Green adopts unfamiliarly shy attitude

Green Property, rejuvenated seven years ago in a fanfare of well-aired property deals, has gone secretive. Last Thursday it announced its interim results, and a possible management buyout (MBO), but failed to identify the executive directors involved. Two months earlier, the senior executives were not taking calls on the speculated MBO.

For a company that has not been shy in explaining its strategies, and the reasons behind its numerous property deals, this new stance is a retrograde step. Indeed, it is hardly in keeping with the mood for transparency. The reasons behind the shyness is probably connected with the speculation that there may be an MBO. And the new stance coincides with that speculation. However, it could be argued that the company's two formal responses to the speculation have been inadequate. First, on June 19th it informed the Stock Exchange as follows:

"The board notes recent press speculation regarding a possible privatisation of the company. It confirms that it has received no approaches from any source regarding an offer for the company. The board confirms, however, that it continues to give due consideration to all opportunities to improve shareholder value." Note there was no mention about a possible MBO. The statement, however, was seen as an effort to dampen speculation that the group would shortly be taken private by the management. And the market reacted by pushing the shares down 43 cents to €5.97.

The second response was last Thursday. At the end of the interim statement it "confirms that no proposal had been received from any source". That tied in with its original statement but it then went on to tell shareholders that "a team led by certain executive directors has, however, indicated to the board that it is investigating the possibility of making a proposal which may or may not lead to an offer being made for the company". It went on to explain if a proposal emerged "there can be no assurance that any formal offer will be made or that it will be recommended by the board to shareholders" and that the company has established "an independent committee of the board to consider any proposal which may be made".

The first statement begs the obvious question - why was there no mention about a possible MBO? It should have been mentioned if the board had been formally notified. If it had not been formally notified, it should be asked: Did the board which consists of Ray MacSharry, Stephen Vernon, Mark Cherry, Richard Hooper, Danny Kitchen, David McDowell, James McKenna and Kevin Wylie, informally know about the MBO moves?

The second statement also raises valid questions. First, who are the "certain executive directors?". Second, as all the executive directors are not involved, is there a board split about the MBO route? It is widely believed that the managing director, Stephen Vernon, is heading the team. He has often voiced his dissatisfaction with institutions' reaction to the company. Three days before the first statement, and before the subsequent silence, he told The Irish Times that his group was not big enough to be considered by the European institutions and is being ignored by the Irish institutions. In the UK, it is lumped with "the rest", rather than in the UK sector, when they are making investment decisions.

The group, he added, "concluded it was right to have a debate". The plan, he said, "might be to soldier on. I am not wild about plans to break it all up".

It is easy to see his frustration. When Green announced it had increased its net asset value by €250 million in 1999, the market reacted by cutting the share price. The interim figures announced last week showing an 11.21 per cent increase in the net asset value per share to €9.04 (and the possible MBO) led to an 18 cents fall in the share price to €6.82. On Friday, there was a further fall of 17 cents to €6.65 before the partial recovery to €6.72. The shares are now on a 26 per cent discount to the net asset backing.

Green Property has been one of the star performers, yet its share price is below the high of €7.36 recorded two years ago. One could ask - why bother? That adequately explains the privatisation move.