Prime Kapital Investments acquires 14.38% stake in MAS Real Estate

Prime Kapital Investments (PKI) said Friday that it had acquired 14.38% of the shares of JSE-listed eastern and central European property group MAS Real Estate, following an offer to buy out all of its shareholders.

Following the settlement of the voluntary bid, PKI will own 254.09 million MAS shares, or 36.32% of its share capital. PKI, with other shareholders deemed to be concert parties, will jointly hold 49.4% of MAS's shares. It brings to a conclusion one aspect of the corporate battles being fought in MAS - South African REIT Hyprop withdrew a competing bid for MAS weeks ago, because MAS and its development joint venture partner (DJV) PKI had allegedly refused to provide Hyprop with the required documentation to make a bid.

PKI’s offer to buy all of MAS’ shares had also followed a failed attempt by PKI, at a shareholder meeting earlier this year, to get shareholders to approve resolutions to sell all of MAS’s assets and distribute the proceeds to shareholders.

And another contested shareholder meeting looms on August 27, this after nine institutional minority shareholders from South Africa, representing 17% of the shares at the time raised corporate governance concerns at MAS, and with its DJV, and they wish to replace two PKI-linked MAS board members and appoint new independent board members.

The DJV, 60% owned by PKI and 40% by MAS, now accounts for nearly half of MAS’s net assets. The institutional shareholders raising red flags at MAS include Ninety One, Stanlib, Catalyst Fund Managers, and Meago Asset Managers.

On Friday, evidently keen to accept as many of the shares offered as possible, PKI announced an increase in the maximum it would make available for shareholders, who might wish to accept the cash offer, to €115 million (about R2.38 billion) from €110m (about R2.26bn).

The voluntary bid had closed at midday on Thursday. On Friday, PKI said MAS shareholders holding 100.59 million shares, comprising 14.38% of MAS’s shares, accepted the offer.

Some 179.13 million MAS shares were tendered for the cash option, and 12.29 million MAS shares were tendered for the preference share option. Of the cash acceptances, 8.78 million shares were tendered for the preference shares in the event of a scale back.

As cash acceptances had exceeded the increased maximum cash amount, they would be scaled back equitably, resulting in cash allocations of 45.86% of the cash acceptances.

PKI said on Friday it had chosen to limit the total cash consideration to €115m — despite having raised some €230m — to maintain a healthy free float in MAS and enable the DJV to make a special distribution to its own shareholders, including MAS.

This distribution was also intended to support MAS in reinstating dividend payments.

PKI's director said they would protect and grow value for all MAS shareholders, and they would continue to support MAS's financial performance while pursuing initiatives to ensure that operational success was reflected in the share price.

“If these measures do not result in a re-rating to better reflect intrinsic value, PKI will support alternatives such as targeted asset disposals, share repurchases, or other forms of capital returns,” they said.

Meanwhile, MAS’s share price gained 1.12% to R24.40 on the JSE on Friday, a price already 38.6% higher than what it was 12 months before, and not far off the approximate R28.80 that MAS had pitched its cash offer at.

Visit:www.businessreport.co.za