NZ Rural Property Trust farmed out to new holding pen

Williams & Kettle shareholders voted overwhelmingly in favour of splitting the company's 31.9% stake in the unlisted New Zealand Rural Property Trust (NZRPT) and the trust's management contract into a separate unlisted company Rural Equities (REL).

Wednesday, February 11th 2004, 7:52PM

by Jenny Ruth

Shareholders voted 8.4 million of the 14.8 million shares on issue with more than 99% in favour and just 0.04% against the proposal.

While the same people within Williams & Kettle will continue to manage both companies as before, shareholders currently holding 10,000 Williams & Kettle shares will end up with 15,000 Williams & Kettle shares and 10,000 REL shares.

Until REL's first annual meeting, its shares will be tradable on Share Mart, run by registry company Computershare. At the meeting, shareholders will be able to vote on whether REL should join either the stock exchange's main board or its new secondary board, the AX market.

Independent expert Steve Smith, of PriceWaterhouseCoopers until his recent retirement, told shareholders that he valued the NZRPT stake between $1.34 and $1.64 a unit compared to recent trades at $1.35 and $1.36.

Because of their nature, the REL assets currently contribute a smaller percentage of income relative to the assets than the rest of Williams & Kettle's operations which accounted for 87% of that company’s earnings in the year ended July 31, Smith said.

That means Williams & Kettle's earnings per share are likely to be higher after the split, he says.

He estimates the split will add between 36 cents and 81 cents a current share for shareholders. "It appears investors generally are supporting that view," Smith said, noting the share price rise since the scheme was announced in late September. The shares have risen from $4.50 to as high as $5 before dropping back to $4.65. The company has paid out a 13 cents a share dividend since then.

Because Williams & Kettle will transfer $6 million in debt to REL as part of the split, that should allow the Williams & Kettle directors to consider paying out more of earnings in dividends.

After the meeting, director David Cushing noted that Williams & Kettle currently pays out only 50% of earnings in dividends while fellow rural services company Wrightson pays out about 90%.

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