Westfield’s proposed restructure will be decided by unitholders this afternoon, with founder Frank Lowy saying the vote could go either way.
The fate of Westfield’s $70 billion global restructure will be decided on the floor of a meeting at Sydney’s Sofitel Wentworth this afternoon, when there will be a vote that founder Frank Lowy admitted earlier today was “too close to call”.
The restructure unveiled in December will break up and recombine two ASX-listed vehicles — Westfield Group and Westfield Retail Trust — to form two new entities: Westfield Corporation, owning the brand and the offshore malls, and Scentre Group, owning and managing the Australasian assets.
Shareholders in Westfield Group voted 98% in favour of the restructure at 11.30 this morning. But a significant minority of Westfield Retail Trust unitholders are opposed to the proposal, which will saddle them with higher debt. The proposal requires 75% support of Westfield Retail unitholders, who will finally vote at 2pm.
Most institutions voted by proxy, which closed Tuesday, but Lowy did not reveal the tally this morning. He acknowledged the result was unpredictable and said if the resolution failed “we will pursue the separation of the two businesses without WRT participation”.
Australian Shareholders’ Association policy director and Crikey founder Stephen Mayne, representing more than 600 shareholders, characterised Lowy’s comments as “oppressive”, accusing the chairman of using strong-arm tactics to sway the result, and called on independent directors to stand up to Lowy on behalf of independent shareholders who were yet to make up their minds ahead of this afternoon’s vote.
“The independent directors should not be allowing this to be said,” Mayne said, sparking a fiery debate in which an emotional Lowy accused Mayne of “character assassination” and making accusations that were “incorrect”. Lowy has been jousting with Mayne for 15 years but lost his cool at this morning’s meeting, and had to remind himself to calm down.
Shareholders questioned the unrecoverable costs of the restructure, which Westfield finance chief Peter Allen confirmed would total about $300 million, including $200 million in bond “breakage costs” associated with refinancing $22 billion in debts, plus $70 million in fees to investment banks and other costs like printing a hundred thousand copies of 400-page explanatory booklets.
Lowy said the costs were unavoidable and he was “not in the business of wasting money”.
It has been clear since the beginning of the month, when the Lowys were forced to sweeten the deal for Westfield Retail unitholders, that today’s vote would go down to the wire. Lowy confirmed Westfield had lobbied small shareholders using a proxy solicitation firm after one shareholder told the meeting she was telephoned at home last Saturday and asked to vote in favour of the proposal.
“People were being rung and they were not being told exactly who was ringing them,” she said.
Lowy admitted the behaviour of proxy solicitation advisers was sometimes questionable and said “if somebody has offended you, madam, I fully apologise for that”.
Lowy suffered a stiff 9% vote against his re-election to the board of Westfield Group, but other directors were re-elected near-unanimously and all resolutions this morning were passed. Now for the main game.