Discounted offer on Radius shares
Investors with cash invested in a small, illiquid property fund with a troubled history, have been made an offer for their shares at a large discount to the assets backing them.
Shareholders in Radius Properties have been offered 42 cents per share by a company controlled by directors of Ascot Capital Management, which wrested control of the company in 2010 from a previous manager shareholders had lost faith in.
But a valuation report shows the unaudited net tangible assets backing each Radius share to be worth 77 cents at the end of September.
The offer is designed to provide some liquidity to investors who want to sell their shares, as the company is not listed on any stock exchange.
The directors say it is uneconomic to list and they do not intend to sell down any of Radius' holdings to free up cash to return to shareholders.
The offer is from Montagu Investment Holdings Ltd, which is ultimately owned by Radius directors Sandy Maier, who was the statutory manager of South Canterbury Finance, and David Glenn as well as business associate Craig Priscott.
A valuation report by investment banking advisory firm Campbell MacPherson Ascot's directors commissioned for investors said a discount of 35 per cent to 45 per cent to the share price was to be expected, given the illiquidity, size and portfolio concentration of Radius.
It concluded that the offer by Montagu was within the "fair value" range of 40-48 cents assuming a "knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller".
The offer only covers up to 20 per cent of the shares of Radius as Montagu does not want to be forced into a full takeover.
Sunday Star-Times was unable to contact Glenn and Priscott before this article went to press.
Many investors bought their shares as clients of financial planning firm Vestar, which disappeared following the collapse of investment companies it backed. These included Bridgecorp, Capital + Merchant and the related party OPI Pacific Finance.
Sunday Star Times