MET - Metlifecare - one for the fundies?

[Longhaul]

I encourage everyone to read the termination notice from EQT.

Where can we find this? Nevermind, I see it's on NZX.

[winner69]

I encourage everyone to read the termination notice from EQT. My initial thoughts are that irrespective of everything else, the wage subsidy application will hold up in court (allowing legal termination of the contract).

Either EQT or the board are in big trouble! Either way, the lawyers are going to be doing well.

I reckon the EQT letter is much better than MET’s response

Seeing MET haven’t done much about FY21 and FY22 numbers suppose EQT had to resort to the Forsythe Barr -


Forsyth Barr published a research note dated 22 April 2020, which stated among other things: “Our scenario is that new sales and resales are very modest, if not non-existent over the first six months post commencement of the Level 4 lockdown and we have assumed development activity remains stalled over this period as well.” Forsyth Barr has commensurately reduced their forecast for Metlifecare’s normalised profit for FY20 and FY21 by 19.9% and 28.7% respectively.

That’s one heck of drop in profit forecasts

[dabsman]

So can someone explain to me how this all works:

MET go to court and lose - I am happy as I think there is lots more value in MET than $7 in the medium term and am happy to hold long term particulatly after selling at $6.91 and buying back in the $3's.
MET go to Court and win - I am happy as I get $7 which is a 100% profit in circa 1 year lets say

The thing I dont know about is lets say this takes a year. How is it then valued with maybe 3 dividends due (we forgo 1 in the sale), development completion, revaluation, profit apportionment etc etc. If they are forced to buy in a years time do we get say $8 as there is another years profit and dividends etc etc.

This will get really messy. It is sort of like begging an ex to come back after she moved in with someone else - sort of sad and will never end well

[macduffy]

The thing I dont know about is lets say this takes a year. How is it then valued with maybe 3 dividends due (we forgo 1 in the sale), development completion, revaluation, profit apportionment etc etc. If they are forced to buy in a years time do we get say $8 as there is another years profit and dividends etc etc.

That depends on the state of the market in a year's time and who, if anyone, sees MET as an attractive takeover proposition. ie who knows the future?

[Balance]

So can someone explain to me how this all works:

MET go to court and lose - I am happy as I think there is lots more value in MET than $7 in the medium term and am happy to hold long term particulatly after selling at $6.91 and buying back in the $3's.
MET go to Court and win - I am happy as I get $7 which is a 100% profit in circa 1 year lets say

The thing I dont know about is lets say this takes a year. How is it then valued with maybe 3 dividends due (we forgo 1 in the sale), development completion, revaluation, profit apportionment etc etc. If they are forced to buy in a years time do we get say $8 as there is another years profit and dividends etc etc.

This will get really messy. It is sort of like begging an ex to come back after she moved in with someone else - sort of sad and will never end well

Commercial disputes happen all the time - that's what the law and dare I write, lawyers and judges are for.

Let the law takes its course or they can quietly negotiate and settle out of court. Interesting enough, judges usually urge parties to settle out of court if possible.

[Sir Ten]

Proper cluster this one. I bought the arbitrage around $5/share and find myself in no man's land...

The MAC is clearly up for legal debate and interpretation... however the prescribed occurrences argument and poor response to EQT's info requests reflect poorly on MET.

[Beagle]

Commercial disputes happen all the time - that's what the law and dare I write, lawyers and judges are for.

Let the law takes its course or they can quietly negotiate and settle out of court. Interesting enough, judges usually urge parties to settle out of court if possible.

What deposit if any have EQT paid in this process ? MET will have incurred substantial costs already. Are there any funds held in trust or does this just turn into one big legal fight that could go on for years and MET are expending millions in legal fees on top of millions already spend in this process ? Possession is often 9 /10th's of the law and I fear unless there is access to some deposit funds EQT have paid there could be a LOT of money going out the door with a very uncertain outcome.

The only thing absolutely certain here is the lawyers will do extremely well out of this as its FAR from crystal clear.

[allfromacell]

I don't know how much this could cost but say it ended up costing $0.20 per share in legal fees, the potential reward would surely be worth the cost if METs legal advice is solid.

[King1212]

Bring it on..I am ready to pay $2 pershare..that will bring the NTA to $5

[Ecks]

MET pulling funds (~ NZ$1m+) from taxpayers pockets when it's mostly business as usual will not bode well for them. I think this decision by MET triggers the MAC clause.
https://services.workandincome.govt.nz/eps/search

Business Name	Number of employees paid	Total amount paid	Last updated
METLIFECARE LIMITED	139	$962,966.40	22/04/2020
METLIFECARE KAPITI LIMITED	13	$80,066.40	22/04/2020
METLIFECARE POWLEY LIMITED	68	$415,761.60	22/04/2020
METLIFECARE OAKRIDGE LIMITED	5	$32,318.40	22/04/2020
METLIFECARE PINESONG LIMITED	60	$384,991.20	22/04/2020

Others in the retirement industry that have taken the subsidy

SUMMERSET MANAGEMENT GROUP LIMITED

1344

$8,870,544.00

22/04/2020

OCEANIA HEALTHCARE LIMITED

266

$1,768,008.00

22/04/2020

It seems Ryman didn't take the government handout.

Any corporate arbitration never ends well for anyone but the lawyers whom I find encourage conflict (personal experience)

DISC: Holding for long term (mid 3's buyer with more buy orders @ $3.8 and lower)