Hunter Hall says Kresta bid too low

Hunter Hall Investment Management says Ian Trahar's bid to take over Kresta Holdings significantly undervalues the business and has rejected suggestions it was seeking to take control of the business by ousting key board members.

Hunter Hall chief executive Peter Hall said the proposed bid, at 32.5 cents a share, represented a 29.3 per cent discount to Kresta's top share price in the last year of 46 cents, and a 19.8 discount to the 40.5 cents a share it traded at after announcing its full-year results in August.

"The Trahar bid appears to be well below the break-up value of Kresta, especially when you consider the value of the Kresta brands," Mr Hall said.

"We also note with interest that the bid makes no allowance for property revaluations totalling $9 million (6.3 cents per share) that the company received in February 2010, but chose not to take to account in preparing its balance sheets for the year to June 30 2010."

Mr Trahar launched the $47 million cash bid yesterday through private company Wildweb Enterprises, saying Hunter Hall was attempting to take control of Kresta without making any offer to shareholders or paying anything for control.

But Hunter Hall spokesman Jack Lowenstein said this was incorrect.

"Hunter Hall Investment Management manages $1.9 billion in funds for mums and dads in Australia," Mr Lowenstein said.

"We're not in the business of controlling companies.

"But we are in the business of protecting our unit holders' interests when we lose faith in directors on boards in companies in which we invest.

"Some institutions in this situation would just sell out and move on.

"We take the view that we have something of a public duty to use our strength to stand up for the interests of all shareholders in these companies when this happens."

Hunter Hall holds 19.9 per cent of Kresta's shares, and has requisitioned a meeting of shareholders to remove Mr Trahar and Mr Hatfull from the Kresta board.

Messrs Trahar and Hatfull would be replaced by John Molloy and Rick Taylor if shareholders adopt the resolution at the February 14 meeting.