ARA Group has today purchased around $61.6 million worth of Cromwell Property Group (ASX: CMW) shares on-market after raising its offer for greater ownership in the Brisbane-headquartered company.
Led by corporate raider Dr Gary Weiss (pictured), Singapore-based ARA already had a 24.07 per cent share in Cromwell before its new offer announced today at $0.92 per share.
Weiss has tried and failed to secure a spot on Cromwell's board on two occasions - in November 2019 and again in March this year.
Through its proportional takeover proposal that Cromwell CEO Paul Weightman previously described as "opportunistic", ARA sought ownership of a further 22 per cent of all CMW shares on issue to take its total holding to 46 per cent.
ARA originally offered $0.90 per share, but that was lowered to $0.88125 due to Cromwell's June 2020 announced distribution.
Now the bid has been lifted by $22.2 million to $528.7 million overall, in addition to today's share purchases which would use what is known as the "creep exemption" to take holdings to around 48 per cent; just under half the company but enough to tip voting decisions in its favour, according to Cromwell.
As of this afternoon ARA Group now has a 26.69 per cent holding in Cromwell, whose related entities have applied to the Federal Court for the discovery of documents in an attempt to link the suitor with Chinese billionaire Gordon Tang; a connection that ARA denies.
"As Cromwell's largest securityholder with more than $650 million invested to date, the ARA Group's interests are aligned with all Cromwell securityholders and it is focused on ensuring sustainable value generation for ALL Cromwell securityholders over the long term," the suitor said this morning before the on-market acquisitions were made.
"The ARA Group intends to provide Cromwell securityholders with further details regarding the automatic price variation, if any, via a Supplementary Bidder's Statement, which will be provided in due course and be despatched to securityholders in conjunction with the original Bidder's Statement."
In a response issued this afternoon, Cromwell reiterated its claim ARA's offer was "an unsolicited opportunistic attempt to gain control of Cromwell at the lowest possible price without offering to acquire 100 per cent of Cromwell securities or paying an appropriate control premium".
"ARA's Proportional Offer is designed to exploit the current volatility in markets due to COVID-19 by acquiring as few Cromwell securities as possible to secure effective control of Cromwell at the lowest possible price," Cromwell said.
"If successful under its Proportional Offer and assuming ARA increases its holding to 26.69 per cent of Cromwell under the creep exception, ARA would acquire 48 per cent of Cromwell providing it with effective control without securityholders receiving an offer for 71 per cent of their remaining securities.
"ARA has stated its intentions to seek the election of Dr Weiss and Mr Gersh to the Cromwell Board and drive a process of Board renewal, supporting ARA's intention to achieve effective control at the lowest possible price."
Cromwell expressed concern that ARA may utilise its proportional takeover bid as a means to acquire additional shares, enabling it to pass resolutions even with very little other Cromwell shareholder support.
"This is consistent with ARA's intention to refresh the Board. While securityholders may or may not be prepared to support the Board changes proposed by ARA, securityholders can simply exercise their voting rights," the group said.
"Securityholders do not need to accept ARA's offer and sell any of the securities at the lowest possible price."
Cromwell also alleges ARA's original bidder's statement on 21 July 2020 included misleading statements and material omissions that disadvantaged Cromwell securityholders and their capacity to make a properly informed decision about the offer.
Business News Australia
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