DNZ apologises to shareholders

BY KRIS HALL

Last updated 11:51 10/12/2009

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DNZ Property Fund has ruled out making any changes to its board in a lengthy letter of apology sent to shareholders.

Chairman Tim Storey urged patience from the company's more than 8000 investors as he sought to explain in words the reasons behind a planned float and capital raising.

"On behalf of the board, I would firstly like to apologise for any concern and worry that may have occurred over the last weeks regarding your investment in DNZ,'' said Mr Storey.

"We have not engaged with shareholders as well as we perhaps could have, but our aim is remedy that now.'' DNZ, which oversees a property portfolio worth over $700 million, had been looking to raise up to $140m to buy out its external management contract and reduce bank debt. But last week the proposal was pulled in the face of shareholder confusion and concern.

Notwithstanding criticism, Mr Storey said the board maintained the view that the proposed capital raising and listing was the best long-term solution to resolve issues the company faced.

Decisions as to the future of the company needed to be made sooner rather than later, he said. "The board also believes that a proposal to replace experienced and qualified directors with executives from an organisation representing only some shareholders is inappropriate at this time,'' said Mr Storey in reference to MMG Advisory Partners efforts to remove three of DNZ's six directors.

MMG had rallied investors to demand the heads of DNZ independent directors Simon Botherway, John Harvey and Mark Hopkinson, with MMG directors Derek Young and David van Schaardenburg taking their place.

But Mr Storey was clearly unimpressed.

"Rushing into a potentially flawed director / governance process is the wrong approach at a time when your company needs a properly considered and structured answer to the issues ahead of the company,'' he said.

In the letter Mr Storey also sought to alleviate investor concerns about share holding consolidation and the erosion of wealth, while once again talking up the ''significant cost savings'' that would be made by cancelling an external management contract and bringing it in-house.

"We believe ending the contract will maximise the value of your shares in the company over the long term,'' he said.

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