Battle over RHG gets dirty

by Mackenzie McCarty16 Sep 2013

The battle over RHG has intensified, with Pepper Australia responding to a joint press release issued by rival bidders Resimac and Australian Mortgage Acquisition Company (AMAC) last week, calling the latter group’s arguments ‘preposterous’.

In the Resimac/AMAC release, the group claimed Pepper’s acquisition bid was ‘highly conditional’ and favoured Cadence on both terms and benefits.

"It fails to deliver better certain value than the alternative proposal from Resimac and Australian Mortgage Acquisition Company,” read the release.

Resimac also suggested that the Pepper bid would be subject to regulatory intervention “…arising from the collateral benefits to Cadence and lack of clarity on aspects of the proposal (for example, the buyback that Cadence says it ‘may’ conduct at an unspecified price only if its shares trade at a material discount to net tangible assets.”

The group also claims that, based on Cadence's net tangible asset value, the bid is only worth 49.88 cents a share. The Resimac offer, which has been recommended by the RHG board, is an all-cash offer of 49.5 cents a share.

But Pepper’s group managing director and CEO, Patrick Tuttle, dubbed the claims ‘highly speculative’ and says the ‘subjective nature’ of the statements encouraged Pepper to ‘set the record straight’.

“The Resimac/AMAC press release contains a number of supposedly factual statements clearly intended to unduly influence the board of RHG Limited to dismiss the proposal submitted by Pepper and Cadence Capital Limited on Friday, September 6.

“Their comments around the purported preferentiality, conditionality and uncertainty of our bid are entirely self-serving. Whilst we acknowledge the clear differences between our proposal to acquire RHG and the competing all cash offer made by the Resimac Syndicate, it is preposterous to suggest that our cash and scrip offer is simply inferior by definition, unless of course they are asserting that ASX-listed shares in the form of Cadence (“CDM”) stock have no economic value. This is a convenient and, at best, simplistic argument,” says Tuttle.

Tuttle says Pepper and Cadence together have presented RHG shareholders with a ‘highly credible’ proposition, valuing RHG at 51 cents per share based on Thursday’s CDM closing price of $1.50.

“This compares to the lower all cash offer of 49.5 cents per share offered by the Resimac Syndicate”.

“There have been a number of inaccurate statements made about the supposed conditionality of the Pepper Syndicate’s proposal which are clearly designed to discredit our proposal in the eyes of the RHG Board and its shareholders. Rather than play the man, we prefer to focus on the facts,” says Pepper executive chairman, Mike Culhane. “And the facts are that our proposal provides an obviously higher value for RHG shareholders.

“As we have previously stated, we welcome the opportunity to discuss the merits of our improved proposal with the RHG Board at their earliest convenience”


  • by Positive Broker 16/09/2013 10:02:14 AM

    This is a bad look for the industry. Don't sort your differences out in the media. Do it behind closed doors. A certain political party did this and look what happened to them.