The move comes as more than 38% of PrimeTime unitholders had already provided irrevocable undertakings to reject the offer, signalling strong investor resistance to the proposed transaction. RDC, the Botswana Stock Exchange-listed diversified property investment outfit, proposed a unit-for-unit swap, offering 0.68750 RDC linked units for every one PrimeTime linked unit. If were to be accepted, the transaction would have effectively resulted in PrimeTime unitholders exchanging their investment for RDC units. However, PrimeTime’s Independent Board argued that the offer misrepresents the true position, as the proposed swap ratio fails to account for a bonus award to be implemented by RDC prior to the deal’s completion. In a formal response circular issued on Friday, Independent Board for the variable loan stock company supported by independent expert Deloitte unanimously concluded that the RDC offer significantly undervalues PrimeTime and would be highly dilutive to its unitholders. As a result, the Board has strongly advised unitholders to take no action on the proposal.
PrimeTime Board chairperson, Paul Masie, said the offer doesn’t present the best interest of unitholders, describing it as materially dilutive, lacking operational benefits, and a distraction from the company’s strategy of long-term value creation. “This offer is opportunistic and attempts to take advantage of PrimeTime’s stronger balance sheet and transparency,” he said. “We believe our unitholders deserve better than to be diluted in value with no strategic or financial upside.” According to Masie, financially the proposed transaction would lead to a 42% dilution in reported Net Asset Value (NAV) and a 35% reduction in distributions, based on the latest 12-month performance. “Operationally, there would be no synergies, as PrimeTime’s asset management agreement would remain unchanged, offering no integration or cost efficiencies,” he added. Importantly, Masie said the circular also highlights that even unitholders with exposure to both companies would not be shielded from negative outcomes. He noted that under the proposed deal, RDC would increase the fees paid to its external manager, PAM, without any offsetting benefit to PrimeTime saying it raises concerns around governance and operational efficiency.
