Shaftesbury backer Lee aims to curtail fundraisings

Shaftesbury's biggest shareholder has again asked other investors to vote with him against the company.

In a letter to shareholders, Samuel Tak Lee, who owns a 26% stake in the London West End property developer, said he intended to vote against three resolutions, numbers 18, 19 and 20, that allow the board to issue shares.

In particular, Lee still has a bee in his bonnet about the £265m non-pre-emptive share issue in December 2017, which he feels was "unnecessary" in December 2017 "and certainly not in the amount raised", arguing that it is unfair that the shares are not offered to all existing shareholders pro rata to their existing shareholdings, that not all shareholders are able to benefit from the discount to the prevailing market price and that the short timeframe "makes them very challenging for non-institutional investors".

He said Shaftesbury was "not under any financial strain" at the time of the issue, had "more than sufficient liquidity", that available debt financing "was inexpensive compared to the cost of equity" and that even if the board felt some form of equity financing was justified, "there was no rationale" for raising so much.

The Hong Kong billionaire added that existing shareholders together suffered a "significant and immediate loss in value" of their shareholdings and after corresponding with the board via his lawyers, reiterated his stance from the last AGM that he does not believe the board should be given the ability to conduct a share issue in future without asking shareholders for specific authority.

Lee also referred to the acquisition of 90-104 Berwick Street, which was a forward-purchase of a long leasehold interest undergoing a redevelopment that Shaftesbury announced in August 2017. He said shareholders have not been kept properly appraised about this project and that the placing was not required to finance this acquisition.

In its response, Shaftesbury said it was disappointed to have not had any direct engagement with Lee, despite repeated offers.

Management said when annual results were announced at the end of November 2017, negotiations "were in progress" for the potential acquisition of 72 Broadwick Street but "it was uncertain whether the transaction would proceed and our statements regarding finance capacity for 90-104 Berwick Street at the presentation to analysts were correct".

Directors said the placing reduced the group's EPRA net asset value per share by 1.7p, equating to 0.18%.

Noting that resolution 18, an ordinary resolution authorising the directors to allot shares in the capital of the company, needs approval from at least half of votes cast, so cannot be blocked by Lee acting alone, they added that if the vote is lost the company would need to seek specific approval from shareholders in a general meeting, which it argued "would be time-consuming and costly".

Resolutions 19 and 20 require the approval of at least 75% of votes cast on the resolution.