Metro Fit To Go To 60pc Of Davids
Sydney Morning Herald
Wednesday March 11, 1998
Metro Cash & Carry has advised investors in Davids that it could go as high as 60 per cent of the Australian-based grocer in its takeover without striking any refinancing problems.
In meetings held last week between Metro chief executive Mr Carlos dos Santos, his senior management and institutional investors in Davids, the South African-based group said it was looking forward to its investment in Davids.
The fund managers said Mr dos Santos and his board acknowledged a lot of work needed to be done at Davids, but calmed investor fears that the money would run out should acceptances for more than the targeted 35 per cent be received.
Mr dos Santos told the fund manager shareholders, which are led by AMP Society with 11 per cent of Davids, that he would seek board representation depending on how many shares Metro received through the offer.
Metro has offered $1.10 a share for all Davids shares, valuing the company at $490 million, but has advised that it would be happy if it only received 35 per cent of Davids. It already owns 19.9 per cent.
In an amended Part A document issued to Davids shareholders yesterday, Metro directors advised that the company had more than "sufficient financial capacity to fund the offer [for Davids]".
Metro issued the amended Part A in response to concern by Davids' board of directors that shareholders needed more information on the group's funding arrangement. "Metro Cash & Carry had a market capitalisation (as at February 27) of about $1.6 billion . . . and has no long-term debt and as at October 31 last year had net cash resources of about $146 million," the amended document said.
"The estimated funding requirement to acquire all of Davids' shares subject to the offer is approximately $146 million, assuming that Metro exercises its option to acquire 5 per cent of Davids shares at $1.05 [currently held by the chairman Mr John David's family company, Allind].
According to Metro, the purchase would be met through a special purpose loan of $US280 million ($420 million). That loan could be supplemented by two short-term loans and cash made available by an associate company.
Davids closed steady at $1.07.
© 1998 Sydney Morning Herald