DNZ investors temper their delight with caution

DNZ Property Fund CEO Paul Duffy. Photo / Brett Phibbs

The delight of DNZ Property Fund investors who wanted to stop a planned float was yesterday tempered with caution about the next step of the deal.

On Thursday, DNZ's management pulled the $130 million sharemarket float citing investor "confusion and concern" and debate about the deal's merits, forcing it to repay money raised since November 18.

"I'm rapt," said retired builder and DNZ shareholder Derek Button.

"But it's only the battle that's won, not the war."

It is the second NZX float to fall over in the past month. The other was dairy company Synlait.

Investors rose up against the DNZ deal which they believed would destroy 40 per cent of their wealth. They were also upset about a management contract that would pay $43 million to chief executive Paul Duffy and ex-chairman Alastair Hasell.

An upset investor wanted Commerce Minister Simon Power to intervene. Warren Whyte said he was one of the 8500 investors suffering after the business announced changes without consulting shareholders.

"We were told earlier in the year that our shares were worth $1.37 and we're now being offered a buy-out price of 82c. I pointed out to Simon that this high-handed action by two executives to pay themselves $43 million was making a mockery of company law and that it was all happening under his watch."

Derek Young and David van Schaardenburg, MMG Advisory Partners directors, yesterday met DNZ management to hammer out an accord.

The two have been at loggerheads for months and MMG failed to force through a rules change to give existing shareholders more say.

This week, MMG rallied investors to demand the heads of DNZ independent directors Simon Botherway, ex-PricewaterhouseCoopers partner John Harvey and AlexanderDorrington lawyer Mark Hopkinson.

Young and van Schaardenburg want to get on to the board to force through a new deal.

That new board would review DNZ's heavily indebted capital structure.

After yesterday's meeting, van Schaardenburg said he was pleased the deal was axed but the work had just started.

Speculation was mounting yesterday over commissioning a new management contract valuation as an alternative to Northington Partners' report. "Everything's on the table," said one party.

But investors fretted about being hit with Goldman Sachs JBWere's fees on the float and any new deal put together.