Centuria Capital has increased its shareholding in takeover target Propertylink, building pressure on the listed industrial property company to have a scheduled meeting date by this Thursday to spill its board.
Centuria chief executive John McBain and chairman Garry Charny told The Australian Financial Review it would also send every shareholder in Propertylink a letter making them aware of a $1.15 all-cash takeover bid from private equity-backed ESR Real Estate.
“We are deadly serious about this Propertylink board spill because we have completely lost confidence in the board of Propertylink,” Mr McBain said.
Mr McBain is not happy and is on a course to make a similar move to his challenge for the listed Over Fifty Group in 2011 when he was successful in spilling that board.
His renewed attack on the Propertylink board comes as Centuria increased its stake in the company to almost 13 per cent on Wednesday. Along with ESR, which also owns a stake in Centuria, Propertylink’s board could easily be removed and installed with new director recommendations from Centuria.
Propertylink’s Stuart Dawes is likely to be saved due to “key man mandates” with large investors for whom Propertylink manages real estate investments. The board comprises chairman Peter Lancken, Christopher Ryan, Stephen Day, Ian Hutchinson, Anthony Ryan and Sarah Kenny.
While Centuria is clearly frustrated by Propertylink’s recent takeover attempt for the Centuria-managed Centuria Industrial REIT, Centuria as a shareholder of Propertylink said the company was being poorly managed and it risked being a highly leveraged company unacceptable to shareholders.
“The Propertylink board approved a strategy to excessively leverage Propertylink and attempt a hostile takeover of Centuria Industrial REIT with Propertylink securities representing approximately 90 per cent of the consideration.
“The Propertylink board has put Propertylink in an unsustainable position having increased its pro forma look-through gearing (estimated increase to approximately 49 per cent) to pre-GFC levels in order to acquire its stake in Centuria Industrial REIT.”
Centuria has also pushed hard on Propertylink’s performance.
“Propertylink’s underperformance in growing recurring revenues has been accompanied with increased operating expenses, which has negatively impacted the recurring/core profitability of the funds management business.”