DNZ mavericks fail to get support

Two financial bosses failed to force changes to the $746 million DNZ Property Fund which plans an NZX listing.

Derek Young, chief executive of MMG Advisory Partners (formerly Money Managers) and David van Schaardenburg, principal of NZ Funds, which owns 40 per cent of MMG, spoke out at DNZ's annual meeting in Auckland on Tuesday, trying to force changes to a constitution.

But Paul Duffy, chief executive of DNZ Property Group, which manages the DNZ real estate fund, said the resolution put forward by the two was defeated.

The first draft of the resolution required that the board would "ensure the company will act in accord with the intentions of a new constitution around governance, transparency and full disclosure".

Tuesday's meeting stalled for negotiations and an amended resolution was put to it which said, "in exercising its management powers, the board will have regard to the intent of the rules of the proposed new constitution".

That was defeated on a vote whose outcome was declared a day after the meeting. Duffy said shareholders backed three other resolutions put by the board which had also advised shareholders to vote against Young and van Schaardenburg's resolution.

Yesterday, van Schaardenburg said the outcome was "incredibly disappointing but not surprising".

DNZ's shareholders did not understand the issues and how they could benefit by voting in favour of the resolution, he said.

"I tried to explain the issues. Maybe the shareholders don't think it's important. It may be in the good old Kiwi tradition where they trust people in positions of authority," he said.

At issue is DNZ's ability to mount a large capital-raising exercise without shareholder approval and van Schaardenburg said he was concerned about DNZ's management fees and its structure with two classes of shares. He wanted to bring better corporate governance to DNZ.

DNZ, previously Dominion Funds, plans to list on the NZX in the next year.

Duffy told Tuesday's meeting that DNZ was heavily indebted and needed to increase liquidity and spark more interest in the stock which trades on unlisted at only about 45c a share. There, it has a market capitalisation of just $200 million - a huge discount on the net tangible assets valued at $746 million.

Duffy said DNZ's loan-to-value ratio was higher than any of the large listed property businesses at 48.4 per cent. He wants to reduce this to "sub-40" per cent.