DNZ Letter to Shareholders Regarding Argosy Merger Proposal

DNZ Letter to Shareholders Regarding Argosy Merger Proposal

DNZ Letter to Shareholders Regarding Argosy Merger Proposal 17/05/2011

Letter to keep Shareholders informed of a strategic initiative that DNZ is considering reagrading Argosy Property Trust.

Dear Shareholder,

As you may be aware DNZ has a proposal with Argosy Property Trust, a similar property based fund, to merge our two property portfolios. Essentially we are proposing that Argosy unitholders exchange their units for DNZ shares at a fair exchange formula, and the two businesses go forward under the DNZ banner.

This is the type of strategic opportunity that the Board and management envisaged being able to capitalise on when we restructured and listed your company. Since the restructure and listing in August last year, DNZ has met with considerable success and it is that success that gives us the confidence and strength of position to put a merger proposal on the table to Argosy. Just to recap since listing we have seen:

  • The share price move from 0.97c to $1.33 (12 pm 16/05/11)
  • DNZ outperforming the projections set out in the offer document
  • he company continuing to meet its goal of providing a dividend of 2c a quarter
  • Market commentators recognising the company’s outstanding performance – and in particular its strong governance and management skills
  • Your directors have continued to look at ways to improve the company’s position and outlook for the future by building on the strong start it has made in its new life as an NZX listed property company, and believe this proposal provides an opportunity to enhance value for our shareholders.
    The Board believes the merger proposal has the potential to bring significant strategic and financial benefits to you, our DNZ shareholders, and the Argosy unitholders through:

  • The creation of New Zealand’s second largest listed property fund ($1.6 billion approx) bringing benefits of scale and a portfolio strongly diversified by sector, region and tenants
  • Expected to be in the top 20 of the NZX benchmark index, providing increased index weighting and liquidity benefits
  • Ability for DNZ to leverage off its existing management structure to achieve material cost efficiencies from managing the combined portfolio, with additional benefits expected to accrue through tenant management across the portfolio of assets
  • Sustainable dividends for both sets of shareholders
  • Leveraging off DNZ’s more appropriate governance structure
  • Our proposal with Argosy is at an early stage and it is likely you will see more public comment on the proposal over the next little while. The Board will keep you updated on any progress when we can and I’d remind shareholders that there are restrictions on what information can be made public and the timing of the release of information that are governed by the NZX disclosure rules.

    But for the moment we would like to assure you as our shareholders that we will only proceed with the merger proposal if it is determined to be in the interests of our shareholders. If the proposal were to proceed we would seek shareholder approval at the appropriate time and you would have an opportunity to vote on the proposal at a shareholders meeting.

    If you have any queries please call our information line on 0800 436 977 or email: Email: admin@dnzproperty.com

    Yours faithfully
    DNZ Property Fund


    Tim Storey

    Proposal to Merge DNZ and Argosy
    DNZ Proposes Merger With Argosy