Farsons to restructure its property portfolio
Directors considering a separate listing for property company
In the article published on May 8 covering the Farsons Group's full-year results I had reported that a €55.5 million revaluation of all properties within the group had been carried out and this resulted in the group's net asset value climbing to €3.24 per share. Further details on the revaluation of the property portfolio and the recommendations being considered by the board of directors with the ultimate aim of maximising shareholders' value were explained in the 2008 annual report recently sent to all shareholders. These recommendations were also discussed at length by chief executive officer Louis A. Farrugia and group director Roderick Chalmers during a recent stockbrokers' meeting. They will also be presented to shareholders at the annual general meeting scheduled to take place this evening.
Following the group's extensive investment in the new logistics centre and soft drinks packaging hall as well as the planned construction of a new brewhouse, the Mrieħel frontage and the Wands site in Qormi will be vacated. While the brewery façade will be vacated on completion of the new brewhouse in 2011, the Wands site is expected to be vacated by the end of 2008. These properties are considered surplus to the group's requirements as they are no longer required to support the group's core business activities. The recent revaluation attributed a combined value of €39.2 million to these two areas with the 21 tumoli of land in Mrieħel valued at €29.1 million and the Wands site in Qormi at €10.1 million.
The group directors believe the time has come to restructure the group and separate the substantial property interests not used in core operations from the other business activities. They are proposing that these properties are transferred to Trident Developments Limited. Trident Developments already owns various other group properties which are either being used by the subsidiary companies, rented to third parties or retained as investment properties.
The directors are also proposing that Trident Developments Limited will be renamed Trident Properties plc and spun-off as a separate public company listed on the Malta Stock Exchange.
Once the segregation takes place, all Simonds Farsons Cisk plc shareholders will be allotted shares in Trident Properties plc on a pro-rata basis to their shareholding in Simonds Farsons Cisk plc. The board believes that this restructuring will benefit the group as follows:
Trident Properties plc will be managed by a separate CEO with expertise in the property sector thus enabling the company to attract strategic investors with a view to developing certain properties such as the Wands and Mrieħel sites;
The spin-off will enable the market to be in a better position to value the group's business once segregation of the core food and beverage business and the property business occurs. Hence, once the spin-off takes place, all shareholders of Simonds Farsons Cisk plc will hold shares in both Simonds Farsons Cisk plc as well as in Trident Properties plc. Simonds Farsons Cisk will continue to focus on the food and beverage business while Trident Properties will be solely responsible for the property portfolio.
Ultimately the Farsons board believes that this will result in added shareholder value. An important consideration is the potential to attract strategic partners into the property company. Without this restructuring exercise it is likely to be harder to attract property investors into the Farsons Group since that would also entail becoming a shareholder in the food and beverage business. Attracting a property investor as a new shareholder in Trident Properties plc would enable the company to develop the two large sites in Mrieħel and Qormi.
In earlier meetings with stockbrokers and financial intermediaries, the group CEO had indicated the possibility of developing the Wands' site in Qormi measuring 12,800 square metres (11.4 tumoli) into an office block. Furthermore in recent media interviews he also indicated that this large parcel of land may be turned into a business centre for sectors like financial services.
In the coming months various factors such as tax issues, company law, the requirements of the MFSA Listing Rules and other considerations will be examined and the directors will be keeping all shareholders informed of developments as they unfold. These are definitely interesting times for the Farsons Group which has recently achieved a strong turnaround in its profitability and invested heavily in a state-of-the-art packaging hall and logistics centre to remain at the forefront of the food and beverage industry.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, "RFC", are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
• Rizzo, Farrugia & Co (Stockbrokers) Limited
Following the group's extensive investment in the new logistics centre and soft drinks packaging hall as well as the planned construction of a new brewhouse, the Mrieħel frontage and the Wands site in Qormi will be vacated. While the brewery façade will be vacated on completion of the new brewhouse in 2011, the Wands site is expected to be vacated by the end of 2008. These properties are considered surplus to the group's requirements as they are no longer required to support the group's core business activities. The recent revaluation attributed a combined value of €39.2 million to these two areas with the 21 tumoli of land in Mrieħel valued at €29.1 million and the Wands site in Qormi at €10.1 million.
The group directors believe the time has come to restructure the group and separate the substantial property interests not used in core operations from the other business activities. They are proposing that these properties are transferred to Trident Developments Limited. Trident Developments already owns various other group properties which are either being used by the subsidiary companies, rented to third parties or retained as investment properties.
The directors are also proposing that Trident Developments Limited will be renamed Trident Properties plc and spun-off as a separate public company listed on the Malta Stock Exchange.
Once the segregation takes place, all Simonds Farsons Cisk plc shareholders will be allotted shares in Trident Properties plc on a pro-rata basis to their shareholding in Simonds Farsons Cisk plc. The board believes that this restructuring will benefit the group as follows:
Trident Properties plc will be managed by a separate CEO with expertise in the property sector thus enabling the company to attract strategic investors with a view to developing certain properties such as the Wands and Mrieħel sites;
The spin-off will enable the market to be in a better position to value the group's business once segregation of the core food and beverage business and the property business occurs. Hence, once the spin-off takes place, all shareholders of Simonds Farsons Cisk plc will hold shares in both Simonds Farsons Cisk plc as well as in Trident Properties plc. Simonds Farsons Cisk will continue to focus on the food and beverage business while Trident Properties will be solely responsible for the property portfolio.
Ultimately the Farsons board believes that this will result in added shareholder value. An important consideration is the potential to attract strategic partners into the property company. Without this restructuring exercise it is likely to be harder to attract property investors into the Farsons Group since that would also entail becoming a shareholder in the food and beverage business. Attracting a property investor as a new shareholder in Trident Properties plc would enable the company to develop the two large sites in Mrieħel and Qormi.
In earlier meetings with stockbrokers and financial intermediaries, the group CEO had indicated the possibility of developing the Wands' site in Qormi measuring 12,800 square metres (11.4 tumoli) into an office block. Furthermore in recent media interviews he also indicated that this large parcel of land may be turned into a business centre for sectors like financial services.
In the coming months various factors such as tax issues, company law, the requirements of the MFSA Listing Rules and other considerations will be examined and the directors will be keeping all shareholders informed of developments as they unfold. These are definitely interesting times for the Farsons Group which has recently achieved a strong turnaround in its profitability and invested heavily in a state-of-the-art packaging hall and logistics centre to remain at the forefront of the food and beverage industry.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd, "RFC", are members of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.
© 2008 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved
• Rizzo, Farrugia & Co (Stockbrokers) Limited