AMP takeover board slashes Capital payout

Capital Property has slashed the company's dividend payments after AMP took control of the Wellington landlord's board as part of its takeover offer.

Last month the new board suspended Capital's latest quarterly dividend, which had been due by Christmas, and said it was conducting a review of the company.

The review led to yesterday's announcement that it was slashing dividends by 40 to 60 per cent and keeping more profits.

"It makes sense to retain a portion of our earnings to assist in the funding of future opportunities," said Capital's new chairman, Murray Gribben, referring to a string of large property developments planned in Wellington.

AMP is offering $1.48 a share in its takeover bid for Capital and has 84.7 per cent of the company, whose shares are trading at $1.46 to $1.48.

Before AMP's audacious on-market bid, shareholders got almost all of Capital's net earnings.

Gribben added a further touch of parsimony to his plans by announcing shareholders would only get payments every six months instead of quarterly.

Anxious shareholders - many retired and dependent on the large, quarterly payments - had expressed fears about AMP's plans in November and one investor took his concerns to a regulatory authority.

Angry Capital shareholder Claude Moffat, of Ellerslie, said yesterday Capital had been the best listed property company before AMP's takeover and he was extremely disappointed about the dividend change.

"But I'm surprised they're paying any dividend at all because they want to frighten shareholders off," he said of the changes.

He called for AMP to declare its management fees and questioned the dividend changes, saying the previous Capital board had not sought to cut dividends despite putting in place the many Wellington real estate developments planned.

Moffat has continually criticised statements from AMP Property Portfolio general manager Stephen Costley about overhauling the dividend policy.

Costley signalled part-way through the takeover late last year that if AMP got control of Capital, it had big changes - including to dividends - in store for investors.

Moffat took his complaints to the Takeovers Panel, calling for it to protect the interests of minority investors. But the panel refused.

Costley said his unlisted entity had "no appetite for dividends" and was purely an investment vehicle.

Moffat called this an attempt to push shareholders to sell because they did not want to be trapped with a parcel of unsaleable shares that had fallen in price, nor did they want to be trapped in a listed company which no longer paid dividends.

Moffat further predicted that AMP would "milk the income via a management contract that will further undermine the value of those shares by lessening any dividend if there is any".

But Gribben said the dividend changes were necessary because of the number of developments planned in the next three to five years and to create a stronger balance sheet.

Gribben also announced that Capital's balance date would change from March 31 to December 31 to fit in with AMP's needs.

Capital paid a 2.5c gross dividend in September. The new board is yet to decide when to pay the November dividend, or to set payment dates for 2006.

Gribben said those dates would be set once AMP's bid for Capital closed.


AMP bid

* September 30: AMP makes its $1.42-a-share bid for Capital Properties.
* October 28: AMP increases its offer to $1.48.
* November 16: AMP goes unconditional with its takeover.
* January 4: Capital leaves NZX benchmark Top 50 index.
* January 5: AMP slices dividends by 40 to 60 per cent.
* January 13: AMP's offer for Capital due to close.