Heavily-indebted properties had declined in value by around £50 million since 2007
Stobart Group Limited (Stobart), the transport group with a Premium Listing on the London Stock Exchange, announced on 17 January 2012 that it is to purchase a property portfolio held in a company called WADI Properties Limited (WADI), for a consideration of £12.35 million, the assumption of £88.85 million of debt and a bank fee of £2.8 million– making a total enterprise value of £104 million.
Independent valuation less than price paid by Stobart
This WADI property portfolio had a gross market value of £98.93 million as at 30 November 2011 – some £5 million less than the enterprise value being paid by Stobart.
Vendors are Stobart’s CEO and COO
The vendor of WADI is a company controlled by the Stobart Chief Executive (Andrew Tinkler) and the Stobart Chief Operating Officer (William Stobart) . The Stobart Finance Director and the Stobart Deputy CEO are also directors of the vendor of WADI.
As Mr Tinkler and Mr Stobart are directors of Stobart – and Mr Tinkler is a substantial shareholder* of Stobart - the WADI purchase is a related party transaction for the purposes of Listing Rule 11. Accordingly, the WADI purchase has to be approved by the Stobart shareholders before it completes. None of Mr Tinkler, Mr Stobart, the Finance Director or the Deputy CEO will be able to vote on that shareholder resolution, and Mr Tinkler and the Stobart Finance Director did not participate in the Stobart board decision that approved the WADI transaction.
Purchase of a reversal of 2007 sale by Stobart
The WADI property portfolio was sold by Stobart to the WADI vendor in 2007, for an enterprise value of around £150 million. So this is a repurchase by Stobart of the WADI portfolio from its Chief Executive and COO, that portfolio presumably not having performed quite as anticipated between 2007 and now.
*The latest Stobart annual report (page 39) is coy about the exact percentage of shares held by Mr Tinkler
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