Kiwi and Capital off to the courts

Colin Beyer

The $1.2 billion listed landlord Kiwi Income Property Trust is having its third crack at blocking rival Capital Properties from selling its lucrative management rights.

After its complaints about Capital were rejected by the Takeovers Panel and the NZX, Kiwi said yesterday it had launched a High Court action.

And the $518 million listed Government landlord hit back, confirming Kiwi's worst fears. Capital chairman Colin Beyer said the company was indeed in negotiation with one party over the sale and that the board had "a potentially attractive proposal".

Beyer also accused Kiwi of "acting in self-interest" and being "determined to destroy potential wealth" for Capital's shareholders and Kiwi's unitholders.

The company said Kiwi's court action was "cynical meddling".

It would look for an early court fixture to confirm its view that it had the full legal right to proceed with the sale, which analysts estimate could raise between $30 million and $50 million.

Also at issue yesterday was the timing of Kiwi's action. Subsidiary Kiwi Property Holdings served papers on Capital chief executive Chris Gudgeon last Thursday, on the eve of the Easter holidays, when he was powerless to respond.

Kiwi wants a High Court injunction to stop the Capital sale before any special meeting of shareholders, demanded by Kiwi on February 18.

Kiwi wants the meeting to agree to amend Capital's constitution so any management sale would then become subject to shareholder approval.

"Kiwi is disappointed to have to take this action and had requested that Capital simply confirm to Kiwi that it will not dispose of the management rights prior to the special meeting," it told NZX. "Unfortunately, Capital has failed to provide this confirmation, leaving Kiwi with no option but to seek appropriate relief from the court."

Beyer said Kiwi's action had no merit and would be dismissed.

"Kiwi's previous attempts to restrict our ability to maximise shareholder value have already been firmly rejected by the Takeovers Panel and NZX regulation," he said.

Beyer said Capital expected to hold the special general meeting late next month.

On November 19, Kiwi paid $53.4 million for 19.9 per cent of Capital but did not declare its intentions. A full takeover was then widely expected, its eye on Capital's lucrative internalised management contract.

Capital's response was to put its management on the block, pushing up its share price. Capital was trading yesterday around $1.23 and Kiwi was at $1.12.

* The takeover battle for Capital intensified on March 8 when the country's biggest fund manager, AMP Capital Investors, bought 10.4 per cent for $31 million.