valad defiant despite write-downs

Valad defiant despite write-downs, job cuts

Paddy Manning

The Australian Financial Review I 27 Jan 2009 I Page: 47

Valad Property Group securities were marked down again last week after the company flagged significant write-downs against its $610 million Valad Capital Services and Crownstone businesses in its December half-year accounts.
Based on Valad’s June 30 accounts - and factoring in the $65 million sale of its M4/M7 stake, held at a book value of $82.4 million - the VCS and Crownstone businesses make up roughly 330 of Valad’s last stated net asset backing of $1 .30.
Valad said as a result of its likely asset impairment it was in discussions with its banks to restructure its loan facilities and covenants and would update investors when it released its accounts on February 25. Valad securities closed down 3.70, or 44 per cent, to 4.70 on Friday.
Valad also said it had reached agreement on a partial debt-for-equity swap with the vendors of its Scarborough European property business, including director Kevin McCabe. Valad bought Scarborough for $2 billion in July 2007 and was obliged to pay the vendors £37 million ($78 million) in September this year under the deal.
The vendors proposed reducing the cash commitment payable this year by some £30 million ($67 million) in exchange for equity issued at a price to be agreed, lifting their stake in Valad to 19.9 per cent.
The remainder of the payment will be deferred by three years to September 2012 and will bear interest at a rate yet to be agreed.
Valad last week cut its workforce by 25 per cent and on Friday said its Asia-Pacific chief executive, Jeff Locke, and group head of corporate affairs, Rebecca Thompson, would leave.
It also announced that all investors in its European Industrial Property Fund, which has gross assets valued at EUR47O million ($933 million), had agreed to extend the funds life to 2013.
Valad managing director Peter Hurley told The Australian Financial Review yesterday that, while the
share market had reacted negatively to last week’s announcement, it was ‘a combination of stating what is self-evident and good news’.
“Our assets are likely to be impaired, but it’s the same position for us and many of our peers,” he said.
The staff reductions were a necessary step but one which “from a personal point of view, gives nobody any pleasure”.
The proposal from Scarborough’s vendors was “very good news”.