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Listed invested company van Eyk Three Pillars (VTP) will become a shell of its former self if an asset sell-down proposed by the Dixon Advisory-led board is undertaken.
Canberra-based planning group Dixon Advisory won control of VTP’s board of directors in September last year. The board is now seeking to liquidate about 95 per cent of the company’s assets in a bid to return cash to shareholders, a large number of who are Dixon Advisory clients.
VTP’s directors are estimating the proposed capital return would amount to about 95 per cent of VTP’s gross tangible assets, funded by the sale of shares held in its investment portfolio.
Based on VTP’s financial position at January 31, 2010, the return to shareholders would be $0.90 per share – an amount above the VTP share price on that date.
The directors said the remainder of the assets would remain within the company, which will remain listed. Under the proposal shareholders will retain their proportional interest in VTP following the capital return, with shares consolidated on a 20:1 ratio.
The proposal will be put to a shareholder vote on April 8, 2010.
If the proposal is successful, the resulting company would have reduced scale and profitability, the directors said. But they would continue to “pursue additional initiatives to enhance VTP’s performance and to reduce its cost structure”.
“The proposal does not contemplate the termination of existing management agreements to which VTP is a party,” the board’s statement said.
The board said it has independent opinion from Lonergan Edwards & Associates that shareholders will be better off if the proposed capital return is implemented.
The board has been undertaking a strategic review of capital management initiatives and said it had also considered a substantial share buyback, capital return and merger/takeover and winding up of the company. A previous share buyback saw $17 million worth of shares repurchased.
Van Eyk Three Pillars’ investment portfolio is derived from Australian Securities Exchange top 300 listed shares using van Eyk Research’s share selection model.
