ARA vows to wield the axe at Cromwell and put Weiss on the board
Singapore’s ARA has promised to dramatically reshape Brisbane-based Cromwell Property Group if it can get control of the company it said had become erratic and undisciplined.
Cromwell chair Gary Weiss (Photo: AAP Image/Dan Peled)
ARA has released a bidder’s statement as it seeks to grab control of the company it claims has gone off the rails through its decision to invest in Polish shopping centres and European data centres.
ARA already has 24 per cent of Cromwell worth about $650 million and wants to get another 29 per cent of the company’s securities and put two of its own representatives, Gary Weiss and Joseph Gersh, on the board of the company to drive a review of its strategies.
ARA said it would redirect Cromwell to areas where it had a significant advantage, reposition its portfolio including possible acquisitions, disposals and the creation of new funds and identify efficiencies to reduce overheads.
Management remuneration would also be targeted, in particular the chief executive.
“For over 12 months now, the ARA Group has been consistently and publicly seeking change at Cromwell, a company in which we share ownership,” ARA said in a letter to Cromwell shareholders.
“The Cromwell board has now put security holders in a position where the company’s balance sheet is heavily exposed to Polish shopping centres, gearing is above their target, costs continue to rise and earnings per share and distributions are likely to continue to fall.
“Furthermore, in recent days Cromwell has announced a foray in investment in European data centres, a sector in which it has no experience and no point of difference.
“The latest move only serves to confirm the erratic and undisciplined strategy of the current management team and board.”
Cromwell has urged shareholders to take no action in relation to the bid while it continues to assess the offer, but said it was an opportunistic attempt to get control without paying a premium was timed to exploit the market’s current dislocation.
ARA’s offer is 88.125 cents for each security, which Cromwell said was a discount to its net tangible assets of $1.04 for each stapled security as of December 31.
“Cromwell security holders should take no action and ignore ARA’s bidder’s statement and any documents sent to them by ARA,” the board said.
