The Shareholders Association is supporting National Property Trust directors in a battle to capture hearts and minds for rival bids.
NPT owns Eastgate Shopping Centre in Christchurch and four other commercial buildings, and has been a poor performer.
On balance, Shareholders Association chief executive Michael Midgley said his group would vote any undirected proxies in favour of a Kiwi Property plan for NPT and would accept proxies from any shareholders whether or not they were members of the association.
He also said that shareholders who had already voted could change their minds and submit a new vote.
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Shareholders are being wooed by the Kiwi Property expansion plan and must decide at an April 21 meeting.
But rival Augusta Capital will also seek shareholder support to sack NPT directors and install their own candidates.
The Shareholders Association has spoken with both suitors and other shareholders Salt Funds and ANZ Equity.
Midgley said the Kiwi Property proposal brings a strong level of certainty and will enlarge the company, albeit at a short term cost because Kiwi will buy 19 per cent of the company at a discount and also take over management.
The Kiwi deal would increase profit and dividends, and has a provision that after five years NPT can dismiss Kiwi as manager without cause at a cost of $10m, Midgley said.
“We are not aware of any other management contract with these dismissal provisions.
“While the numbers seem large it is worth remembering Property for Industry is proposing to buy their external management contract for $40m.”
Midgley was less enthusiastic about the rival Augusta plan to replace the NPT board.
“The problem we have with changing the board is that shareholders have no idea of what actions it may take. We think it is unlikely that the status quo would prevail.
“If a new board decides to externalise the management contract this can be done without reference to shareholders, and on whatever terms the board decides.
“We don’t see much likelihood of a blended board of old and new working together constructively,” Midgley said.
Alternatives included doing nothing but NPT would be limited in its ability to grow and most likely remain illiquid with shares trading at a discount, he said.
NPT could also be broken up and the assets sold to give a greater return than the value of the current share price.