Kerry Stokes has increased his position in Estia Health after the company revealed Sentinel Property Group is eyeing a takeover of the aged care group.
Estia revealed today that Mr Stokes’ Seven Group had increased its stake in the company from 7.53 per cent to 8.54 per cent, with exposure to just under a 10 per cent interest through its subsidiaries.
The move on Estia (EHE) by Mr Stokes comes after the aged care provider told its investors that Sentinel had produced a plan to partner with two unknown operators to run Estia’s aged care homes, while Sentinel kept the property assets.
Shares in Estia jumped 3.49 per cent to $3.26 yesterday on the news.
Sentinel, which holds just under five per cent of Estia, said in a report to its investors, which was obtained by Estia, that it was assessing various funding options to enable it to secure a controlling position in Estia.
The aged care operator, which has been focused on maintaining its earnings guidance after a volatile 12 months and an executive overhaul, has told its shareholders to take no action on the plan.
Estia chairman Gary Weiss yesterday noted it was “somewhat unconventional” for a party purportedly seeking control to telegraph its intention to buy additional shares.
Sentinel Property Group’s managing director Warren Ebert told The Australian yesterday he had no plans at this stage to hold talks with Estia, saying he didn’t think they were “very reliable”.
“What they printed verbatim stated in the document that it was ‘strictly private and confidential’ … it shows that receiving something private and confidential means nothing to them,” he said.
“The report was done for our investors. What you do for your investors and others could be different. It’s not as if they attempted to call us and tell us they had received it.”
Mr Ebert said he would now wait and let the response to the report settle.
“There’s been a bit of hype, so we’ll see what comes out of the woodwork,” he said.
“We’ve been working on it for 12 months, so a one day, or a week hiccup won’t matter, we’ve got plenty of things to do. We’re patient.”
Queensland-based Sentinel proposed in its plan released to its thousands-strong investor base that it would claim a controlling position in Estia before offloading the operating business of 60 of the target’s 68 sites for $300 million. Another eight facilities would be sold for $60m.
Sentinel would then retain ownership of the property of the 60 sites, earning money through a leaseback agreement with the unnamed aged care operator.
“We have people keen to work for us and they like our idea as it’s different. No one has looked at it on this angle,” Mr Ebert said.
Morgan Stanley analyst John Stavliotis said the plan was highly speculative, with little certainty that value could be created from such a transaction.
“We find it very strange that Sentinel would take a 4.988 per cent, just below the 5 per cent threshold of public disclosure and then selectively disclose its intentions to investors in the fund,” he said.
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