ASIC Flags Issues In Oxford Scheme Implementation Agreement With IOF

  • Oct 30, 2018 AEDT
  • Team Kalkine
ASIC Flags Issues In Oxford Scheme Implementation Agreement With IOF

In the month of October 2018, Investa Listed Funds Management Limited (ILFML) as responsible entity of the Investa Office Fund (ASX: IOF) received  a conditional proposal from Oxford Properties Group to acquire 100 percent of IOF for $5.60 per unit. The Board of ILFML has unanimously recommended the Oxford proposal to the shareholders. On 18 October 2018, ILFML entered in a Scheme Implementation Agreement (SIA) with Oxford with regard to the acquisition proposal.

On 30 October 2018, Investa Office Fund made an announcement regarding the Amendment to Oxford Scheme Implementation Agreement. Australian Securities and Investments Commission (ASIC) recently notified Investa Listed Funds Management Limited (ILFML) and Oxford that it was concerned with clause 11.5 of the scheme implementation agreement (SIA). In the SIA, a ‘reasonableness’ requirement is imposed on the ILFML Board in determining what are its fiduciary duties, in addition to the requirement in the clause that ILFML obtain financial advice and legal advice. As per ASIC, it is inappropriate to levy additional "reasonableness" requirement on a target board in determining what are its fiduciary and statutory duties. Both the parties were not aware of this policy concern at the time of entering into the SIA but now they have amended it after ASIC raised its concern. Following this news, the share price of the company increased by 0.09 percent as on 30 October 2018. 

The Proposal is subject to the limited conditions which includes completion of confirmatory due diligence by Oxford to its satisfaction, execution of a Scheme Implementation Agreement for the Proposal on terms that are consistent with the Blackstone Scheme Implementation Agreement, and an FIRB approval, which will be required for implementation of the Proposal.

In FY 2018, the Statutory Net Profit of, Investa Office Fund was $521.6 million, which is 10.6% higher than the last year, supported by $399.2 million of valuation uplifts resulting from revaluations undertaken in both December 2017 and May 2018. Valuation gains were the primary contributor to the Fund’s uplift in Net Tangible Assets (NTA) per unit of 14.2% to $5.47. The valuation gains were driven predominantly by the Sydney and North Sydney leasing and transaction markets, significant leasing activity within the portfolio and the progression of the Barrack Place development at 151 Clarence Street, Sydney. Funds from Operations (FFO) per unit increased by 3.0 percent in FY 2018 compared to the previous corresponding period, driven by like-for-like property FFO growth of 3.6 percent together with a 2.5 percent buy-back of units undertaken during the first half of FY 2018. IOF’s debt structure continued to be prudently managed with a weighted average cost of debt of 4.0 percent and average hedged debt of 78 percent.

In the last six months, the share price of IOF increased by 26.42 percent as on 29 October 2018. IOF’s shares traded at $5.555 with a market capitalization of circa $3.32 billion as on 30 October 2018 (AEST 1:00 PM).


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