Lederer Group hits back at Elanor on commercial property fund strategy
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The news: Family office Lederer Group has hit back at the Elanor Investors Group (ENN) board regarding its strategy for the Elanor Commercial Property fund (ECF).
The context: Earlier this month, Lederer made a 70 cents per share takeover bid for the listed fund due to dissatisfaction around its strategy and responsible entity (RE).
In its bidder’s statement, Lederer reiterated its two main concerns — Elanor could seek to merge some of all of its newly acquired Firmus Capital assets into ECF and the influence substantial holders Rockworth and Su Kiat Lim have on the strategy.
Elanor announced in July that Rockworth Capital would inject $125 million into Elanor to stabilise the business. 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 Lim who is Firmus’ chief executive. Rockworth’s holding in ENN increased to 47.9% and Lim became a substantial shareholder at 13.6%.
Lederer said it was concerned that if Elanor merged some of all of Firmus’ assets into ECF it could:
- Result in a change of control in ECF;
- Dilute existing ECF security holders; negatively impact earnings and future distributions in ECF; and
- Entrench Elanor’s role as the current RE and investment manager of ECF if the transaction resulted in ECF securities being issued to certain Elanor investors such as Rockworth and other associates of Rockworth.
Lederer also said that if the Rockworth recapitalisation transaction was approved and implemented, Rockworth and Lim would collectively own 62% of Elanor.
“These two parties will be able to heavily influence the operational, financial and revised strategy of Elanor going forward, including the responsible entity and investment manager of ECF if they remain Elanor entities,” the statement said.
“Other than highlighting that they intend to ‘revise’ Elanor’s strategy to focus on a pan Asian strategy, Rockworth and Su Kiat Lim have not made their intentions clear in relation to the future operations of Elanor and ECF.”
Lederer Group also said that if it acquired 90% or more of ECF it would review its real estate portfolio; investment management and property management arrangements between ECF and ENN; ECF’s debt structure and gearing levels; and ECF’s capital management, asset developments and distributions.
It would also look to delist ECF and might destaple the ECF securities. Other changes included rebranding ECF, replacing the responsible entity, trustee, and directors, and reviewing all commercial arrangements. Lederer intends to appoint Evolution Trustees as the fund's independent RE.
What they said: Lederer Group chair Paul Lederer said: “It is clear to investors and market participants that control of Elanor (which is the parent entity of the ECF responsible entity and investment manager) is passing to Rockworth and Su Kiat Lim without the need for ECF securityholder approval”.
“Let me be clear, we have no interest in supporting any potential transaction between ECF and Firmus assets that would dilute existing ECF securityholders. Equally, we have no interest in being part of any broader pan Asian strategy. We are seeking clarity and assurances from Rockworth on their intentions for Elanor and ECF.”
“... Lets just call a spade a spade: We don’t understand how any of the directors of the responsible entity can put their hand on their heart and genuinely call themselves independent. Our interactions and experiences with members of the Elanor board (including the IBC) to date suggest this would be a challenge”.
The source: ASX
