MET - Metlifecare - one for the fundies?

[Balance]

The next results will be telling whether the bidder was correct in relying upon the MAC. If they are good it will definitely mean MET success in the pursuit of specific performance, but if they are below the parameters in the agreement it does not mean that the bidder will be sucessful. It may hurt our case a bit however.

Valuation done for the deal came in at $6.50 to $7.45.

New valuation has been done but not disclosed.

[Beagle]

https://www.nzherald.co.nz/business/...ectid=12335627
"Independent adviser KordaMentha partner Grant Graham valued the company at between $6.50 and $7.65 a share earlier this month but updated the valuation last week. That valuation remains confidential". "In the statement of claim lodged May 15, Metlifecare asserts there is no basis for changing its 20-year forecasting methodology for asset valuation and that its most recent internal management forecast for underlying profit was $88.7m, consistent with its statement on April 26 that it expected year-end earnings of between $83m and $90m".

Last month I modelled out a 7.5% reduction in house prices (which was the medium of economists a few weeks ago) and allowed for accrued earnings to April 2021 and got a fair value NTA of $6.65 inclusive of all earnings for the next 11 months.

At the end of the day with the price where it is and my own estimates of fair value (although a takeover would be nice ) I am committed to this one way or the other and looking at the share prices of all others in this sector, the current share price of MET is very attractive, as is OCA's share price.

[King1212]

thanks Master Beagle for the sum up!!

[Baa_Baa]

Hey folks, non holder not playing this game, but what do you think about the economics of taking it on the chin with a fine plus legal costs versus having to shell out the total wad of cash for a business they’ve decided they don’t want? Which is the more likely outcome? Or do you bank on an outcome that the suitor who was but is no longer interested, is compelled to pay the mother load plus the legal fees? Where do you see the legal view landing on this?

[Beagle]

I am still cautiously hopeful of a negotiated settlement at a price in the $6 - $6.50 area before this goes to court in November but it may take a ruling by the High court in MET's favour, (acknowledging this can be appealed), to bring this about.

[King1212]

The company’s gearing (loan to valuation ratio) was 16% at balance date, remaining the lowest in thelisted retirement village sector and retaining ample capacity to fund future growth.

That made me okay to hold long term ...whether the takeover done or not done deal.

[Beagle]

The company’s gearing (loan to valuation ratio) was 16% at balance date, remaining the lowest in thelisted retirement village sector and retaining ample capacity to fund future growth.

That made me okay to hold long term ...whether the takeover done or not done deal.

Well said. I like this bit too "most recent internal management forecast for underlying profit was $88.7m" and well worth noting that includes the full effects of Covid 19 for the four months from March to June 2020. They did $90.5m underlying last year so after the wage subsidy Covid haven't hurt them much at all.

I think this shows the underlying resiliency of their business, just like OCA eh mate .

[traineeinvestor]

The company’s gearing (loan to valuation ratio) was 16% at balance date, remaining the lowest in thelisted retirement village sector and retaining ample capacity to fund future growth.

That made me okay to hold long term ...whether the takeover done or not done deal.

Add in the cash saved by not paying the last dividend.

Agree on MET's balance sheet - that + discount to NAV makes it one of the safest stocks in the NZX at this time.

[fish]

Just goes to show, the devil is in the detail. Have to read that a bit more carefully, before I buy any more. Still happy to hold without the takeover going ahead.

Unfortunately the article is paywalled, and I cant see how they presume the limitation of damages. I cant see anything in the agreement which limits damages. But there are different types of damages. I could look foolish talking about my take on the matter without studying the article fully. But even though the court warns MET, about the costs involved in pursuing the cancelled agreement, its unfortunate the court did not specify the risks and costs, as well as damages, (all types) that the bidder may incur in the process of cancellation. Without being involved, I must accept that MET has had legal opinions, on the success of their challenge, and whether damages are worthwhile the pursuit. I feel that the damages amount of $14 mill odd is based on acceptance of the MAC by MET, but further and different type of damages may be available by pursuing the specific performance of the agreement.
So I really havent changed my opinion too much at this stage.

The cost of subscribing is trivial.
My reading is that Stephen Hunter QC for metlifecare told the court that shareholders needed to vote because the costs were high.
In contrast Galbraith said no point voting now as may get a different offer-eg a higher bid !(this insinuated to me that they may be wanting to make a lower bid)

[Raz]

The cost of subscribing is trivial.
My reading is that Stephen Hunter QC for metlifecare told the court that shareholders needed to vote because the costs were high.
In contrast Galbraith said no point voting now as may get a different offer-eg a higher bid !(this insinuated to me that they may be wanting to make a lower bid)

Yes the high bid part made me chuckle