Recommended Proposal to Acquire Commonwealth Property Office Fund
November 10 2013 - 3:58PM
Marketwired Canada
Canada Pension Plan Investment Board issued a joint ASX release with DEXUS
Property Group today. Below follows the release.
Recommended proposal to acquire Commonwealth Property Office Fund
DEXUS Property Group ("DEXUS") refers to its announcement on 11 October 2013 in
relation to the indicative, non-binding proposal (the "Proposal") made jointly
with Canada Pension Plan Investment Board ("CPPIB") (together the "Consortium")
to Commonwealth Managed Investments Limited ("CMIL") the Responsible Entity of
the Commonwealth Property Office Fund ("CPA") to acquire all of the issued units
in CPA(1).
DEXUS today announced that:
1. The Consortium has revised its Proposal put forward on 11 October 2013
in the manner described below - which the Independent Directors of CMIL
have confirmed they will recommend, in the absence of a superior
proposal and subject to an independent expert opinion that the proposal
is in the best interests of CPA Unitholders ("Recommended Proposal")
2. The Consortium has entered into a Process Agreement ("Process
Agreement") with CMIL in relation to progressing the Recommended
Proposal, and
3. It has entered into a Confidentiality and Exclusivity Agreement with the
Commonwealth Bank of Australia ("CBA") with respect to an ancillary
proposal.
Summary of the Recommended Proposal
The Recommended Proposal provides for the following cash and DEXUS scrip
consideration (expressed per CPA Unit):
-- A cash payment equal to 71 cents plus an amount equivalent to 75% of FFO
per CPA Unit for the period from 1 January 2014 to the Implementation
Date, plus
-- 0.4516 DEXUS stapled securities.
CPA's current distribution guidance of 6.65 cents per CPA Unit for the year
ending 30 June 2014 assumes a payout ratio of 75% of FFO. Based on an assumed
implementation date of 31 March 2014, the total cash consideration component of
the Recommended Proposal is estimated to be 72.65 cents per CPA Unit. The actual
total cash payment may be higher or lower than 72.65 cents per CPA Unit,
depending on the operating performance of CPA and the actual implementation
date.
CPA Unitholders will be entitled to receive and retain the CPA distribution for
the six months ending 31 December 2013, which is expected to be approximately
3.3 cents per CPA Unit. If the Recommended Proposal is implemented, this will be
the final distribution paid by CPA to CPA Unitholders.
DEXUS stapled securities issued to CPA Unitholders under the Recommended
Proposal will have a pro-rata entitlement to DEXUS distributions for the period
to 30 June 2014 from the date of issue of the DEXUS stapled securities under the
Recommended Proposal, and will rank equally with all other DEXUS stapled
securities for subsequent distribution periods.
The pro-forma earnings and NTA impact of the Recommended Proposal on DEXUS's key
financial metrics is expected to remain within the ranges provided in the
announcement of the initial Proposal on 11 October 2013 (adjusting for the
change in the assumed implementation date from 31 December 2013 to 31 March 2014
and the announced CPA property revaluation(2)). DEXUS will provide financial
forecasts in conjunction with the release of a Scheme booklet following
execution of a binding Implementation Agreement between DEXUS and CMIL.
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Estimated
consideration value
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DEXUS scrip consideration(3) $0.4787
Total cash consideration (assuming an implementation
date of 31 March 2014) $0.7265
--------------------
Recommended Proposal value per CPA Unit $1.2052
Recommended Proposal represents a premium to CPA's:
- Closing price on 7 November 2013 ($1.190) 1.3%
- Closing price on 23 July 2013(a) ($1.085) 11.1%
- 30 day VWAP on 23 July 2013(a) ($1.071) 12.5%
- Stated 30 June 2013 NTA ($1.150) 4.8%
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a. The day prior to CMIL's announcement that it had received a preliminary
internalisation proposal from CBA, which was released to the ASX on 24
July 2013.
The Consortium believes this Recommended Proposal is compelling and, if
implemented, provides CPA Unitholders with an attractive premium for their units
and on-going participation in the benefits associated with an investment in
DEXUS.
Process Agreement with CMIL
The Consortium has entered into a conditional Process Agreement with CMIL (see
copy attached) under which the parties must negotiate in good faith to agree a
binding Implementation Agreement by mid December 2013.
Under the Process Agreement, CMIL has granted the Consortium a period of
exclusivity to conduct due diligence. The parties currently expect that due
diligence will be completed within four weeks followed by entry into a binding
Implementation Agreement.
The Independent Directors of CMIL have confirmed that, if the Recommended
Proposal proceeds, they will recommend that CPA Unitholders vote in favour of it
at any meeting in the absence of a superior proposal and subject to an
independent expert opinion that the Recommended Proposal is in the best
interests of CPA Unitholders.
The Process Agreement confirms that the Recommended Proposal is subject to a
number of conditions, including:
-- the Consortium completing satisfactory due diligence
-- CPA Unitholder approval of a trust scheme, and
-- approvals from regulators (including FIRB and ACCC).
Agreement with CBA
In its announcement on 11 October 2013, DEXUS announced that it had submitted to
CBA an indicative and non-binding ancillary proposal outlining a potential
facilitation of the Proposal and transition of the management of CPA ("Ancillary
Proposal").
DEXUS and CBA have now agreed an indicative term sheet for the Ancillary
Proposal, including a facilitation payment of $41 million and that CBA will
grant DEXUS due diligence in relation to the management arrangements of CPA.
DEXUS and CBA have today entered into a Confidentiality and Exclusivity Deed
("Deed"). The Deed, including the term sheet for the Ancillary Proposal (a copy
of which is also attached) sets out the terms of the arrangements between the
parties, including exclusivity arrangements in favour of DEXUS that extend until
24 December 2013.
The Ancillary Proposal is subject to implementation of the Recommended Proposal,
due diligence and execution of a binding Facilitation Deed.
Attachments
-- Process Agreement with CMIL
-- Confidentiality and Exclusivity Deed with CBA
Note: Australian Dollars (AUD) have been used as the reference currency for this
release.
About DEXUS
DEXUS Property Group (DEXUS) is one of Australia's leading real estate groups,
investing directly in high quality Australian office and industrial properties.
With a total of $13 billion of assets under management, DEXUS also actively
manages office, industrial and retail properties located in key Australian
markets on behalf of third party capital partners. DEXUS manages an office
portfolio of over 900,000 square metres across Sydney, Melbourne, Brisbane and
Perth and is one of the largest institutional owners of office buildings in the
Sydney CBD, Australia's largest office market. DEXUS is a Top 50 entity by
market capitalisation listed on the Australian Securities Exchange under the
stock market trading code 'DXS' and is supported by more than 18,000 investors
from 15 countries. With over 25 years of experience in commercial property
investment, development and asset management, DEXUS has a proven track record in
capital and risk management, providing service excellence to tenants and
delivering superior risk-adjusted returns to investors. www.dexus.com
Download the DEXUS IR app to your preferred mobile device to gain instant access
to the latest stock price, ASX Announcements, presentations, reports, webcasts
and more.
DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible
Entity for DEXUS Property Group (ASX:DXS)
About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional investment
management organization that invests the funds not needed by the Canada Pension
Plan (CPP) to pay current benefits on behalf of 18 million Canadian contributors
and beneficiaries. In order to build a diversified portfolio of CPP assets,
CPPIB invests in public equities, private equities, real estate, infrastructure
and fixed income instruments. Headquartered in Toronto, with offices in London
and Hong Kong, CPPIB is governed and managed independently of the Canada Pension
Plan and at arm's length from governments. At June 30, 2013, the CPP Fund
totalled C$188.9 billion of which C$20.9 billion represents real estate
investments. For more information about CPPIB, please visit www.cppib.com.
CPPIB has agreed to the statements made by and references to CPPIB in this
release. However, CPPIB has not authorised any of the statements made by DEXUS
or the references to or concerning DEXUS Property Group in this release.
1. Other than those to which DEXUS is already entitled under DEXUS's
forward contract with Deutsche Bank AG, announced to the ASX on 25 July
2013. If the Recommended Proposal proceeds, DEXUS currently intends to
take early delivery of those CPA Units under the forward contract.
However, DEXUS reserves the right to cash settle the forward instead of
taking early delivery. If it does so, the Recommended Proposal will
relate to 100% of the units in CPA.
2. On 23 October 2013 CPA released revaluations completed across six
properties and subsequently on 5 November 2013 announced draft
revaluations across 16 properties. The combined expected increase
against prior book values is estimated to be $74 million.
3. Based on the closing price of DEXUS Stapled Securities as at 7 November
2013 of $1.06.
FOR FURTHER INFORMATION PLEASE CONTACT:
DEXUS
Investor queries
David Yates
+61 2 9017 1424 or M: +61 418 861 047
david.yates@dexus.com
DEXUS
Media queries
Martin Debelle, Citadel
+61 2 9290 3033 or M: +61 409 911 189
mdebelle@citadelpr.com.au
CPPIB
Media queries, Canada
Linda Sims
+1 416 868 8695
lsims@cppib.com
CPPIB
Media queries, Australia
Nigel Kassulke, Cannings
+61 2 8284 9990 or M: +61 407 904874
nkassulke@cannings.net.au
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