SINGAPORE (June 23): ARA Asset Management is offering to acquire 29% of all Cromwell Property Group’s stapled securities that it does not already hold for A$0.90 per stapled security reduced by any dividends or distributions declared, determined or paid after June 23, 2020. ARA and its partners own 24% and Gordon Tang owns 16% of Cromwell Property Group. The offer represents a 9.8% premium to Cromwell’s 30-day volume weighted average price (VWAP) of A$0.82 per stapled security. “We believe this Offer represents an opportunity for securityholders to realise cash at a premium for a portion of their Cromwell securities amidst the heightened market volatility and uncertainty from COVID-19 and other factors,” ARA says in a statement.
The offer provides securityholders with a clear exit strategy, given Cromwell's elevated gearing levels in conjunction with the uncertainty surrounding rental collections and asset values as a result of Covid-19, and the possibility of equity raising at a discount, ARA says.
In addition, ARA has become increasingly concerned with the poor operational performance, increased complexity, erratic strategy, overall governance and risk management protocols at Cromwell. As Cromwell’s largest securityholder ARA has, on a number of occasions, sought to constructively engage with the Cromwell Board in order to ensure securityholder value is protected and maximised, ARA says. “These attempts have been met with an unwillingness by the Cromwell Board to engage in a constructive manner; accordingly, ARA views the best way forward to improving the governance and performance of Cromwell is to present an offer directly to its fellow Cromwell securityholders.”
Unsurprisingly, Cromwell Property has told its securityholders to take no action. Australian news reports of differences arising between ARA and Cromwell’s management and board appear from time to time.
