by Paul McBeth
The High Court has given the green light to Waltus’ plans to merge property syndicates into one company, in spite of objections by a group of dissenting shareholders.
However, it’s been made plain that the Court OK only comes if Waltus sorts out the issue of some $2.95 million in management fees pre-paid by the 27 syndicates but not properly accounted for under the new proposal.
The question of fees was just one of the points raised by a group of shareholders, led by Auckland-based financial planner Murray Weatherston and Whangarei chartered accountant Brian Moyle, who have been opposed to the Waltus proposal.
They've been saying that they didn’t vote for it, it would change the nature of their original investment and they wanted Waltus to buy them out if it went ahead. Their objections were made plain at a substantive hearing at the High Court last month.
In a judgement just released, Master Thomson said that Waltus would either have to get formal approval from those shareholders who voted in favour of the proposal to the double payment of fees, or the company would have to build that sum into the new fee arrangement "in an appropriate way."
"I do not consider the fact that a double payment will be received by the Hodge family for management fees has been clearly explained to shareholders," Master Thomson said.
In considering whether to approve the overall proposal, he said that, at the end of the day, the Court had to weigh the rights of the opposing shareholders against the rights of those shareholders who voted in favour of the proposal to have it approved - 75 per cent, in this case.
"I think the Court should be slow to refuse to sanction a scheme of arrangement which has the required majority of the class concerned," Master Thomson said.
"It has to be borne in mind that it is inherent in membership of a company that a shareholder may be bound by a decision of the majority, and here the majority approved the Arrangement without buy-out."
The syndicates represent most of Waltus' 44 property syndicates, were set up between late 1989 and late 1996 and mostly just own one building in the provinces.
While Waltus director Shayne Hodge couldn't be contacted yesterday afternoon, he said in a letter to investors earlier this year that the merger was being undertaken to provide "better sustainability of income, growth prospects, liquidity and diversification of risk."