Shareholders feel cheated by Hili Ventures’ buyback offer

Shareholders who just three years ago invested their hard-earned cash into Hili Properties Plc are feeling shortchanged by the company’s recent announcement that it is offering a voluntary buyback of its listed shares.

Shareholders have until 25 March to accept the offer. They are complaining that the shares the company sold for €0.27c per share are now being asked to be sold back for €0.24c per share.

According to the latest published financial statements, the company has grown significantly during the past three years, so much so that the Net Asset Value (NAV) of the shares reached €0.324c per share until last June.

Hili Ventures is proposing an offer of some 30% less, insisting that it is paying more than the current market price quoted on the Malta Stock Exchange.

Angry shareholders described the offer as an “indecent proposal”. They criticised the regulatory authorities for not stopping this “obscenity,” while Price Waterhouse Coopers (PwC) justified this “rip-off.”

PwC, one of the so-called ‘Big Four’ auditing firms, said in a report accompanying the offer’s document: “It is true that the offer is below Hili Properties’ reported consolidated net asset value per share of €0.322 as of June 2024. ”

However, PwC underlined that “one must also consider the impact of the ongoing property portfolio management costs not considered in the reported fair value of the underlying properties.”

“The net asset value per share, after adjusting the capitalisation of property portfolio management costs, is lower than the offer price,” the firm concluded.

When Hili Properties offered the shares in 2022, the company told prospective buyers that it “anticipated” it would “distribute a 4% net dividend”.

Rubbishing the offer and its justifications, shareholders insisted that the shares are currently valued at €0.322, and Hili wants them back at a discount.

They also lamented that Hili may force those disagreeing to sell their shares.

According to the Offer Document, if the company acquires 90% or more of the shares through this offer, Hili can force the remaining shareholders to sell “at a fair price.”

Veteran expert blasts offer

While local stockbrokers, who usually make a significant effort to sell shares for a commission, fell silent on the Hili Ventures’ offer, a veteran stockbroker and financial expert blasted the proposal.

Referring to a ‘financial analysis’ published by The Times of Malta, stockbroker Paul Bonello said the “article” does not mention that the public share issue for €0.27c was made only in January 2022.

“Nor does it mention that the net asset value per share as per last published 30 June, 2024 interim accounts is €0.322,” he said, saying the article was more a public relations exercise.

Harshly criticising PwC for their ‘analysis,’ Bonello said that while acknowledging this Net Asset Value, the audit expert auditors make a series of convoluted arguments to conclude that “nothing has come to our attention that the offer is not fair and reasonable.”

“You see how good the Maltese businessman is at making a quick buck and buying back shares it issued ‘yesterday’, now at a 30% discount on book value, equivalent to more than €11 million,” Bonello argued.

Contacted to explain how they had arrived at their offer and to justify the fact that they are offering a lower price for the same shares they sold just three years ago, a spokesperson for Hili said:

“Hili Ventures’ Voluntary Offer of €0.240c exceeds the current market value of €0.193c per share, representing a 24.4% premium based on the last traded price of Hili Properties plc on the Malta Stock Exchange. This voluntary offer also exceeds the volume-weighted average price (VWAP) over the past six months of €0.219c, reflecting Hili Ventures’ commitment to extending fair value despite the stock’s market performance.”

Hili Properties Plc owns and manages strategic commercial real estate for lease across Europe, including Estonia, Latvia, Lithuania, Malta, and Romania. The portfolio features office buildings and spaces, grocery-anchored shopping centres, healthcare facilities, and McDonald’s restaurant properties in key commercial districts.