The Swedish fund manager that signed up to buy NZX-listed retirement village owner & operator Metlifecare Ltd on 30 December gave notice last night that it intended to terminate the agreement, but Metlifecare countered today that the buyer had no right to pull out.
The key reason for withdrawing was Metlifecare’s decline in value through the Covid-19 pandemic period.
Metlifecare had a share buyback underway when it announced on 13 November that an unnamed party had made an offer to buy the company.
The share price promptly jumped from $5.08 to $5.73 and reached $6.93 on 14 February but, as the Covid-19 virus began to impact the economy, the price plummeted from $6.87 on 2 March to $4.15 on 24 March.
Today, the price was down at $3.16 late morning but back up at $3.51 late afternoon.
The offer, at $7/share, put a value of $1.493 billion on Metlifecare. At the latest dip on the market to $3.16/share, the value fell to $674 million.
Asia Pacific Village Group Ltd (APVG), a newly incorporated subsidiary of Swedish private equity investment fund EQT Infrastructure IV Investments Sarl, advised Metlifecare late on Tuesday night it intended to terminate the scheme implementation agreement in about 10 business days.
Under the agreement, Asia Pacific Village Group was to acquire all shares in Metlifecare for $7 cash/share, subject to certain conditions including Metlifecare shareholder approval.
Metlifecare had scheduled the required shareholders’ meeting for 29 April.
Subject to shareholder & High Court approval, and satisfaction of other conditions including Overseas Investment Office approval, Metlifecare said in February the transaction should be implemented in May.
Metlifecare chair Kim Ellis said in today’s notice to the NZX disclosing the intended withdrawal & Metlifecare’s view that APVG’s assertions were “without substance”:
“APVG has asserted that Covid-19 is a specified event triggering the “material adverse change” clause (as defined on page 55 of the scheme implementation agreement) – the MAC clause – because it has reduced, or is reasonably likely to reduce, the consolidated net tangible assets of Metlifecare by at least $100 million; and/or that it is reasonably likely to reduce the consolidated underlying net profit (as described in the MAC clause) of Metlifecare by at least 10% in the 2020 financial year, and/or 2021 & 2022 financial years, against what it would reasonably have been expected to be but for the Covid-19 event.
“APVG has also asserted that Metlifecare has not provided some information to APVG and made decisions in relation to its response to level 4 Government directives without consultation &/or consent of APVG, contrary to clauses 9.2 & 9.3 of the scheme implementation agreement.”
Mr Ellis said Metlifecare was taking legal advice on the APVG correspondence, “but its initial view is that the assertions are without substance and that APVG does not have a lawful basis to terminate the scheme implementation agreement.”
Metlifecare owns & operates a portfolio of 25 retirement villages, predominantly in the upper North Island.
25 March 2020: Metlifecare moves buyout scheme forward though market price way below offer
18 March 2020: Metlifecare clarifies takeover status
20 December 2019: Metlifecare attracts more takeover interest as board puts value well above first offer
26 November 2019: Metlifecare appoints offer advisor, sees share price rise 20% in 3 weeks
20 November 2019: Metlifecare gets buyout offer, suspends share buyback
Attribution: Company release, NZX.