Kirks exits lease, rejects Sir Ron
Kirkcaldie & Stains has again urged shareholders not to accept an offer from Sir Ron Brierley, after escaping its final lease.
The company, which previously owned the famous Wellington department store, is now simply a cash shell with a sharemarket listing, after the lease on the store and branding was sold to Australian chain David Jones.
The first New Zealand site of the major chain is set to open in the capital in the coming months.
While most of the cash from the sale of Kirks’ commercial property assets has already been returned to shareholders, a battle is under way between the board and Brierley’s investment vehicle, Mercantile, for what is left over.
In February Brierley, the 78-year-old corporate raider, announced a plan to buy the shares in Kirks that he does not already own, offering $2.75 a share.
This has since been increased to $3 a share.
The former Wellingtonian has said that not only is he offering shareholders cash in the company now, but also that liquidation would be a ‘‘sad end’’ for the company, and could prove controversial.
Kirks chairman Falcon Clouston immediately described the offer as a ‘‘a bit low’’, with the board believing it may be worth up to $3.50 a share once it escaped remaining leases.
Late on Friday the company confirmed it had negotiated its way out of its remaining leases on a site in Petone, and subletting another site on Thorndon Quay.
Its final lease is in a retail store adjacent to the main department store, which was seeing ‘‘strong demand’’.
Despite paying the landlord of the former Petone site $400,000 to surrender the lease, Kirks said it believed it may now be worth more than the $3.49 a share it previously said was the upper end of an estimated range.
‘‘The board expects to write to shareholders at the end of next week with advice of their latest estimates in order that they can make a decision in respect of the takeover offer from Mercantile NZ Limited,’’ Kirks said in a statement to the NZX.
‘‘For present purposes, shareholders should note that the board’s previous high end estimate of the likely cash available for distribution to shareholders referred to in the target company statement that was sent to shareholders on 1 April 2016 was $3.49 per share.
‘‘The board is now confident that this high end is likely to be achieved barring any unforeseen event and could be exceeded.’’
Shares in Kirks last traded on the NZX at $3.10 a share.