Ann: MERGER: PFI: Independent Directors Recommend

• Release Date: 22/05/13 12:59
• Summary: MERGER: PFI: Independent Directors Recommend Merger to Shareholders
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PFI
22/05/2013 10:59
MERGER

REL: 1059 HRS Property for Industry Limited

MERGER: PFI: Independent Directors Recommend Merger to Shareholders

PFI AND DPF INDEPENDENT DIRECTORS RECOMMEND MERGER TO SHAREHOLDERS

Property for Industry Limited (PFI) and Direct Property Fund Limited's (DPF)
independent directors today formally recommended to shareholders the proposal
to merge and create one of New Zealand's largest industrial property
investment companies.

PFI and DPF have today registered an Information Memorandum, which is also a
simplified disclosure prospectus in respect of the offer of PFI shares to DPF
shareholders. It contains details of the merger, the report of the
independent expert Deloitte which assesses the merits and fairness of the
merger, the report of the independent appraiser PwC which assesses the
fairness of proposed changes to the PFI management contract, as well as the
PFI and DPF notices of special meetings to approve the merger.

In a joint statement, PFI Chairman Peter Masfen and DPF Chairman Arthur Young
said: "Having examined the merger proposal in detail, including the two
independent reports, the PFI and DPF independent directors have no hesitation
in recommending the merger to PFI and DPF shareholders."

"PFI and DPF have a bright future together. The merger brings together two
successful and complementary property investment companies at an attractive
point in the property cycle" said Mr Masfen.

Mr Young noted: "Shareholders of the merged group will have exposure to a
significantly larger property portfolio, with increased diversification of
the portfolio by rental income, lease expiry, and number, type and size of
tenants and buildings."

As previously announced, the transaction is structured to occur by way of a
court approved scheme of arrangement. PFI will be the continuing entity, with
DPF shareholders receiving 123.218 PFI shares for each DPF share held. The
exchange ratio reflects agreed relative values for each of PFI and DPF, being
109% of the adjusted net tangible asset value for PFI and 104% of the
adjusted net tangible asset value for DPF, both calculated as at 28 February
2013.

The merged group is expected to have a market capitalisation of more than
$500 million, making it the 5th largest LPV on the NZX Main Board, whilst
PFI's ranking in the NZX 50 Index is expected to rise from its current
position of 42nd to 29th as a result of the merger (based on PFI and DPF's
own analysis - the expected ranking has not been approved or checked by NZX).

The merger and associated treasury initiatives are forecast to deliver an
increase in dividends per share for PFI and DPF shareholders, an increase in
net tangible assets per share for PFI shareholders, and preservation of the
market value of DPF shareholders' investment.

The PFI and DPF independent directors, all of whom will vote their shares in
favour of the merger, are confident the benefits of the merger are shared
fairly between the shareholders of each company.

This view is shared by the independent expert, Deloitte, which concluded:

"In our opinion, after having regard to all relevant factors, the Merger has
merit for the shareholders of both PFI and DPF, and the benefits of the
Merger are shared fairly between the shareholders of PFI and DPF."

The merger is contingent on PFI shareholder's approval of proposed changes to
PFI's management agreement, including PFI's base management fee. The proposed
new base fee will be a simple blend of the current base management fees paid
by PFI and DPF.

The independent appraiser, PwC, in reviewing the proposed management
agreement and considering the benefits of the merger, concluded:

"In our opinion, the proposed changes to PFI's Management Agreement are
"fair" to the Non-Associated Shareholders of PFI."

Documentation will be mailed to shareholders by 7 June 2013. The merger will
require approval from 75% of PFI and DPF shareholders entitled to vote and
voting at special meetings on 24 June 2013. On the same day, PFI shareholders
will also vote on the proposed changes to PFI's management agreement.
Assuming shareholder approvals and final court orders are received, the
merged entity is expected to commence trading on 1 July 2013.

Mr Masfen will be Chairman of the merged group. He will be joined by current
PFI directors Humphry Rolleston and Anthony Beverley. Mr Young and DPF
independent director John Waller will also join the PFI board. Greg Reidy
will remain on the board as the management representative.

The merged group's management team will be led by Greg Reidy. PFI General
Manager Nick Cobham and DPF General Manager Simon Woodhams will be appointed
as Joint General Managers. Craig Peirce will continue as PFI's Chief
Financial Officer and Company Secretary.

PFIM Managing Director Greg Reidy said: "I am delighted that the PFI and DPF
independent directors are supporting the merger. We are now looking forward
to presenting this proposal to shareholders."

Contact
For further information please contact:
Peter Masfen
Chairman
Property for Industry Limited
Phone: +64 9 306 1261
Email: [email protected]

Arthur Young
Chairman
Direct Property Fund Limited
Phone: +64 9 357 9001
Email: [email protected]

About PFI
PFI is New Zealand's only listed company specialising in industrial property.
PFI's portfolio of 50 industrial properties in Auckland, Wellington and
Christchurch, is leased to 84 tenants. www.pfi.co.nz

About DPF
DPF is an unlisted limited liability property company which invests in the
commercial and industrial property sector. DPF's portfolio of 33 properties
in Auckland, Hamilton, Tauranga and Wellington is leased to 55 tenants.
www.directproperty.co.nz

Note
This announcement includes information extracted from an Information
Memorandum in relation to the proposed merger which is dated 22 May 2013.
Please refer to the Information Memorandum for further detail. Terms used in
this announcement have the meaning ascribed to them in the Information
Memorandum. The Information Memorandum was registered with the Registrar of
Financial Service Providers on 22 May 2013.

Attached
(1) PFI - Presentation - 22 May 2013
(2) PFI - Information Memorandum - 22 May 2013
End CA:00236509 For:PFI    Type:MERGER     Time:2013-05-22 10:59:35