NZX-listed retirement village owner & operator Metlifecare Ltd has a long & difficult battle to wage to get a Swedish fund manager to buy the New Zealand company at what is now a very high price, made no easier by a High Court decision yesterday.
Justice Graham Lang said he couldn’t be sure the buyout agreement was still on foot – the buyer said it wasn’t and has sold all the shares it had acquired, while Metlifecare’s board is preparing litigation to force the transaction to proceed.
The judge dismissed Metlifecare’s application for initial orders for a meeting where shareholders could approve the now-disputed scheme of arrangement for a buyout, saying that wasn’t really what the company’s application was about.
Justice Lang agreed with counsel for the Swedish fund management group, Alan Galbraith QC, that Metlifecare didn’t need a court-ordered meeting to gauge support, and that the meeting would really be about whether shareholders supported continuing with the litigation.
The judge said the court hearing on the buyout scheme of arrangement wouldn’t happen until November – tentatively set for 23 November – and the trial would probably take 3 weeks, so a decision wouldn’t be issued until next year.
Metlifecare said after the judge issued his decision yesterday that the company would issue a notice of meeting to shareholders next week, for a meeting expected to be in mid-July.
Metlifecare went to court seeking approval of a scheme of arrangement for Asia Pacific Village Group Ltd, which is ultimately controlled by Swedish private equity investment fund EQT Fund Management Sarl via the Luxembourg-based EQT Infrastructure IV Fund, to buy the NZX-listed company for $7/share.
Metlifecare’s share price picked up yesterday, from $4.19 at the close on Friday to $4.33.
The buyout scheme implementation agreement permitted Asia Pacific to terminate the agreement by notice in writing if a defined material adverse change or prescribed occurrence occurred before the arrangement was implemented.
Justice Lang said: “On 28 April, Asia Pacific served Metlifecare with a notice terminating the scheme implementation agreement. Asia Pacific relied on 2 grounds to terminate the agreement. First, it alleged that the emergence & spread of the Covid-19 virus in New Zealand constituted a material adverse change under the agreement because it had reduced, or was reasonably likely to reduce, Metlifecare’s consolidated net tangible assets & underlying net profit. Secondly, it alleged several acts by Metlifecare constituted prescribed occurrences under the agreement.”
Justice Lang turned down Metlifecare’s application for orders, saying he couldn’t be satisfied an arrangement remained in existence to which the orders could apply.
21 May 2020: Metlifecare names 5 big shareholders supporting buyout court action, 2 others get on with trading
8 May 2020: Metlifecare gets court timetable to consider EQT withdrawal from takeover
29 April 2020: Swedish fund gives notice of complete exit from Metlifecare as NZ company repeats “you can’t” bluster
8 April 2020: Metlifecare buyer sends pullout notice, Metlifecare says it can’t
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: Court decision, Metlifecare notice.