The Agency shareholders back board, snub Magnolia bid

Shareholders in real estate upstart The Agency Group Australia (ASX: AU1) have given their support to management's plans to put its debt in order, voting overwhelmingly in favour of a tie-up with an investment firm backed by Western Australian horse racing magnate Bob Peters. 

At yesterday's AGM that had been postponed due to a Takeovers Panel ruling, more than 80 per cent of votes were in favour of issuing options and $5 million worth of convertible notes to Peters Investments, which intends to pay back The Agency's debt facility with Macquarie Bank.

The options are worth around half of the last traded AU1 share price, with the new partner able to exercise them at $0.027 each in March 2023.

This compares to a $0.04 per share takeover bid that was revealed by Magnolia Capital last month, and formally released by subsidiary Magnolia Equities III on the eve of yesterday's vote.

Throughout the process the AU1 board been sceptical about whether Magnolia - affiliated with former The Agency director Mitchell Atkins who still retains a 16 per cent share in the fast-growing real estate agency - was able to raise the funds required for a takeover. 

If the timing of Magnolia's bidder statement was intended to spook shareholders into changing their proxy votes, the strategy failed. The paperwork included a condition that Magnolia's bid would only go ahead if AU1 shareholders rejected the Peters transaction, but only a tiny fraction of votes outside of Atkins' holding were against it.

This afternoon, Atkins offered a statement to Business News Australia that did not rule out pressing ahead with the takeover attempt anyway.

"Magnolia retains the option to waive the condition in its Bidder's Statement in relation to the resolutions concerning the Peter's proposal," Atkins said.

"This said, the validity of the purported resolutions passing the Peter's proposal is a matter which is before the Takeovers Panel, and Magnolia awaits the ultimate outcome of Panel proceedings with interest."

Yesterday afternoon The Agency urged shareholders to take no action in relation to Magnolia's offer or documentation, and this morning requested an extension for its voluntary suspension from trading that has been in place since a trading halt was called on 29 December.

On 24 December, it was revealed that an independent assessment from Nexia Perth Corporate Finance still deemed the Peters transaction "not fair but reasonable", even in light of the Magnolia alternative.

Business News Australia