The corporate regulator is facing calls to delay a shareholder vote on the $70 billion Westfield restructure to ensure that shareholders in its Australian shopping mall spin-off have time to consider the “material’’ change to the deal announced last week.
Westfield Retail Trust heads to the Supreme Court this afternoon to seek court approval for new documents to be sent to shareholders ahead of resuming the meeting controversially adjourned by chairman Dick Warburton last Thursday some time in the next two weeks.
But corporate governance advisers said the meeting should be scrapped and a new meeting held to ensure that shareholders have time to absorb the changes and make an informed vote.
Gordon Hagart, the chief executive of the Australian Council of Superannuation Investors, said he was concerned that investors would not have the time to process information in time for the vote.
“What we want is people having information to make a decision and the time to make a good decision and it seems to me that in this case we don’t have that,’’ Mr Hagart said.
The Australian Securities & Investments Commission has briefed legal counsel to appear at the court hearing.
It is understood ASIC will confine its remarks to advising the court about its views on the adequacy of disclosure about the change in the deal and the timing of the voting process.
Shareholders would be able to withdraw their proxies and resubmit the votes based on the new information, Westfield said.
Mr Warburton last week adjourned a vote of WRT shareholders after major investor BT Investment Management said there had been a “material’’ change to the deal terms.
Earlier that day, Westfield Group founder and chairman Frank Lowy said he would pursue a separate demerger of the group’s Australian assets if the Westfield Retail shareholders opposed the deal.
The move headed off a historic defeat on the floor of a shareholders meeting for one of Australia’s richest men, with proxies representing 74.1 per cent of WRT votes cast in favour of the deal, just shy of the required 75 per cent.
Westfield Group shares were voted 98 per cent in favour of the deal.
One source close to the deal said there was no need to call a new meeting since the terms of the deal had been changed previously — with Westfield offering WRT a $300m deal sweetener three weeks before the vote.
Proxy adviser Ownership Matters said the meeting should be halted and a new meeting called to ensure the integrity of the market.
Shares in both companies have continued to trade through the controversy, but Westfield said yesterday that the record date for deciding who could vote would not change from May 27.
Ownership Matters director Dean Paatsch said the longer share trading was allowed without a fresh meeting increased the risk of the fate of the deal being decided by people who did not own the company.
“Market integrity is more important than who wins or loses on the day,’’ Mr Paatsch said.
A historically high 81.6 per cent of WRT shares were voted, but Mr Paatsch said this could fall sharply if investors were required to vote again in such a short space of time.
Ulysses Chiatto, executive director of proxy adviser ISS, said he would wait to see what new information was in the document before deciding whether clients needed to vote again and whether they needed to change their recommendation.
He said Mr Warburton had discretion to adjourn the meeting but that any challenge to his decision would depend on proving a deficiency in the disclosure ahead of the meeting.
The deal has split the investment community with industry fund UniSuper, owner of 8.5 per cent of WRT, challenging Westfield last weekend to “bring it on’’ with its threat to create a separate Australian arm.
UniSuper, Legg Mason, Colonial First State, UBS Global Asset Management and Phoenix Portfolios were among investors who opposed the deal.
Calls by Westfield Retail Trust shareholders for sweeping changes to the company’s board in the event of the parent company’s $70 billion restructure being voted down were intensifying yesterday.
Stuart Cartledge, the managing director of Phoenix Portfolios, which holds shares in WRT, said the five independent directors of the listed satellite had all been appointed by Westfield.
“It’s fairly hard for them to be truly independent,” he said. Mr Cartledge predicted the revised restructure vote for Westfield would be close and he believed the deferral would enable the parent company to secure more support to create Scentre Group.
However, if unsuccessful, WRT needed an independent board to scrutinise potential development proposals being made by the new entity on developing shopping centres, of which WRT would be the passive joint venture owner.
“I think there will be a call for it to happen, but given Westfield is playing hard ball on this whole thing, I would be surprised if they are going to allow it to happen without a substantial fight,” Mr Cartledge said.
“I think this whole process has identified it is a problem, to the extent that the deal doesn’t get up, that it probably needs to be addressed.”
But one fund manager in favour of the deal, who spoke on condition of anonymity, said there was no risk of either WDC or WRT being impaired by the deal to create a new company, Scentre, out of the local assets of the two companies.
“I believe Scentre would represent a significant improvement over the current Westfield Retail Trust structure and one of the most compelling platforms in the local market,’’ the fund manager said.
Additional reporting: Ben Wilmot