RMB HOLDINGS (RMH) yesterday said it had turned down a R1.75 billion approach from Cyprus-based Brightbridge Real Estate as well as Fledge Capital Proprietary to acquire its property investments held through RMH Property, saying the offer was valued too low and not in the best interests of the company or its shareholders.
“The RMH board has considered each of the approaches holistically, including the relevant quantitative and qualitative considerations related to the approaches, and is of the view that the approaches are not in the best interests of RMH nor its shareholders and do not accord with the RMH board’s view of an acceptable range of realisable net asset value for these assets (NAV). The approaches will consequently not be progressed,” it said.
RMH Property holds 27.5 percent of Atterbury Group, which invests and develops office, retail and industrial properties in South Africa, 37.5 percent of Netherlands managed Atterbury Europe, which invests in office and retail property assets, and 10.9 percent of Divercity, which operates in urban renewal in South Africa.
The Divercity Property Fund’s portfolio has a total value of nearly R3.4bn comprising some 6 500 apartments and 90 000m² of commercial and retail lettable area in South Africa.
The approach from Brightbridge on October 11 was for 27.5 percent of Atterbury Property, including the R534 million loan claim held by FirstRand Bank against Atterbury (the APH loan), which would have resulted in, subject to implementation of the offer, the relevant RMH property holding company holding the APHloan directly before transfer to Brightbridge; 37.5 percent of Atterbury Europe and 10.9 percent of Divercity, subject to the right of first refusal process between the existing shareholders of Divercity; as well as 10.9 percent of Divercity Urban Property Fund Proprietary Limited (Divercity)
The approach from Fledge on October 12 was in relation to the total loan claims as well as ordinary shares held by the relevant RMH property holding company in Integer Properties 3.
The RMH board said it had considered a number of factors in arriving at its view of the approaches, including the significant discount that the offer prices represented relative to the International Financial Reporting Standards (IFRS) NAV of RMH, excluding the special dividend, as at March 31.
It also looked at the further discount that the respective offer prices represented relative to RMH management and the RMH Board’s internal, conservative assessment of the future NAV of the portfolio.
“This view is based on quantitative factors including traditional valuation discounts and control premiums for transactions of this nature, marketability and illiquidity of non-controlling stakes, capital structure and liquidity positions of the underlying assets and capital gains tax (CGT), as the Brightbridge approach assumes that there are no CGT implications (given that Brightbridge is a foreign entity),” it said.
Further qualitative factors considered by the RMH board was the implications of the approaches on RMH’s monetisation strategy.
The RMH board said it acknowledged that Brightbridge, as an Atterbury group affiliated entity and one closely aligned to Louis van der Watt, was the most likely acquirer as part of this monetisation strategy in view of their deep knowledge of the businesses and contractual arrangements between the parties, but the RMH board remained confident that, notwithstanding the RMH Board’s view on the Brightbridge approach, the partnership would continue to focus on the creation of shareholder value.
philippa.larkin@inl.co.za
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