ILFML Board unanimously recommends Oxford proposal to acquire IOF for $5.60 per unit
Investa Listed Funds Management Limited (ILFML) as responsible entity of the Investa Office Fund (IOF) refers to its announcement on 15 October 2018 stating that it had commenced the matching rights process under the Blackstone scheme implementation agreement, giving Blackstone the opportunity to provide a matching or superior offer to the binding proposal received from Oxford Properties Group (Oxford) to acquire 100% of the units in IOF for cash consideration of $5.60 per unit, to be implemented by way of trust scheme (Oxford Proposal).
Change in ILFML Board recommendation
Blackstone has advised ILFML that it will not provide a matching or superior offer to the Oxford Proposal. As the ILFML Board has determined that the Oxford Proposal is a 'superior proposal'  to the Blackstone proposal, the ILFML Board has now withdrawn its recommendation of the Blackstone proposal.
ILFML has terminated the Blackstone scheme implementation agreement and has entered into a scheme implementation agreement with Oxford in relation to the Oxford Proposal. The Directors of ILFML unanimously recommend that IOF unitholders vote in favour of the Oxford Proposal, in the absence of a 'superior proposal'  and subject to the independent expert concluding that the Oxford Proposal is in the best interests of unitholders. Subject to these same qualifications, each of the ILFML Directors intends to vote all IOF Units that they hold or control in favour of the Oxford Proposal. The change in the ILFML Board's recommendation will give rise to an obligation to pay a break fee of approximately $32 million to Blackstone under the Blackstone scheme implementation agreement.
A copy of the Oxford scheme implementation agreement is attached to this announcement. Accordingly, the Blackstone proposal will not proceed.
Summary of the Oxford Proposal
The cash consideration under the Oxford Proposal of $5.60 per unit values IOF at a market capitalisation of $3.35 billion, and represents an attractive premium to the trading price of IOF units prior to announcement of the Blackstone proposal, as follows:
- 23.1% premium to IOF's ex-distribution price of $4.55 per IOF unit on 25 May 2018, being the last trading day prior to announcement of the Blackstone proposal;
- 26.1% premium to the 1 month VWAP up to 25 May 2018 of $4.44 per IOF unit; and
- 28.7% premium to the 3 month VWAP up to 25 May 2018 of $4.35 per IOF unit.
Commenting on the Oxford Proposal, ILFML Chairman Richard Longes said, "The Oxford Proposal, which is all cash, priced at a premium to NTA and a premium to the offers received from Blackstone for IOF, represents a superior value proposition. This is an excellent opportunity for IOF unitholders to crystallise their investment in IOF at an attractive and certain price." Penny Ransom, IOF's Fund Manager added: "It is very satisfying to see the considerable value that we have created from our portfolio."
Oxford Proposal Conditions
The Oxford Proposal is conditional upon a number of matters set out in the Oxford scheme implementation agreement, including approvals by the requisite majorities of IOF unitholders and the Court, no material adverse change, prescribed occurrence or breach of warranty in relation to IOF, as well as approval from Australia's Foreign Investment Review Board. The Oxford scheme implementation agreement includes terms and conditions customary for a transaction of this nature, including exclusivity arrangements and provisions for payment of a break fee of approximately $33.5 million in certain circumstances.
ILFML has appointed KPMG Corporate Finance as the independent expert to prepare a report opining on whether the Oxford Proposal is in the best interests of IOF unitholders. The independent expert's report will be included in the explanatory memorandum to be sent to IOF unitholders.
IOF unitholders do not need to take any action at the present time. IOF unitholders will receive an explanatory memorandum in relation to the Oxford Proposal in due course. This will include a more detailed explanation of the Oxford Proposal, including the reasons for the ILFML Board's recommendation, along with a copy of the independent expert's report.
A meeting of IOF unitholders is expected to be held in early December to consider the Oxford proposal, with implementation scheduled to occur later in the same month.
In order for the Oxford Proposal to be implemented, IOF unitholders eligible to vote must approve each resolution at the meeting by the requisite majorities, including the resolution to amend the IOF constitutions which must be approved by eligible unitholders representing at least 75% of the units voted at the meeting (in person or by proxy).
 As defined in the Blackstone scheme implementation agreement dated 12 June 2018 (as amended).
 As defined in the Oxford scheme implementation agreement dated 18 October 2018.
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