“Take no action”

Babcock & Brown Communities Group (BBC) has advised its share holders to “take no action” in relation to an unsolicited scrip offer from The Prime Retirement and Aged Care Property Trust (Prime Trust).

In a letter to the group’s security holders, BBC chairman Judith Sloan said that while BBC was still assessing the offer, based on an initial review, and using the value of 47.5 cents that the Prime Trust ascribed to its units in its bidder’s statement, “the BBC board is concerned that Prime Trust’s offer materially undervalues your BBC securities”.

“The offer value of 47.5 cents ascribed by the Prime Trust for each BBC security is 2.1 per cent below the closing price for BBC securities on ASX on September 3, 2008 (prior to the Prime Trust announcing its offer) and 6.9 per cent below the closing price for BBC securities on September 11, 2008 (the day prior to the date of this letter),” Sloan said.

The letter stated that Prime Trust was offering only to acquire 40 per cent of their securities in BBC, and were not offering cash, but rather, “for each BBC security for which you accept its offer, you will receive one unit in the Prime Trust”.

According to Sloan, BBC has initiated a price discovery process for the whole of its group, opening a data room for potential purchasers to commence due diligence on BBC and its business. To date, Prime Trust has not sought to gain access to the data room.