Coronavirus: Huge deal to buy retirement village operator Metlifecare likely to terminate because of Covid-19

Wednesday, 8 April 2020

A deal to buy one of New Zealand's largest retirement villages is likely to collapse because of the impact of Covid-19 on the business.

The $1.49 billion takeover of one of New Zealand's large retirement village operators Metlifecare by a Swedish investor is likely to be terminated because of Covid-19.

Metlifecare has been told by the Swedish fund manager EQT that it is likely to terminate the takeover of the company because of the impact of Covid-19 on the retirement village business and its value and because Metlifecare did not consult with it or get its consent to decisions made in relation to the Government lockdown.

Metlifecare said it would be taking legal advice on that. It owns and operates 25 villages in the North Island, home to 5600 residents.

'Metlifecare is taking legal advice on the APVG correspondence, but its initial view is that the assertions are without substance and that APVG does not have a lawful basis to terminate the SIA.(scheme implementation agreement).'

Poynton Green on Auckland's Northshore is one of Metlifecare's 25 villages in the North Island.

* Retirement village operator Metlifecare fires up its stalled $1 billion development programme**

EQT Fund Management said Covid-19 had or was likely to reduce the value of Metlifecare by $100 million and its profits by at least 10 per cent in the 2020 and 2021 financial years and in the future.

Metlifecare had also failed in its obligations to carry on the business in the same way as conducted in the 12 months before it entered into an agreement with Asia Pacific Village Group (APVG), owned for EQT, to takeover the company through 'a scheme of arrangement'.

EQT said these circumstances allowed it to terminate the takeover.

It considered that Metlifecare could not remedy these circumstances and assuming they were not remedied within 10 business days, APVG intended to terminate the scheme of implementation agreement for the takeover within the following five business days.

Metlifecare said APVG has asserted that Covid-19 was an event triggering 'material adverse change'.

It had also asserted that Metlifecare had not provided some information to APVG and had made decisions in response to Alert Level 4 Government directives in New Zealand without consulting or getting the consent of APVG.

APVG has been offering $7 a share to Metlifecare's shareholdersnin the takeover. The share price fell by just over $1 after the news to $3.17 from $4.25 the day before.

'Metlifecare will be making no further comment at this stage.'

Another large property company deal to fall over because of the Covid-19 disruption was the Australian investment company Centuria Capital's takeover bid for Augusta Capital.