Grant Thornton deems Elanor recapitalisation ‘not fair but reasonable'
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The news: Independent expert Grant Thornton Corporate Finance has deemed Elanor Investors Group’s proposed strategic alliance with Rockworth Capital Partners as “not fair but reasonable”.
The numbers: In July, Elanor struck a deal with Singapore-based Rockworth Capital Partners, which would invest up to $125 million to pay down its debt and provide additional working capital.
The deal also included the acquisition of Singapore-based real estate investment manager Firmus Capital, which is 70% owned by Rockworth and 30% owned by Su Kiat Lim who is Firmus’ chief executive.
The proposal is set to be voted on at an extraordinary general meeting on 10 February.
The context: Grant Thornton said despite the proposal being unfair, it was still in the best interests of securityholders to vote in favour of the resolution in the absence of a superior alternative proposal.
It noted that, despite an extensive process, the only proposal that had progressed to a fully negotiated, executable form was the recapitalisation transaction with Rockworth and Firmus.
Family office Lederer Group has been in a takeover tussle with Elanor’s listed Elanor Commercial Property Fund (ECF) due to dissatisfaction around its strategy and responsible entity (RE).
Late December, Lederer and Elanor agreed to transition the management of ECF to Lederer after a deal was struck to allow Elanor Asset Services to receive $8.5 million in compensation due to its termination as manager, down from $11.08 million Elanor could have sought to claim.
The management transition is subject to an EGM with more than 50% of votes cast in favour. But given Lederer holds 42.7% of ECF, Elanor said the resolution would likely pass unless there was a very high level of voter turnout against the resolution.
What they said: “Our valuation assessment of ENN before the Recapitalisation Transaction on a control basis is higher than our valuation assessment of the Merged Group on a minority basis and we have accordingly concluded that the Proposed Recapitalisation is NOT FAIR for the Non-Associated Securityholders,” Grant Thornton said.
