Augusta seeks to oust NPT board after rebuff   28 Oct 2016

Article - BusinessDesk

Friday 28 October 2016 01:16 PM

Augusta seeks to oust NPT board after rebuff over management contract

By Paul McBeth

Oct. 28 (BusinessDesk) - Augusta Capital, which bought 9.3 percent of listed property investor NPT a month ago, wants to spill NPT's board after being rebuffed with an offer to buy the company's management contract and facilitate a $329 million acquisition.

Auckland-based Augusta is seeking a special meeting of shareholders where it wants to dump chairman John Anderson and directors Jim Sherwin and Tony Sewell, replacing them with its own chairman, Paul Duffy, and independents Bruce Cotterill and Allen Bollard. Augusta would also use the forum to put a proposal in front of the property group's shareholders where NPT would buy three buildings worth $329 million and Augusta would buy the management contract to build "a meaningful listed entity that generates greater returns than are currently being realised," it said in a statement.

"Unsuccessful attempts to engage with the NPT chairman has left Augusta little choice but to seek change at the board level so that its proposal can be put in front of NPT shareholders," it said.

Augusta paid a 14 percent premium to take the stake in NPT at 73 cents apiece last month, saying at the time it saw value in acquiring a cornerstone stake from Accident Compensation Corp. Today Augusta shares fell 2.9 percent to $1.01 and are up 4 percent this year, while NPT stock gained 2.9 percent to 70 cents and has barely budged in 2016.

The company diversified into funds management last year when it bought KCL Property and Investment Property Titles, giving it about 165 properties to manage, with some $1.1 billion in funds under management. Since then it has been focusing on property syndication to grow that funds management business, which it sees as less demanding on capital than direct property investment.

Augusta wants NPT to buy three office buildings, one of which is under construction, worth a combined $329 million at the net tangible asset price in an uncontested process, and would support a $185 million issue of new equity to help buy the assets. Augusta also wants to buy NPT's management contract for $3.5 million, a premium to the $2.5 million paid to internalise it in 2010, with an initial five-year term and automatic right renewal.

The proposed contract attract a base management fee of 0.5 percent of assets under management up to $500 million, and 0.4 percent after that, with a performance fee attracting 10 percent of shareholder returns above the threshold. That compare to the previous external contract with base fees of 0.75 percent of assets under management and bonus of 20 percent of the average annual increase in capital reserve account over the previous three years.

The expanded property portfolio would increase NPT's assets under management to about $505 million, which Augusta estimates would more than triple net profit by 2020 to about $18.3 million. Augusta would look to pocket base fees of $1.7 million in 2018, rising to $2.5 million by 2020.

The looming stoush will be another distraction for NPT, which appointed Tony Osborne as chief executive in August, a role he'd been acting as since March. The property investor has been focusing on upgrading its Eastgate shopping centre in Christchurch and refurbishing its AA Centre building in Auckland to take advantage of that city's strong office leasing market.

The vote will largely hinge on whether Augusta can convince the NPT shareholders Salt Funds Management, ANZ New Zealand Investments, and Westpac, which collectively own about 46 percent of the property investor.

Augusta, whose biggest shareholder is managing director Mark Francis with about 17 percent, counts all three fund managers as substantial shareholders, with ANZ topping up its stake in Augusta to about 12 percent.

(BusinessDesk)

ends

Add a comment

News

Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students

29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more

New Zealand reaffirms support for Flight MH17 judicial process

7 Mar 2020 News By Rt HON WINSTON PETERS
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more

Business

NZ Government's Economic package to fight COVID-19

17 Mar 2020 Business News By RT HON JACINDA ARDERN
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more

NZ Government announces aviation relief package

19 Mar 2020 Business News By Hon Phil Twyford
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more

Living

Diversity was Key at New Zealand Trade Tasting in London

6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall. It was the first... more

Kiwi author stuns Behind the Butterfly Gate

12 Jan 2022 Arts By Charlotte Everett
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...  New Zealand writer Merryn Corcoran’s... more

Property

Fairer rules for tenants and landlords

17 Nov 2019 Property By Minister Kris Faafoi
17 NOVEMBER 2019 The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more

New Zealand Government will not implement a Capital Gains Tax

17 Apr 2019 Property By RT HON JACINDA ARDERN
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more

Migration

Boosting border security with electronic travel authority – now over 500,000 issued

19 Nov 2019 Migration By Hon Iain Lees-Galloway
19 NOVEMBER 2019 We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more

Christchurch reinstated as refugee settlement location

18 Aug 2018 Migration
18 AUGUST 2018 HON IAIN LEES-GALLOWAY The announcement that Christchurch can once again be a settlement location for refugees... more

Travel

Gallipoli Anzac Day services cancelled

19 Mar 2020 Travel & Tourism By RT HON JACINDA ARDERN
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more

New Zealanders advised not to travel overseas

19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas more

Sport

The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners

27 Oct 2019 Cricket By Charlotte Everett
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more

PREVIEW: All Blacks v England semi-final

26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more

Columns

Gordon Campbell on the Gareth Morgan crusade

11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade First published on Werewolf The ghastly likes of Marine Le Pen in France and Geert ... more

Gordon Campbell on the US election outcome

10 Nov 2016 Opinion
Column - Gordon Campbell   Gordon Campbell on the US election outcome Well um.. on the bright side, there (probably)... more

Kiwi Success

Congratulations to Loder Cup winner

26 Sep 2018 People By Hon Eugenie Sage
25 SEPTEMBER 2018 The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more

Appointments to New Zealand National Commission for UNESCO

16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO HON JENNY SALESA Associate Education Minister Jenny Salesa is... more

Recruitment

Historic pay equity settlement for education support workers

14 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more

Historic pay equity settlement for education support workers

22 Aug 2018 Recruitment By RT HON JACINDA ARDERN
14 AUGUST 2018Historic pay equity settlement for education support workers RT HON JACINDA ARDERN HON CHRIS HIPKINS Prime Minister The... more