MFS goes back to a spin-off
A Report by Scott Rochfort in The Sydney Morning Herald says that troubled Gold Coast property and leisure group MFS has continued to baffle its investors by hatching a new proposal to spin off its Stella travel agency and holiday apartment business.
Only two days after MFS warmly received a full-scrip merger proposal from a rival Queensland property group, City Pacific, and a day after it announced plans to change its name, the company said yesterday it was considering the demerger of its property and funds management operations from Stella.
The company put its shares into a trading halt pending a further announcement on the proposal, a day after they plunged to a near two-year low in response to the proposed tie-up with City Pacific.
The deal proposed that City Pacific buy MFS’s fund management business for $833 million worth of its scrip, leaving Stella in the shell of its former parent.
MFS shares dropped to $3.15 on Tuesday. They have fallen 54 per cent since their peak last May.
MFS spent a large part of last year attempting to find a trade buyer for Stella, whose businesses include travel agents Harvey World Travel, Travelscene and Gullivers, the Saville Hotel Group and Peppers resorts.
Macquarie Research has valued Stella at $1.7 billion, or $3.50 a share. That is more than MFS is now worth on the sharemarket with Stella included.
MFS’s deputy chief executive, Craig White, played down concerns over the succession of announcements made by his company this week. He said MFS could easily service its short-term debt obligations.
But just as MFS pitched its new restructure plan, City Pacific appeared to be pressing ahead with its merger proposal by announcing it had appointed Babcock & Brown as its adviser.
Only five months ago City Pacific was on the receiving end of a proposed takeover by MFS, which is more than three times its size.
But City Pacific’s shareholders do not appear to be enamoured with the proposed tie-up either. Its shares slumped to a two-year low of $3.18 yesterday before closing 18c lower at $3.33.
A Report by The Mole from The Sydney Morning Herald
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