Property firms bury hatchet over sale feud

Two feuding property giants have buried the hatchet in a bitter dispute over the sale of management rights.

On the eve of a courtroom drama, Capital Properties sprang a surprise yesterday by dropping the plan to sell the rights, which had so irked 19.9 per cent stakeholder Kiwi Income Property Trust.

Kiwi boss Angus McNaughton, who brought the court proceedings to stop the sale last month, said he was thrilled with the decision. Capital chief executive Chris Gudgeon said his company had achieved a satisfactory outcome by setting a price for the management rights - $35 million to $40 million - and, ultimately, a new premium for its shares.

Gudgeon called for Kiwi to make a full takeover offer at a premium of $1.40, saying AMP Capital Investors' purchase of a 10.4 per cent stake last month - at $1.35 - had already set a new benchmark.

Capital's shares closed yesterday up 2c to $1.22. Kiwi's units were unchanged at $1.13.

Gudgeon refused to give any details about who was interested in the management rights but said several factors had spurred the sale cancellation.

"It's not practical to sell because of what Kiwi is doing and the general environment with AMP there," Gudgeon said.

The dramatic change of stance came from Capital chairman Colin Beyer, who maintained that the sale exercise had been useful because it highlighted the value of the business.

McNaughton and Gudgeon had been sparring since Kiwi bought its cornerstone stake in Capital on November 19 without declaring its intentions.

However, Kiwi's complaints to the Takeovers Panel and NZX over the management rights sale were rejected and then Capital refused to set a date for a special shareholder meeting to vote on altering its constitution to enable the sale.

Kiwi then upped the ante just before Easter by filing High Court proceedings, calling for an injunction to halt the sale.

Capital, called Kiwi's action "cynical meddling", and said it was looking forward to its day in court, boasting that all Kiwi's earlier attempts to stop the sale had failed.

It also baited Kiwi further by saying it was already in negotiations with an interested party.

The situation had been complicated earlier last month when a third player stepped into the fray, also with mysterious intentions. On March 8, AMP Capital Investors bought 10.4 per cent of Capital for $31 million and - like Kiwi - refused to disclose its intentions.

Yesterday, Capital said it wanted to work closely with Kiwi. The board expected "further dialogue" with Kiwi and AMP and if either made a full takeover offer, "every assistance" would be offered.

Kiwi said it would review the request for a special shareholder meeting if Capital could give assurances that shareholder approval would be sought for any future sale of the management rights.

The story so far

November 19: Kiwi Income Property Trust buys 19.9 per cent of Capital Properties without saying why.

November 26: Capital offers management rights for sale.

Late last year: Kiwi complains to NZX and Takeovers Panel about sale.

Early this year: Kiwi's complaints rejected, but it demands a special Capital shareholder meeting.

March 8: AMP buys 10.4 per cent of Capital.

Late last month: Kiwi issues court proceedings to stop sale. Capital taunts Kiwi that sale negotiations are on with one party, refuses to back down or set date for special meeting.

Yesterday: Capital withdraws management rights from market.