Bluestar Group has criticised the board of social housing trust Home Reit after it refused the firm’s request for a further extension to the deadline for making a formal takeover offer.
In a stock exchange announcement, Bluestar said that despite receiving “limited diligence information in February 2023”, it was “frustrated” by a lack of engagement since then.
The investment firm claimed it had “repeatedly attempted” to meet with Home Reit’s board to progress the due diligence process, especially over the last three weeks. However, the only meeting scheduled between Home Reit chair Lynne Fennah, Smith Square Partners (Home Reit’s financial adviser) and Bluestar was cancelled on behalf of Home Reit at short notice.
The current Put Up or Shut Up (PUSU) deadline is 5pm today (11 May). If an extension is not granted, Bluestar will be unable to make a takeover offer for Home Reit for six months.
Further extension rejected
News of Bluestar’s unsolicited takeover approach first broke in February. The London-based firm said it requested a further deadline extension on 5 May, similar to those granted in March and April. This time, Bluestar said they were informed by Smith Square Partners that the request would be rejected.
The firm said: “Smith Square Partners delivered the staggering message that the [Home Reit] board had met and decided that it would not grant an extension to the PUSU deadline as ‘Bluestar has not sufficiently progressed the possible offer.’ This is despite Bluestar having received no information since February and having been guided by Smith Square Partners that Home desired Bluestar to wait patiently until the board is able to assess the possible offer and provide Bluestar with the requested due diligence information.”
“Bluestar considers that the [Home Reit] board should have greater attention to its fiduciary duties to shareholders to promote the success of Home and considers that this board decision removes a major element of optionality for shareholders at what is undoubtedly a very difficult time for Home given its suspension, potential delisting and the very challenging circumstances it finds itself in,” the firm added.
“It is the firm view of Bluestar that it would be in the best interests of shareholders and other Home stakeholders for the Board to extend the PUSU Deadline and to engage properly with Bluestar on ways to facilitate a streamlined due diligence process.”
Home Reit was one of the largest investment trust initial public offerings of 2020, raising £240m.
However, uncertainty over the trust’s future has intensified following a series of issues in recent months, including the collapse of its rent roll, delayed annual results leading to de-listing from FTSE indexes, and accusations from shareholders over a lack of adherence to its investment policy.
Partner at law firm Harcus Parker, who are seeking compensation on behalf of Home Reit shareholders, Jennifer Morrissey said: “What is striking about Home Reit’s handling of Bluestar’s proposal – and even Bluestar’s own account of its interactions with Home Reit – as well as the process of selecting an investment adviser is the complete lack of transparency, accountability, and communication with its shareholders and others.
“Investors are left to learn about the company’s efforts to address its challenges from reports in the press, and receive no clear information about the decision-making process or management’s plan for recovery. The legal case against Home Reit and its investment adviser Alvarium which we are pursuing on behalf of shareholders is gaining traction, with a significant group of investors wishing to seek compensation for the losses they have suffered on their investments.
“The company’s shares have now been suspended for more than five months and the management continues to demonstrate a concerning lack of regard for shareholders’ interests and basic standards of corporate governance, which threatens the company’s prospect of recovery. There is no clarity as to when this may change – or if it is going to change at all. Amidst all of this, it is understandable that shareholders continue to join the legal action and seek to protect themselves.”
See also: Scottish Mortgage bust-up and Home Reit troubles strike a sharp contrast with open-ended funds
