Archive | Securities – NZ

Steel & Tube confirms turnaround from 2018 loss

Steel & Tube Holdings Ltd lifted itself from a low first-half profit last year & a second-half loss to a $5.6 million net profit after tax in the December half.

The company reaffirmed guidance that it would make $25 million in ebit (earnings before interest & tax) for the year to June.

Ebit went from $7.5 million in the December 2017 half to a $43.7 million loss in June, and now a $9.8 million profit for the December 2018 half.

Normalised ebit went from $13.4 million in the December 2017 half to $4.5 million in June and up to $9.7 million in December 2018. Normalised ebit excludes non-trading adjustments including writedowns, impairments, business rationalisation & restructuring costs and gains on sale of property, as well as contributions from S&T Plastics.

Steel & Tube’s assets have shrunk from $364 million in 2017 to $346 million in June and $330 million in December 2018 – but it has slashed debt in the meantime – to just $16 million, from $96 million a year ago and $104 million in June.

“Net debt reduced significantly to $16 million due to capital raise, improved operating cashflows, tighter working capital management & prudent capital expenditure,” chief executive Mark Malpass said.

“Solid improvement in operating cashflows to $11.1 million (from $17.7 million a year ago and a negative flow of $16.4 million in June) enabled a return to dividend payments, with the board declaring an interim dividend of 3.5c/share.”

Susan Paterson, who took over the chair last year, said: “While it has been a difficult period, we now have a strong foundation with the right strategy, people & systems in place to drive the business forward and deliver earnings growth.

“We have a clear focus on growth & shareholder value and it is pleasing to see the business is now benefiting from the significant work undertaken in the first half to transform & turn around the organisation. The board remains confident in the company’s positive trajectory and is pleased to reinstate dividend payments.”

Attribution: Steel & Tube.

Continue Reading

Port of Tauranga lifts volumes & returns

Port of Tauranga Ltd increased group net profit after tax by 4% to $49 million ($47.1 million in 2017) in the December half, on higher cargo volumes.

Highlights:

  • Total trade increased 8.8% to nearly 13.6 million tonnes
  • Container volumes grew 5.1% to 621,117 TEUs
  • Transhipment volumes increased 18.9% to 174,983 TEUs
  • Imports increased 5.7% to almost 5.0 million tonnes (4.7 million tonnes)
  • Exports increased 10.8% to 8.6 million tonnes (7.7 million tonnes), with an 11.7% increase in log export
  • Interim dividend up 5.3% to 6c/share.

Port of Tauranga chair David Pilkington said: “Tauranga is working very well as an international hub port for shippers looking to quickly & efficiently access large ship container services.

“Tauranga is the only New Zealand port that can easily accommodate these big ships, and we are very pleased by the amount of transhipment occurring from other New Zealand locations as well as Australia.”

Bulk cargo volumes also continued to grow, driven largely by the increase in log exports but also increases in kiwifruit, meat & apple exports.

Port of Tauranga’s inland freight hub, MetroPort Auckland, handled a 3.8% increase in containers to set a new record in cargo transferred by rail to & from Auckland during the October-December seasonal peak. 

Chief executive Mark Cairns said: “All evidence points to a continuing trend to larger vessels. Our strategy to create long-term value for our shareholders is clearly working and we are now planning for the next stage of cargo growth.”

The company has ordered a ninth container crane for delivery in 2020 and is preparing to extend the container terminal quay by up to 385m by converting port-owned land south of the existing 770m quay. The company is assessing options for increasing container storage & handling capacity.

It’s reconfiguring existing wharf space on both sides of the harbour to ensure efficient cargo handling.

Cargo trends 
Log exports remain buoyant on the back of strong demand from China and record international prices. Log volumes increased 11.7% to 3.7 million tonnes and sawn timber volumes increased 9%.

Kiwifruit volumes increased 30.2%, frozen meat 17.3%, apples 64.9%. Dairy product exports were steady.

Ship visits decreased 5.4% to 842 but their average length continued to increase.

Outlook

Mr Pilkington said the company expected earnings to be at the upper end of the previous guidance of $96-101 million given in October.

Attribution: Port of Tauranga.

Continue Reading

PFI doubles profit

Property For Industry Ltd more than doubled its net profit after tax in 2018, from $51.7 million to $110.1 million.

Basic & diluted earnings/share rose from 11.25c to 22.08c.

The fair-value gain on investment properties rose from $43.6 million to $66.4 million.

The company increased funds from operations/share by 3.2%, adjusted funds from operations were steady and the cash dividend was increased by 1.3% to 7.55c/share.

Other highlights:

  • Portfolio revaluation gain 5.3% ($66.4 million)
  • NTA (net tangible assets)/share up 8.9% (14.5c) to 177.7c/share 
  • Second $100 million senior secured fixed rate 7-year bond issue, $37.5 million of bank facilities refinanced, gearing 30.3%
  • Over 100,000m² (15%) of portfolio leased to 30 tenants for an average increase in term of 6.2 years
  • 2 Auckland industrial properties acquired for $28.4 million.

PFI announced management structure changes in December, appointing Simon Woodhams as chiefexecutive and Craig Peirce as chief finance & operating officer from 1 January, when they switched from being independent contractors to full-time employees. Greg Reidy, managing director since 2012, will remain an independent contractor until 30 June, when he will become a non-executive director.

These appointments followed the internalisation of the management contract in mid-2017 and are part of the PFI board’s long-term approach to succession planning.

Financial performance 

Net rental income increased by 8.4% ($6.1 million) to $79.1 million, as increases from acquisitions ($4.9 million) & positive leasing activity ($3 million) partially offset a decrease due to increased vacancy ($1.8 million).

Average occupancy through 2018 was 98%, before ending the year above 99%.

The end of management fees saved $2.9 million, against a $1.8 million increase in internal administration costs.

Also as a result of the June 2017 internalisation, PFI recorded no current tax expense in 2017 and a reduced level of current tax expense in 2018. Excluding the impact of the internalisation, PFI’s effective current tax rate was 21.0% in 2017 and 20.2% in 2018.

Attribution: PFI release.

Continue Reading

Augusta Industrial Fund offer opens

Augusta Capital Ltd opened its unlisted industrial fund to new investment today as it seeks up to $115 million to add 5 properties to its portfolio.

That includes subscription for $10.5 million of shares by Augusta Capital itself, to ensure it maintains a shareholding of at least 10% in the fund.

The $115 million includes $10 million of oversubscriptions. Depending on takeup, new shares will comprise 58.3-60.5% of the fund’s total shares.

Gearing at this point will be in a range of 40-42%. Augusta said in the product disclosure statement it intended to continue growing the portfolio – though it had nothing further in sight for this year or 2020 – and intended to maintain a gearing target of 35-40%, which might increase to 45% short-term when new properties are acquired.

To ensure Augusta Industrial maintains its PIE (portfolio investment entity) status, no investor will be allowed to have a shareholding exceeding 19.99% of the post-issue total.

The share offer opened today and closes on Friday 22 March. Acquisition of the new properties (4 of them from other Augusta entities) will be settled and shares allocated on Thursday 28 March.

The whole portfolio of 9 properties has been valued at $296.7 million.

The portfolio’s 4 initial properties, 3 in Auckland, one in Wellington:

  • Penrose, 862-880 Great South Rd
  • Henderson, 12 Brick St
  • Mt Wellington, 20 Paisley Place
  • Wellington, Seaview, The Hub

New properties – 4 in Auckland, one in Christchurch:

  • Rosedale, 265 Albany Highway
  • Mt Wellington, 510 Mt Wellington Highway
  • Henderson, 116-152 Swanson Rd
  • Otahuhu, 5 & 21 Beach Rd
  • Christchurch, Hillsborough, Castle Rock Business Park, Mary Muller Drive

Augusta sees greenfield development opportunities at 3 of the new properties – Henderson, Mt Wellington & Rosedale.

Industrial fund chair Mark Petersen, who’s also an Augusta Capital director, says in the product disclosure statement that Augusta Industrial’s original $75 million share offer was oversubscribed. The initial portfolio’s value grew in a short time from a total purchase price of $114.1 million to $121.64 million.

Ongoing costs

The product disclosure statement highlights 2 areas of cost in managing the portfolio – management & property management fees, and interest.

Augusta Funds Management Ltd, the Augusta Capital subsidiary which runs all its portfolios, will charge a management fee of 0.5%/year of the total average value of the fund’s tangible assets, up to $500 million of assets under management, 0.4%/year above that figure.

The property management fee has been set at 1.5% of gross rental income, with 3 exceptions in the existing portfolio, on which the fees will be $50,000/year until 14 June 2021 unless it can recover more than that from tenants under their leases.

The manager will also be entitled to a performance fee equal to 10% of any shareholder returns above 10%/year, capped at 15%/year. Certain other transaction fees are also payable.

The other big cost factor is interest, forecast to be about 27% of the industrial fund’s net income for the next financial year: “Increases or decreases in interest rates will have a material effect on Augusta Industrial’s returns,” the offer document says.

“To manage this risk, Augusta Industrial has entered into interest rate swap agreements under which about 68% of Augusta Industrial’s drawn debt will be hedged on 28 March 2019, and this is expected to increase to 70% following settlement of the land sale at Great South Rd. This will reduce the exposure to floating interest rates.”

Listing potential

Augusta Capital chief executive Mark Francis has talked of the company’s intention of eventually listing the industrial fund, and following a similar track for other funds such as the tourism fund now being created, but hasn’t put a timeframe on listing.

In this product disclosure statement, the company states bluntly: “As part of this offer, Augusta Industrial does not intend to quote these shares on a market licensed in New Zealand and there is no other established market for trading them. This means that you may not be able to sell your shares.”

The offer document adds: “We do not think it is appropriate to consider a listing for Augusta Industrial at this point given current market conditions.”

Link: Augusta Industrial Fund

Attribution: Product disclosure statement.

Continue Reading

NorthWest signs Healthscope sale & leaseback deal, but Vital still undecided

Entities in the NorthWest Healthcare Properties group of Toronto have signed a conditional contract to buy 11 hospital property assets from hospital property assets from ASX-listed Healthscope Ltd for $A1.258 billion, but the NZX-listed member of the group, the Vital Healthcare Property Trust hasn’t signed up to participate – yet.

At the beginning of December, Vital doubled its loan to its manager to support the acquisition of an increased stake in Healthscope. Vital had paid $A41 million to support the investment, and in December upped it to $A81 million.

Vital’s board, who are actually directors of the trust manager, NorthWest Healthcare Properties Management Ltd, came under fire from dissident corporate investors at the trust’s annual meeting in December. The dissidents got majority support for 3 of their 5 proposals, which were deemed non-binding, but failed in the bid to get their nominee elected to the management company board.

On Friday, a related Toronto-listed trust, the NorthWest Healthcare Properties Real Estate Investment Trust, said it & its controlled entities had entered into a conditional contract to acquire 11 freehold hospital property assets from Healthscope as part of a sale & leaseback transaction.

The New Zealand management company’s chief executive, David Carr, who was a director for a short time last year but reverted to his purely executive role at the annual meeting, said in Vital’s Friday release: “Vital is not currently a party to the property transaction. Vital views it as potentially an attractive opportunity and has had significant discussions about its participation in the acquisition of the portfolio with NorthWest. Those discussions have not as yet resulted in any agreement. Any such participation is subject to being able to reach agreement on commercial terms and documentation with NorthWest.

“Further, any participation by Vital would be subject to compliance with its trust deed & the Financial Markets Conduct Act, including necessarily being in the best interest of unitholders & on arms’-length terms.”

Earlier stories:
14 January 2019: Vital Healthcare updates on developments at 6 hospitals
21 December 2018: Vital Healthcare Property dissidents show muscle, and their arguments may yet hold sway
6 December 2018: Vital doubles loan to NorthWest for Healthscope acquisition
25 November 2018: Vital Healthcare management fees up for review, new action at Healthscope

23 November 2018: 
Northwest increases Healthscope stake to 11.1%

9 May 2018: 
Vital Healthcare’s parent makes new Australian investment
11 October 2013: Dalla Lana lifts Vital stake to 24.11%
5 December 2011: Toronto healthcare specialist North West pays $11.5 million for Vital management, holds 19.8% of trust

Attribution: Company release.

Continue Reading

Veritas unconditional on Kingsland gastro pub buy

Veritas Investments Ltd has gone unconditional on its agreement to buy the business & assets of Citizen Park from Kingsland Trading Co Ltd as a going concern, following shareholder approval on Friday.

Veritas subsidiary The Better Bar Co Ltd expects to complete the acquisition, for $2.7 million plus stock (estimated to be $30,000), on 25 February.

Citizen Park is a gastro pub at 424 New North Rd, Kingsland.

Veritas chair Tim Cook said when the proposed acquisition was announced in December: “Citizen Park is in a highly desirable location and represents a complementary acquisition for The Better Bar Co on a number of levels, from which we could drive synergies through our existing hospitality outlets, procurement base & supplier relationships.”

Veritas will debt-fund the full purchase price from the acquisition & capital expenditure facility provided by Pacific Dawn Ltd, a subsidiary of Japanese financier Nomura Holdings Inc.

Earlier story:
19 December 2018: Veritas to buy Citizen Park

Attribution: Company release.

Continue Reading

PFI completes Gracefield sale

Property for Industry Ltd settled the disposal of an industrial property at 50 Parkside Rd at Gracefield in Wellington on Wednesday. The company announced the sale in December, to a private investor for a gross $3.4 million, and Bayleys gave details of the transaction in its roundup this week of December deals.

The sale was at a 10% yield on rent of $340,000/year net + gst. The 10,540m² corner site & its 4500m² industrial building are leased to Waste Management NZ Ltd.

In its portfolio update last month, PFI said it leased over 82,000m² (11% of the portfolio) to 22 tenants – 17 renewals averaging 5.7 years, 5 new tenants averaging 8.9 years, overall average new term 6.1 years.

The company also expected to conclude documentation last month of a 6-year lease over 2229m² at its Carlaw Park property in Parnell, representing 60% of the vacant space at the property.

PFI will issue its annual result on Monday 18 February.

Earlier story:

23 January 2019: Wellington office adds 19 commercial sales to December tally of 15 at auction

Attribution: Company releases.

Continue Reading

Vital Healthcare updates on developments at 6 hospitals

In the turbulence in the week before Vital Healthcare Property Trust’s annual meeting in December, an update by the trust manager on brownfield development & strategic acquisitions was easily set aside.

At issue at the annual meeting was the disparity between returns to investors and returns to the manager, NorthWest Healthcare Properties Management Ltd, a 100% subsidiary of the NorthWest group of Toronto headed by Paul Dalla Lana. Dissident corporate unitholders got majority support for 3 of their 5 proposals put to the annual meeting, but failed in the bid to get their nominee elected to the management company board. A review called by the board may still bring changes to at least partially satisfy the dissidents.

Meanwhile, the trust management headed by chief executive David Carr continues with a large programme of acquisitions in Australia & New Zealand, and the injection of further value through development.

Mr Carr said in the update, dated 13 December: “The programme underpins our strategy to drive long-term value-add opportunities and deliver sustainable returns to Vital investors. Development work now under way builds on property acquisitions totalling $195 million in the June 2018 year, all of which had short- to medium-term brownfield development projects planned or in progress.”

Recent milestones related to tenders to start the full redevelopment at Wakefield Hospital in Wellington, resource consent for work at Royston Hospital in Hastings, final development work at Bowen Hospital in Wellington, the acquisition of land adjacent to Ormiston Hospital at Flatbush in Auckland, further development at Maitland in New South Wales and – subject of some concern at the annual meeting over the way it’s been carried out – the first joint acquisition of a value-add development site with the NorthWest Healthcare Properties Australia REIT.

Wakefield Hospital, Newtown, Wellington: Capital commitment $88 million.

Tenders have been invited for the first stage of redevelopment. Vital Healthcare bought Wakefield Hospital, together with Royston & Bowen Hospitals, on initial 30-year lease terms as part of the strategic partnership with Acurity Health Group established in 2017.

The trust manager, NorthWest, expects to award the construction contract in early 2019. The full development programme will be delivered in stages to be completed in 2022, creating a new, high quality facility with 8 operating theatres, 42 beds, a 3000m² medical consulting building & supporting infrastructure. It will include a base-isolated design to ensure the hospital remains operational following a seismic event.

Royston Hospital, Hastings: Capital commitment $13 million. 

NorthWest has received resource consent for the development, which will expand into adjacent properties the trust owns. The development will incorporate the reconfiguration of patient admission & recovery areas, expansion of consulting space & 2 new operating theatres, one of which will be commissioned immediately. NorthWest expected to award the construction contract in December and anticipates completion of works in mid-2020.

Bowen Hospital, Crofton Downs, Wellington: Capital commitment $4 million.

Final works were under way to complete the radiation oncology facility, including new linear accelerator bunkers, by the end of December.

Ormiston Hospital, Flatbush, Auckland: Capital commitment not yet confirmed.

Vital acquired this hospital in April 2017 and bought 5500m² of vacant land next to it last September. Existing facilities include a 6-theatre, 31-bed private hospital in one of Auckland’s strongest population growth corridors. Ormiston is the only private hospital in this area, which has a population estimated at 540,000.

NorthWest has begun masterplanning for development, focusing initially on establishing a medical & healthcare precinct. Pending appropriate precommitments, development will enable the trust to establish complementary services & facilities, enhancing value and securing Ormiston as the pre-eminent private healthcare precinct in the South Auckland catchment.

Maitland Hospital, Merewether, New South Wales: Capital commitment $A3 million.

Construction of a 10-bed intensive care unit within the existing building, including the provision of chemotherapy services, is scheduled for completion in February. Maitland Hospital is a 156-bed private hospital owned by Vital & operated by Healthe Care Australia Pty Ltd (now a subsidiary of the Singapore-based Luye Medical Co Group Ltd, which in turn is part of the LuyePharma Group Ltd based in Shandong, China), specialising in surgery, acute medical, post-natal, psychiatric & rehabilitation services. NorthWest said provision of an intensive care unit would bring the hospital into line with other major tertiary-level private hospitals of similar scale in the region.

Strategic acquisition adjacent to Lyell McEwin Hospital, Adelaide, South Australia: Transaction value $A13.75million (100% interest).

Vital & NorthWest have jointly acquired a 16,700m² development site adjacent to Lyell McEwin Hospital, the third largest public hospital in metropolitan South Australia. A 2200m² retail centre on the site is fully occupied by tenants on short lease terms with relocation &/or termination rights. The acquisition provides Vital with the opportunity to develop a private healthcare precinct colocated with a major public hospital.

Earlier story:
21 December 2018: Vital Healthcare Property dissidents show muscle, and their arguments may yet hold sway

Attribution: Trust release.

Continue Reading

Augusta slots new single-asset fund in ahead of tourism fund

Augusta Capital Ltd has delayed the launch of its tourism fund while it raises new capital for its industrial fund and starts a new single-asset fund.

The single-asset fund will hold a mixed-use property in Brisbane. It’s at 255-271 Gympie Rd, Kedron, and comprises 5 office, retail & childcare buildings. The property’s 6 tenancies are all occupied, giving a weighted average lease term of 7.7 years.

Augusta managing director Mark Francis said just before Christmas the new fund would acquire the property for $A21.52 million. Settlement is scheduled for 29 March. Augusta intends to raise $A15.1 million of equity, using a debt facility to fund the balance of the purchase price & establishment costs. Augusta expects to receive an offeror’s fee of about $A700,000. The offer won’t be underwritten and is expected to open in mid-February.

As a result of the timing of this offer and the timing of the Augusta Industrial Fund’s next capital-raising in February-March, Mr Francis said Augusta had determined to delay the establishment of the Augusta Tourism Fund until later in 2019. The 2 properties so far intended to go into it – 54 Cook St in Auckland & 7-19 Man St in Queenstown – will continue to be held on Augusta’s balance sheet until the tourism fund is established.

Earlier stories:
21 December 2018: Augusta Industrial Fund to add 5 properties, seek more investors
3 December 2018: Augusta buys Queenstown site for second tourism fund hotel
23 October 2018: Fund shareholders approve sale to initiate Augusta tourism fund
24 September 2018: Pod hotel the opportunity for Augusta to close value-add fund with strong return and open tourism fund

Attribution: Company release.

Continue Reading

Vital Healthcare Property dissidents show muscle, and their arguments may yet hold sway

Dissident corporate unitholders in the Vital Healthcare Property Trust got majority support for 3 of their 5 proposals put to the annual meeting yesterday, but failed in the bid to get their nominee elected to the management company board.

Nevertheless, the support the trio of corporate dissidents amassed may be enough to reshape a review sought by the manager, and start the rebalancing they advocate between returns to the manager & distributions to unitholders.

Under the NZX structure for listed trusts, investors hold units in the trust but control lies with the manager. At Vital, the manager is NorthWest HealthcareProperties Management Ltd, a 100% subsidiary of the NorthWest group of Toronto headed by Paul Dalla Lana. Although the annual meeting was of unitholders in the trust, the board they vote directors to is the board of the manager.

Dissidents tried to get a director elected yesterday, and put 5 proposals which the board declared would be non-binding.

The broad outcomes:

  • Management board candidate Graham Stuart, appointed to the board in November, was re-elected
  • The dissidents wanted the board enlarged to 6 members, the manager & current board resisted. Dissidents’ candidate Paul Mead lost the vote to Mr Stuart, and the dissidents’ proposal to enlarge the board was also defeated
  • Although the dissidents’ 5 proposals were put as part of the business of the meeting, the board had decreed that they’d be non-binding and recommended unitholders vote against the resolutions
  • NorthWest scored marginal support for the first 2 relating to unilateral removal of directors & unilaterally altering the management fee. The third, to realign returns to manager & unitholders, was won 50.5% v 49.5% by the dissidents. The fourth & fifth, to enlarge the board and amend the conflicts of interest policy & board charter, gathered more opposition and were defeated.

The meeting was unusual. The board, having started a review of how Vital’s run and wanting to continue with it, had declared its position in the meeting documents but didn’t push its case, except for management company chair (and thereby trust chair) Claire Higgins saying directors wanted to get on with the review in the way they’d planned it.

Ms Higgins, a Vital/NorthWest director since 2012, succeeded Graeme Horsley as chair in May. After the meeting, but before the votes had been counted, Ms Higgins told me: “I don’t like to get into the trenches. I like to work with people. We’ve got to get NorthWest to agree to the changes, things we brought as independent directors to them.”

She thought NorthWest of Toronto would be receptive to the appointment of another independent director but, as with reviewing policies, “you have to do it in the right way”.

NorthWest’s vote questioned

The ability of NorthWest of Toronto to vote at all was called into question at the meeting because of allegations of conflict, but Ms Higgins said that although that question of law hadn’t been fully resolved, NorthWest’s units would be voted.

Excluding the Toronto holding of 110.8 million units (just under 25% of the total) would have meant NorthWest’s candidate for the board would have been defeated and all 5 proposals put by the dissident corporates would have been carried, though they would still have been non-binding.

The question of conflict has arisen often throughout the 30-odd years that externally managed trusts like Vital have been listed on the NZX, and most of them have changed their ownership & management models.

Vital, and just one other NZX-listed property trust, Goodman, have maintained the model of a trust managed by an external manager, both with large cornerstone unitholdings by the manager’s parent. Goodman parent, trust & unitholders have forged a good relationship in which the Australian parent has at times partnered with the NZ trust, and their transactions have been clearly visible.

The Canadian controlling interest in Vital & its manager has expanded the business exponentially from what, in its first couple of years as the Calan Healthcare Properties Trust, was a rickety, inadequately capitalised listed entity, and under ING and then ANZ Bank control remained a minor entity.

Ironic dissidence

But dissident unitholders at Vital’s annual meeting pointed to the widening discrepancy between returns to the manager and returns to unitholders.

That was ironic, because one of the leading trio of dissidents, ANZ Bank funds management, is a successor to OnePath (NZ) Ltd, the business that sold the Vital management contract to NorthWest in 2011.

And more ironic, because the entity that made that handover possible was another 2018 dissident, the Accident Compensation Corp, which had been calling for Vital’s ANZ-owned manager to be sacked in 2011 but then sold nearly half its 9.1% stake to an ANZ subsidiary.

The third of the corporate dissidents yesterday was Mint Asset Management Ltd.

The director vote

Re-election of Graham Stuart versus election of dissidents’ candidate Paul Mead as an independent director: Mr Stuart 184,312,438 (67.4%) votes in his favour, which exceeded the 89,023,333 (32.6%) votes cast in favour of Mr Mead. As they were contesting one board seat, Mr Stuart was elected.

Ms Higgins, Andy Evans & Mr Stuart are considered to be independent directors under the NZX listing rules. Chief executive David Carr was appointed to the board on 1 May and has been an executive director. He stood down from the board yesterday, reducing the board from a temporary 6 members to 5. The other 2 are Mr Dalla Lana & Bernard Crotty, of NorthWest in Toronto.

Although the argument looked at times a “them versus us” dispute, the wheels of change had been turning.

The manager confirmed in the meeting notice that it had already established a process to deal with the substance of the dissidents’ first 3 proposals, including a board-led review of management fees in the first quarter of 2019, with the manager’s rights in regard to election or removal of independent directors being suspended for the duration of that review.

Non-binding proposals passed: 
Proposal 1, relating to the election or removal of independent directors: 
For: 137,113,960 (53.9%) Against: 117,412,541 (46.1%) 
Proposal 2, relating to management fees:
For: 137,904,997 (54.2%) Against: 116,647,180 (45.8%) 
Proposal 3, also relating to management fees:
For: 128,475,755 (50.5%) Against: 126,067,548 (49.5%)

Non-binding proposals defeated: 
Proposal 4, relating to board composition:
For: 117,271,395 (46.1%) Against: 137,086,559 (53.9%) 
Proposal 5, relating to policies & procedures:
For: 117,437,126 (46.6%) Against: 134,721,703 (53.4%)

Background

In December 2011, the group Mr Dalla Lana controls, Toronto-based NorthWest Value Partners Inc, bought Vital’s management company from ANZ National Bank Ltd subsidiary OnePath (NZ) Ltd and held 19.66% of Vital’s units until April 2013, when he declared his intention to acquire up to 15.35 million units.

That proposal came 3 weeks after Vital obtained an Inland Revenue binding ruling which increased the limit a large unitholder could go to before the trust’s PIE (portfolio investment entity) status would be affected. Before that ruling, Vital management understood no unitholder could hold more than 20% of the units in the trust if it were to maintain its PIE status. The ruling lifted the limit to 25%.

According to Vital’s 2018 annual report, NorthWest held just under 106 million (24.26%) of Vital’s 437 million units at the 30 June balance date. Subsequent payments & acquisitions have lifted that stake to 110,823,292 units, or 24.91% of the trust.

In addition, NorthWest of Toronto owns Vital’s manager, renamed NorthWest Healthcare Properties Management Ltd in February.

Earlier stories:
6 December 2018: Vital doubles loan to NorthWest for Healthscope acquisition
25 November 2018: Vital Healthcare management fees up for review, new action at Healthscope
23 November 2018: Northwest increases Healthscope stake to 11.1%
9 May 2018: Vital Healthcare’s parent makes new Australian investment

28 February 2018: Vital Healthcare gets revaluation lift
4 December 2017: Vital Healthcare confirms 3 hospital acquisitions & development programme
31 January 2015: Ownership of Vital Healthcare manager moves to Canadian reit
11 October 2013: Dalla Lana lifts Vital stake to 24.11%
5 December 2011: Toronto healthcare specialist North West pays $11.5 million for Vital management, holds 19.8% of trust
21 November 2011: Vital unitholders get a pointless vote while major issues stay up in air
4 November 2011: Canadian investor Dalla Lana buys ACC out of Vital Healthcare
23 September 2011: ANZ halts Vital internalisation after lifting trust stake to 9%
27 April 2011: $14 million buyout price on Vital management contract

Attribution: Annual meeting, annual report, NZX documents.

Continue Reading