MCK - Millennium & Copthorne Hotels NZ Limited

[Interested321]

Thanks Southern Lad.  It is an important point that in certain circumstances non-accepting shareholders have the right to have the offer price reviewed by an independent expert in a takeover. 

This could allow the following scenario to play out
1.  Another sub-par takeover offer is made for MCK and over 90% acceptance is achieved
2.  Over 50% of the remaining shareholders (perhaps including ACC) do not accept it and an independent expert is appointed to value MCK by the Takeovers Panel.
3.  The independent expert values MCK at $4.70 (the previous mid-point of the offer) and shareholders need to be paid that price. 

That may allow fair value ($4.70) to be paid even though the 90% compulsory acquisition threshold is reached at a price below that.  However, I am not an expert in this area and will have a close read of the link you suggested tonight to try and ascertain some clarity.  I would welcome comments from other people on this important issue.

[alkebab]

https://api.nzx.com/public/announcement/470003/attachment/464828/470003-464828.pdf

As of March 2 as per the company report (page 70), CDL was at 83.84% with ACC at 7.81%, leaving around 8.35% held by others.

I believe there were some CDL affiliates on the Top 20 as well from previous posts here taking CDL's total holdings to 85%(?).

Would it make sense for CDL to resume buying on market? The less they have to pay to get to 90% the better especially with the share price falling below $3.30. Previous posts said the creep provisions was going to expire in May this year but there will be a few holdouts in the 8.35% shareholders.

[Basil]

I think with the Kwek family director holding CDL effectively control about 84.6% of the shares leaving 15.4% (half of which is 7.7%).

ACC's holding of 7.81% is more than half of the remaining free float shares so they are the kingmaker and their acceptance together with the Kwek family directors personal acceptance will leave less than 50% of remaining shareholders in a position to object to the price of any further takeover attempt so you can forget about the prospect of takeover price objection procedures, its simply not going to happen.

That's said, ACC know they are the kingmaker and also know that their acceptance removes the ability of other minority shareholders to object so they know they have all the power to enable CDL to drive through a takeover under compulsory acquisition at the price ACC decide to accept.  ACC know they can use this power to get a better deal knowing that whatever price they agree too, gives CDL guaranteed complete ownership of the company at that fixed price.  I know that ACC are determined to get the best price possible for not only themselves but for others.

No thinking or reading of NZX takeover regulations is required here.  Just sit back and leave ACC in the co-drivers seat.  If / when CDL want to make another takeover offer, they have to negotiate with them.

[Southern Lad]

MCK has for a number of years held 99,547 of its own ordinary shares as treasury stock, thereby reducing the effective number of ordinary shares from 105,578,290 to 105,478,743.

The Substantial Holder disclosures filed with NZX generally exclude these treasury stock shares when calculating the percentage holding.  For example the 88,250,974 shares held by CDL was stated to be 83.923% in the Substantial Holder notice filed on 16 May 2025 but the MCK annual report discloses the holding as 83.84%.

Just a small factor to take into account for anyone doing the maths.

[Basil]

Just a small factor to take into account for anyone doing the maths.

ACC have a spreadsheet of other significant holders and their contact details including mine.  I would think they will canvass other opinions before negotiating regarding any possible future takeover offer.

[entrep]

This is one of maybe 3 shares on the NZX I am happy to DCA and be comfy. However given my track record on the NZX I am not sure that should inspire confidence! Current prices look good. Also this article, while lacking substance and not really applicable, made me think of the value of our Queenstown holdings. https://www.nzherald.co.nz/business/block-star-why-australians-have-more-confidence-in-nz-property-than-kiwis-do/K33SES2TNVHJPD4JNLYHIDSLTU/

[Crackity]

AGM coming up tommoz  - I'll be there till the sausage rolls run out.

And one of the majority shareholder representative directors (Mr Eik Sheng Kwek)  is up for re-election

Hope he turns up - he's a very smart fella 

[Basil]

See you there mate.

[Basil]

Interesting meeting today.  Not sure we are any closer to a resolution of the differing viewpoints on value from ACC and many investors on here and CDL.
Encouraging that Q1 trading was really solid and they seem to be holding up quite well with current trading notwithstanding the geopolitical tension.
I think we are going to need a good dose of patience with this one.  I have written to the board with a proposal for a self funded takeover using the proceeds of the redemption of the preference shares, (redeemed through their bank debt facility).  Whether that gets any traction, we will see in due course.  Thought I might as well try.  Would be good to get this company cleaned up so we can redeploy our capital more effectively elsewhere.
https://api.nzx.com/public/announcement/473346/attachment/469308/473346-469308.pdf
https://api.nzx.com/public/announcement/473346/attachment/469377/473346-469377.pdf
Results of voting.  I voted no as a protest against most of the resolutions and publicly called out their 1% dividend yield as being "pathetic"..couldn't help myself, someone needed to call it what it is.
https://api.nzx.com/public/announcement/473351/attachment/469392/473351-469392.pdf

[Southern Lad]

Strong close to the share price today, closing up 19 cents at $3.35.  Strong Q1 trading update was certainly a plus, but all the investor talk of another CDL bid appears to have reignited interest.  Will be interesting to see how long the renewed interest lasts given we have radio silence from CDL.

[BlackPeter]

Interesting meeting today.  Not sure we are any closer to a resolution of the differing viewpoints on value from ACC and many investors on here and CDL.
Encouraging that Q1 trading was really solid and they seem to be holding up quite well with current trading notwithstanding the geopolitical tension.
I think we are going to need a good dose of patience with this one.  I have written to the board with a proposal for a self funded takeover using the proceeds of the redemption of the preference shares, (redeemed through their bank debt facility).  Whether that gets any traction, we will see in due course.  Thought I might as well try.  Would be good to get this company cleaned up so we can redeploy our capital more effectively elsewhere.
https://api.nzx.com/public/announcement/473346/attachment/469308/473346-469308.pdf
https://api.nzx.com/public/announcement/473346/attachment/469377/473346-469377.pdf
Results of voting.  I voted no as a protest against most of the resolutions and publicly called out their 1% dividend yield as being "pathetic"..couldn't help myself, someone needed to call it what it is.
https://api.nzx.com/public/announcement/473351/attachment/469392/473351-469392.pdf

Cheers for the report.

I guess the big questions are:
1) what does it cost MCK to keep the company listed vs. what does it cost shareholders to keep their money in these shares with big NTA, but rather little dividend?
2) who of the both sides has more time, and what effect will time provide?

All numbers just rough ideas on the back of an invisible envelope:

Re 1)
I think in general we are looking for some $100k for a rather small company per year. Say $500k pa listing cost for CDL?

Shareholders: 1% dividend vs say 6% dividend - i.e. 5% loss per year in dividends - which means takeoverprice needs to creep up at least 20 cents or so per year to make it sensible to wait. For something like 24m shares, this is nearly $5m pa.

Not good - higher cost be on the side of shareholders.

re 2)
Nobody knows which box the red baby in the half white house opens next, but otherwise - it looks like forecasts for MCK are good, though CDI currently going through one of the low points. Still - give it another year or two and real estate improving, and MCK will find it really difficult to stick with such a low takeover price?

So - time might be good (obviously without knowing the plans of the world running monster babies).

Difficult - maybe we need to find some sort of compromise.

[alkebab]

Cheers for the report.

I guess the big questions are:
1) what does it cost MCK to keep the company listed vs. what does it cost shareholders to keep their money in these shares with big NTA, but rather little dividend?
2) who of the both sides has more time, and what effect will time provide?

All numbers just rough ideas on the back of an invisible envelope:

$64k pa if this is anything to go by when you plug in the numbers (annual licensing fees):
https://www.nzx.com/services/listing-on-nzx-markets/listing-fees

I grabbed the data from the NZX listing:
https://www.nzx.com/instruments/MCK

For CDI, the annual listing fee is 60k from the same calculator above:
https://www.nzx.com/instruments/CDI

There may be other costs involved that I'm not aware of.