulsory acquisition and there is still a week to go until the final close of the offer, we have taken this decision and announced it publicly to provide absolute clarity to the market about the likelihood of a fresh offer in the near term.

“Recent statements by some commentators may have led remaining shareholders to expect an imminent higher offer if AMP Property Portfolio does not reach the 90% threshold. This is a false expectation and reliance on it could have negative financial consequences for those shareholders,” Mr Costley said.AMP has already outlined changes at Capital. “In line with its new focus on growth in assets/share rather than just dividend yield, Capital Properties’ future dividend payout will be 6-monthly with a payout ratio of between 40-60% of net earnings. In this context, other listed property companies may offer better alternatives for shareholders seeking property exposure with a focus on dividend yield.”In addition, Capital Properties’ independent directors said in a 1 February letter to shareholders that if acceptances under the present offer don’t reach 90%, “it is likely that the share price could trade below the $1.48 offer price for some time into the future”.”So remaining minority shareholders need to be aware that the value of their investment is likely to decline and they may have difficulty trading out of that position because only 11% of shares would be freely tradeable on the NZSX,” Mr Costley said.Earlier stories:

12 February 2006: AMP within 1.2% of Capital Properties compulsory acquisition

1 February 2006: AMP just short of 90% of Capital Properties

14 January 2006: AMP extends Capital bid to 31 January

11 January 2006: ING holds trump at Capital Properties

 5 January 2006: AMP cuts Capital dividend ratio

24 December 2005: AMP extends Capital bid to 13 January

26 November 2005: Outcome of Capital Properties review out in January

4 November 2005: Capital directors suggest $1.55 OK as takeover price, and AMP works at belittling them

28 October 2005: AMP has 36% of Capital as Kiwi accepts 6c higher offer

23 October 2005: AMP tells Capital what should have been in Deloitte report, extends offer another week


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Attribution: Press release, story written by Bob Dey for this website.

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