Below is yesterdays full article - Is this saying that Marathon and York are both against the deal moving forward. That they too believe the 230m to be paid to CNP for the asset management is way over priced? I think that the board is in damage control - as I stated previously, the due dilligence of the bigger players will carry us all to the best outcome for shareholders in CER.
AS Centro Properties Group's senior lenders and hybrid note holders prepare to battle it out in the NSW Supreme Court tomorrow over who has the most power when it comes to voting on the $3 billion amalgamation of Centro Properties and Centro Retail Trust as well as their associated funds, there are other issues bubbling away beneath the surface.
Hybrid noteholder JPMorgan's legal dispute with the senior lenders over whether the latter can actually direct the former on how to vote at this month's meeting is an important issue to settle ahead of the vote. But JPMorgan and its fellow owners of Centro's $1bn of hybrid notes are not the only ones to have expressed a dislike of the deal, under which Centro Properties shareholders and junior stakeholders will get $100m to divide between them.
Centro Properties senior lenders say they would have to tip the company into receivership if the deal does not get approved by all stakeholders.
They argue that the JPMorgan and the other hybrid debt holders have to approve the deal or they will end up with nothing at all. They say the $100m is a consent fee and believe that under the original hybrid note agreement, they have the right to direct hybrid noteholder voting on the deal.
Centro Retail shareholders have also expressed their dislike of the deal and word is that the group's biggest hedge fund shareholders Marathon Asset Management and York Capital now have so much support that as a voting block they have 25 per cent of the non-Centro Properties shareholding in the company.
Centro Properties owns 50 per cent of Centro Retail and for the transaction to succeed, it needs approval of 50 per cent of voting shareholders by value to approve, with Centro excluded from voting.
It's understood Marathon and York have the support of billionaire John Paulson's Paulson & Co - which owns about 3 per cent of the stock - as well as Simon Marais's Orbis Investment Management.
The major reasons why they are opposed to the deal include the too-high valuation of the asset manager, which at $230m they perceive to be four times the market value and the too-low valuation of the assets contributed.
CER Price at posting:
28.0¢ Sentiment: Hold Disclosure: Held
