Row over profit at heart of fight for property developer Minerva
South African shareholder demands company disclose 'important financial information'
Sunday 18 July 2010
A furious private row over potential profits is driving the public battle over the management of Minerva, the listed property company behind two of the City's biggest office schemes.
Minerva told the Stock Exchange, on Wednesday, that it had overwhelmingly rejected proposals by its largest shareholder, the billionaire South African investor Nathan Kirsh, to oust its chief executive, Salmaan Hasan, and chairman, Oliver Whitehead.
It made public an acrimonious wrangle that began earlier this month when Mr Kirsh, in a private meeting with Minerva and its legal representatives, demanded the management's removal because of its failure to disclose "important financial information".
Through his investment vehicle, Kifin, Mr Kirsh wants to know what percentage, if any, of the future profits from The Lancasters, Minerva's upmarket scheme overlooking Hyde Park, have been pledged as additional security to its banks. He thinks Minerva has used this to help underpin the company's £750m debt refinancing completed last September.
The Lancasters, which Minerva is developing in a joint venture with Northacre, completes next summer. Earlier this month, Minerva raked in £107.5m from selling 11 apartments and has sold about half of the flats for £230m.
Mr Kirsh has asked Minerva for details of leasing targets it agreed to meet at two high-profile office schemes – The Walbrook and St Botolphs – that it is developing in London's Square Mile. He is also seeking clarification of the fee Minerva must pay its bankers when it repays its debt. Kifin said its actions were motivated by Minerva's failure to answer "certain rudimentary questions" and concerns about its "future viability under the present management". It has proposed installing its representative, Philip Lewis, as an interim chief executive as well as another non-executive director.
Minerva has dismissed the actions of Kifin, which owns 29.94 per cent of the FTSE 250 company, as a "cynical attempt" to gain control of the company "without paying a premium to shareholders for that control" following a failed takeover attempt last year.
Mr Kirsh made a 50p a share offer to buy Minerva in November, which valued the company at £84.5m net of debt. His bid followed Minerva's extension, restructuring and refinancing of all loan facilities. It has no scheduled loan maturities in the current or next financial year and key financial covenant tests have been deferred or removed.
Minerva said that the board considers Kifin's actions to "be wholly inappropriate and not in the interests of shareholders as a whole".
Minerva shares have risen by 450 per cent since Mr Kirsh invested. He is best known for his $3.5bn US business, Jetro Cash & Carry, which he founded with Warren Buffett. Minerva's shares closed at 101.5p on Friday.
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