Well...an interesting turn of events with Aspen Group (APZ) now recommending that holders of securities in Aspen Parks Property Fund (APPF) accept Discovery Parks offer immediately & discard their Merger offer?
If you read the Discovery Parks Bidders Statement - particularly Section 6 titled' Concerns about APPF Governance', you will see two points from their list of concerns that stand out ... being:
1. The APPF Board is not Independent as it is made up of only 2 people - one being an APZ Director & other being APZs founding Chairman & this is why it is no longer able to be called an 'Independent Board Committee'.
2. The 'Independant Expert' is engaged on both sides of the APZ proposed merger as APZ & APPF are both using the same 'Independant Expert' to provide an opinion to both the bidder (APZ) & the target (APPF).
So, IMO only, you could assume if Discovery Parks proved this to be correct then APZ may have had to relinquish?
We, being holders of units in APPF since it first started in 2004 at $1 Security, were concerned too about the possible conflict of interest here as APZ is the parent company who requests an annual Valuer (from independant Valuation Agency) to review all Caravan Parks under Fund to revalue them as details from these amongst other workings out re interest rates etc determine the Unit price for new Investors to enter & existing Investors to exit (via redemption every Feb ONLY if enough funds come in exceed goings out plus leave enough money for Admin expenses etc) For those that don't quite understand how Managed Funds work - lets say price of each Unit is valued at $1.15 each. Investors buying in pay say $1.20 Unit & Investors exiting receive $1.10 per unit so Management collects difference inbetween both transactions & they also tweak the interest rate they pay you on your Units so they actually do decide the gap & rates etc so that they can create enough money to cover their expenses & remunerations etc etc.
Now...sorry for long story but thought some of you may want to get more of a grip on how it has played out from our side seeing APZ Shareholders here were going to end up with APPF. Every year right up until Dec last year the Unit price fluctuated around $1.08 to $1.34 or so but always above our $1 investment price even through GFC as those 5 star Hotels were out but Caravan Parks were needed more than ever as were supposedly recession proof ! The original enticing interest rate was around 12% tax deferred but it whittled lower down every year on 'one off costs' or 'Bank says LVR not looking good etc' so were paying less interest to us so we did put ourselves 'on the list' to redeem when it was at its highest price but though it had been written & pointed out in our original Investment Documents that we were to be allocated on a basis of 'first in, first out', this clause got deleted when they changed the structure into a Managed Fund (for all our benefit apparently...).
So...we planned to redeem last Feb & awaited the letter to tell us the actual price we would get so with the Unit price still showed around $1.08 (?) on their website we got a shock when the letter arrived & it virtually said: 'There will be no redemptions this year' BUT if you want money out then Aspen Group have offered to buy your Shares at 58c..!'
Now ,we were totally aware of the fact the Iron Ore price had slumped especially affecting the income & valuation of the Caravan Park in Port Hedland as about 8 (?) years ago we hired a Campervan from Perth & drove right up the WA Coast to check out every Aspen Parks Caravan Park we had invested in (sidetrack - went all through Pilbara over to Tom Price & Rio Tinto mine too plus checked out many tenements owned by some of the Small Caps stocks we had too lol - well worth the trip!) but we couldn't actually stay in a lot of these Parks because they were totally booked out or balked at the $38 - $58 prices per night for a parking site (had to save money to pay $400 each they asked to go out to look for Whale Sharks - which we didn't see but got to swim with lots of Manta Rays...sort of like being in the stock market ) At the time Port Hedland was extremely busy, milling with workers, packed to the hilt with people living in anything they could & we enjoyed watching all the activity & the Ships being loaded with Ore.
Anyway...yes...we were expecting a pullback in price but definately not an offer like 50% less as it was just one Caravan Park & there were about 8 (?) good profitable others in the Fund portfolio too which seemed to be discarded in the argument as focused on just this one so I rang up Aspen Group to ask more about this Valuation. I was told they use the same Valuation office every year so asked if it was same person or not going out & could they be using different calculation method etc & they said couldn't say but could be so? Then asked how can they be parent group overseeing APPF appointing the Valuer which they then use those figures to make an offer to investors of APPF? I stated that this was a total conflict of interest in our eyes & they should appoint an independent person to assess the real merit of worth for whole APPF properties before making an offer. My comments were swept aside so then rang ASIC to ask this Q but the person there was so useless at comprehending any of it so just gave up expecting it should all come out in the wash as knew we couldn't just be the only Investors thinking this wasn't really quite ethical.
It looks to me like this is a possible reason why APZ have had to withdraw but this whole scenario has made it easy for Discovery Parks to scoop us up at 68c...yes it is a better offer but wouldn't you be asking how do we know that the offer from APZ at 58c which set the original bar was ever a fair offer at all due to the conflict of interest in them doing the valuation rather than someone else outside as they really wanted to add our Caravan Parks into the listed stock here for a reason....they have been parenting us for a long time so they know all the figures...how can we not at least be sceptical about how APZ Directors have behaved here & I feel they were virtually bullying us into accepting a merger quickly without receiving a proper Independent valuation as the lawyers for Discovery Parks seem to have uncovered & used now to get their offer past with also APZ Directors enforcing it in the strongest way & with a huge ACCEPT in bold lettering? Why not just step back quietly.....are they under pressure by DP to enforce it like this?
DP obviously think it is still a bargain at 68c because $1 was the lowest price units ever sold for & many paid higher than that but these Parks bring in huge amount of monthly income - probably enough for the APZ directors to give themselves a nice pay rise for having to handle all those Caravan Parks but feel we have a right to feel upset at Aspen Group Directors because being our 'Parent' we should have been able to trust them yet they tossed an opportunistic 58c offer at us right away before they ever did a Prospectus up to even back it & without getting an independent Valuer in which has created a low bar price so we feel they should feel ashamed for creating this situation for us through the consequences of their impatient actions !
Anyway...I feel it is important that Shareholders of APZ hear another viewpoint from the other side of the deal though some of the prices I quoted may be a few cents out as am relying on my memory BUT if anyone wants it to be exact well I can go get my APPF folder out of storage & tell you exactly every price for the last 11 years!
