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Accordia Golf ups offer price by 3.4b yen; Hibiki to vote in favour of sale

ACCORDIA Golf, the sponsor of mainboard-listed Accordia Golf Trust (AGT), is now willing to fork out 65.2 billion yen (S$848.4 million) to buy over the trust’s 88 golf courses in Japan.

This is an increase of 3.4 billion yen from the original purchase price of 61.8 billion yen announced in June.

It comes after AGT’s largest minority unitholder Hibiki Path Advisors made several attempts to block the sale. Hibiki had alleged that the price was too low and said it was going to vote against the proposal unless the price was raised.

In a bourse filing late Friday night, the trustee-manager said it has signed a supplemental deed after the sponsor agreed to bump up the price.

Further, Hibiki and another unitholder, Santa Lucia Asset Management, have irrevocably undertaken to vote or procure the voting of all the AGT units in which they have an interest in favour of the resolutions to approve the proposed divestment. Hibiki owns a 7.6 per cent stake or 83.6 million units in AGT, while Santa Lucia has an interest of 3.1 per cent or 33.9 million units.

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They will also comply with certain non-solicitation and no-talk provisions, and withdraw the extraordinary general meeting (EGM) requisition notice by next Tuesday.

Last week, Hibiki and more than 50 other minority unitholders had requested the trustee-manager convene an EGM on Aug 18 for the proposed divestment.

Given the latest offered price, net proceeds from the proposed sale - to be distributed to AGT unitholders via special distributions - will also be higher than initially announced.

The trustee-manager now plans to distribute to AGT unitholders at least 59.98 billion yen, which is 92 per cent of the revised consideration and an increase of 3.13 billion yen, within 25 business days of the assignment date.

Subject to there being no claims by Accordia Golf by the claim expiry date, the trustee-manager will also distribute to unitholders at least 3.26 billion yen within 25 business days after the claim expiry date. This amount is about 5 per cent of the revised purchase price, and an increase of 170 million yen.

If the divestment proceeds and completes, unitholders will only receive the aforementioned special distributions. AGT will not make any distribution for the period from April 1, 2020 to the completion of the deal.

Meanwhile, the sponsor’s new proposed price does not include the sum of 1.2 billion yen set aside by Accordia Golf Asset Godo Kaisha (AGA) as special reserves for operations. AGA has an arrangement with the trustee-manager to acquire and manage the trust's golf courses.

The net amount from these special reserves available for distribution by AGA to the trustee-manager is 954.9 million yen, and the trustee-manager will distribute this amount in full to unitholders.

This payment is expected to be made in September, the trustee-manager said on Friday. The minority unitholders had earlier called for the special reserves to be distributed by Aug 28.

The revised price tag of 65.2 billion yen is 4.67 billion yen above the book value of AGT's economic interests in all of its golf courses as at March 31, 2020.

It also translates to an implied consideration of 77.2 Singapore cents per unit. This represents a 36.6 per cent premium to the closing price of 56.5 cents on June 23, a 30.7 per cent premium to the one-month volume weighted average price (VWAP) per unit of 59.1 cents, and a 40.8 per cent premium to the three-month VWAP per unit of 54.8 cents.

The 77.2 cent implied purchase consideration is also at a 19.1 per cent premium to AGT’s adjusted net tangible assets per unit based on the unaudited results for FY19/20, and a 10.9 per cent premium to the trust’s adjusted net asset value (NAV) per unit.

Hibiki had voiced concerns about the original price of 61.8 billion yen, or an implied consideration of 73.2 Singapore cents per unit. 

In an open letter in early July, the unitholder argued that the price was too low as the golf courses generate “significantly attractive cashflow” for the trust. Hibiki also questioned whether previous impairments to AGT’s NAV had been more conservative than necessary.

Accordia Golf subsequently lashed back at Hibiki, saying it was “unclear” how the unitholder reached its position as Hibiki did not provide an opinion from any independent and qualified advisory firm, investment bank or valuer to support its opinion.

The sponsor also said then that the agreement to purchase the golf courses was inked after extensive negotiations with the trustee-manager’s independent directors, as well as a wide market testing process involving solicitation of competing proposals from third parties.

AGT units last traded at 65 cents on Tuesday, before it called for a trading halt on Wednesday. The halt was lifted on Saturday.

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