Plans for biggest NZX reverse takeover ditched

Mark Gunton, NZRPG founder, pictured at Westgate. Photo/Nick Reed

Plans have been ditched for the biggest reverse takeover on the NZX, after the $575 million New Zealand Retail Property Group cancelled its play on listed Bethunes Investments, saying it would examine other options after the September election.

NZRPG released a statement saying: "The decision follows a non-deal roadshow where market feedback indicated a capital raising in this climate would not attach in the board's view a fair and reasonable price to NZRPG's portfolio of assets - given softening dynamics impacting the listed property sector and property market generally.

"The board will now assess various alternative capital management options, which it expects to progress following this year's general election," NZRPG's said.

Christopher Swasbrook, Bethunes chairman, told the NZX this morning that the deal was off.

"BIL was advised this morning by NZ Retail Property Group that the proposed reverse listing transaction is terminated," Swasbrook said.

Institutional investors said they were not surprised by the move.

Swasbrook said it was disappointing but Bethunes shareholders had not incurred any direct costs from the transaction and were therefore no worse off than before.

NZRPG is transforming Milford on the North Shore into 115 apartments and expanding the mall. Its Westgate is a new Auckland town centre and big plans are held for Birkenhead's Highbury: a new mall and apartment blocks up to 11 levels, indicative plans show.

Tim Preston of CM Partners, which had been managing the listing process, said before the deal was cancelled that it was "the biggest reverse takeover of a listed business in the NZX's history", due to the value of NZRPG's assets.

Prior to today's announcement institutional investors had run their eyes over the business, after presentations by NZRPG executives.

"It's too early to have a view on what is reasonable pricing relative to the risks and opportunities, of which there are both at this late stage of the property cycle," said one investor. "I do like [NZRPG head] Mark Gunton's vision and entrepreneurship but the deal will still need to value up well."

Another was not keen.

"My opinion is not positive. They're asking for equity and I'm unlikely to be part of that process. The assets are of reasonable quality in good locations."

Capital raising would fund Milford's development which the investor said was interesting on the face of it and seemed such an obvious thing to do given the issues of supply, using the assets to encourage higher density housing.

"But the issue that I see is the price point they're looking to get. It's pretty high."

Sara Johnson, NZRPG marketing and communications general manager, said last year that prices started at $1.7 million for a 94sq m Milford unit.

Johnson said Gunton and chairman Paul Duffy had met local and Australian investors lately.

"These meetings were part of a non-deal roadshow while the board continues to assess various capital management options.

"The purpose of these meetings has simply been [introductions] and to provide a high-level overview of the company."