Cromwell hits back at "misleading" claims from suitor ARA
3 September 2020, Written by Business News Australia
A leadership struggle at Cromwell Property Group (ASX: CMW) is heating up today after management berated Singapore-based suitor ARA Group over what they claim to be a "patently incorrect understanding" of the Brisbane-based company's earnings.
ARA is in the midst of a proportional takeover attempt which, if successful, would give it almost half of Cromwell's shares, in what current Cromwell leaders have repeatedly claimed is a takeover by stealth.
Cromwell shareholders are now just over two weeks away from an EGM that has been called for 18 September by ARA to try and secure more ownership and put its representatives Dr Gary Weiss and Joseph Gersh on the board.
On 1 September ARA sent out a second supplementary bidders statement making numerous claims against Cromwell, including that its operating earnings per share (EPS) has fallen 11.5 per cent when excluding an internal fee.
In contrast Cromwell reports its FY20 operating EPS is up 3.5 per cent on FY19, highlighting a strong result despite a challenging environment during the COVID-19 pandemic.
But ARA's claims do not end there; it has also claimed Cromwell's gearing has increased to a sector high of 47.5 per cent on a look-through basis, and that its distributions are in excess of cash flow.
ARA's criticisms also take aim at Cromwell's 5.3 per cent downward revaluation of its Polish shopping centre portfolio, which the suitor believes is understated given Poland's largest retail landlord is trading at more than a 70 per cent discount to net tangible assets.
Cromwell took umbrage with all these allegations today, and its shares rose slightly by 0.55 per cent to $0.91.
"Cromwell is concerned by the misleading nature of these statements and wishes to correct these statements to ensure that there is a fully informed market in relation to Cromwell securities," it said, calling on shareholders to reject ARA's proportional takeover and its nominated board appointments.
In its response to ARA, Cromwell issued the following five observations:
Business News Australia
Author: Business News Australia