Cromwell Release Response statement to ARA

Cromwell has released a blistering attack on ARA in response to their proportional takeover proposal.

Cromwell described ARA’s Proportional Offer as a blatant attempt to takeover Cromwell by stealth, without offering to acquire 100% of the securities or paying Cromwell Securityholders a fair premium for effective control.

Cromwell considers that the ARA Group’s Bidder’s Statement does not contain all the information it should and there are material omissions and misleading statements, particularly with respect to ARA Group’s intentions strategy for Cromwell. Cromwell believes such material omissions are deliberate.

Cromwell also defended its record citing that it has consistently delivered value for its securityholders by outperforming its benchmark index and meeting, or exceeding, its own earnings guidance.

Cromwell’s FY20 results revealed this week shows operating earnings per security up 3.5% on FY19 and distributions up 3.4% on FY19 in line with original FY20 guidance. These results stand up well against other AREITs who have reported earnings per share losses over the same period and do demonstrate an ability of the existing board to focused on improving shareholder returns.

In recommending against the proposal by ARA, Cromwell pointed out (& repeated several times) 7 key issues it has with the proposal which really boil down to just 2 issues;

1. That the price offered for effective control of Cromwell does not provide any premium for that control
2. That with ARA taking effective control of Cromwell, its future strategy and performance will lie in the hands of ARA, not the collective balance of its security holders.

Cromwell believes the Offer Price of $0.92cps is significantly less than the typical control premium range of between 14% – 25% above the undisturbed listed market price observed in successful public real estate change of control transactions. What the real value of Cromwell is, is difficult to understand given the market distortions over the past few months from COVID19 and from ARA's interest and agitations.

The meeting of unit holders to consider the request to appoint its Directors to the Board is set for the 18th September and ARA's bid will close on the 21st September