Westfield Retail Trust’s largest shareholder, UniSuper, has challenged one of the key claims made about the risks of rejecting a controversial $70 billion restructure plan as opposing factions stepped up campaigns to win over investor votes.
UniSuper said that the “plan B” announced by Westfield Group founder Frank Lowy — to list a rival group holding the other half of the shares in its Australasian shopping centres and the management operation — could be to the advantage of WRT.
The new company could be left with high debt levels because of the costs of the restructure and be forced to sell assets, the superannuation fund said.
“This would in itself be a great outcome for WRT given that it has pre-emptive rights (ie, first right of refusal) to purchase the properties,” UniSuper said in a letter to investment clients last night.
UniSuper’s claim about pre-emptive rights challenges one of warnings by the deal’s proponents that the “plan B” group could sell stakes in key centres to non-Westfield investors.
However, it is not clear whether WRT would have the resources or inclination to purchase the assets, sources said.
UniSuper also said assumptions that WRT would always trade at a discount to the “plan B” group displayed “an ignorance of how markets actually work”.
The “plan B” company would have a higher risk profile as it would hold the management and development businesses, which UniSuper said meant it “could potentially trade at a premium in a strong bull market, but revert to a discount when investors are more cautious”.
At the moment, Westfield Group trades at premium while WRT is trading at a discount to its net tangible asset backing.
WRT chairman Dick Warburton adjourned a meeting last Thursday when proxies indicated the restructure plan to put WRT together with Westfield’s Australasian assets into a new entity, Scentre Group, would fall short of the required 75 per cent hurdle.
The early proxy result has sparked campaigns by opposing camps to convince some investors who did vote to change their minds as well as attract tens of thousands of investors who did not lodge a vote ahead of the meeting.
“I think they’re contacting those investors that haven’t voted to date rather than trying to get anyone to change their votes,” Maxim Asset Management managing director Winston Sammut said.
WRT advertisements featured in newspapers yesterday, stressing the importance for shareholders to participate in the voting. The group’s independent directors have recommended the deal, partly based on fears of what may happen should the deal not secure approval and their conviction that Westfield will not come back with a sweetened deal.
Mr Warburton said yesterday that “securityholders now have a very clear decision to make”.
He warned of the consequences of rejecting the proposal and keeping WRT as it is.
Additional reporting: Andrew White