Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

HK Type 4 license through Ballingal Investment Advisors Ltd. 

I'm a highly experienced sell-side analyst with in excess of 22 years of covering Asia Pacific equities, the past 19 years immersed in event strategies encompassing M&A risk arbitrage, directional long/short, stub trades and restructuring.  

My background also includes accountancy (liquidation/bankruptcy/receivership) earlier in my career and as a chief financial officer of a global commodity company based in the US and Mexico.

Pan-Asia Catalysts/Events

Metlifecare: Preparing For A Protracted Legal Stoush

Metlifecare: EQT Blinks And Tables A Revised Offer

Metlifecare/EQT: Avoiding Contractual Obligations

Quiddity Advisors

Event-Driven

In <a href="https://skr.ma/CGHEC" target="_blank" rel="noopener">Metlifecare/EQT: Avoiding Contractual Obligations</a> and <a href="https://skr.ma/K8HsH" target="_blank" rel="noopener">Takeover Defenses, MACs &amp; Deal Breaks</a>, I discussed the all-but-broken deal for <a href="https://www.smartkarma.com/entities/metlifecare-ltd" target="_blank" data-smartkarma-citation="entities:19219:1" rel="noopener">Metlifecare Ltd (MET NZ)</a> from Asia Pacific Village Group Limited (APVG), an entity owned by EQT Infrastructure IV fund and managed by EQT Fund Management.
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MET <a href="https://www.nzx.com/announcements/349947" target="_blank" rel="noopener">announced</a> on the 16 March that the Scheme Implementation Agreement (SIA) contained limited termination events and does not include any market fall or force majeure termination event.
On the 26 March, MET <a href="https://www.nzx.com/announcements/350713" target="_blank" rel="noopener">added</a> it was continuing to advance its SIA with APVG. But softened its earlier commentary by adding "APVG has termination rights under the SIA, including termination rights in the event of a MAC. Metlifecare does not consider that a MAC has arisen at this point in time but can give no assurance that a MAC might not arise in the future." 
I argued (unsuccessfully it has now been shown) it would be challenging for EQT to get out of the MAC carve-out. It was also not evidently clear why they would want to get out.
But at an 80%+ spread to terms, very few deals complete from this far back. 
The New News
The inevitable. Metlifecare <a href="http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MET/351464/320564.pdf" target="_blank" rel="noopener">announced</a> today it received notice of an intention to terminate its SIA with APVG/EQT in around 10 business days.
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APVG has asserted that COVID-19 is a specified event triggering the MAC clause because it has reduced or is reasonably likely to reduce the consolidated net tangible assets of Metlifecare by at least $100m and/or that it is reasonably likely to reduce the consolidated underlying net profit (as described in the MAC clause) of Metlifecare by at least 10% in FY20, and/or FY21 and/or FY22 against what it would reasonably have been expected to be but for the COVID-19 event.
APVG has also asserted that Metlifecare has not provided some information to APVG and made decisions in relation to its response to Level 4 Government directives without consultation and/or consent of APVG, contrary to clauses 9.2 and 9.3 of the SIA.  (my emphasis)
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Metlifecare said it is taking legal advice on the APVG correspondence, but its initial take is that the assertions are without substance and that APVG does not have a lawful basis to terminate the SIA. 
To assist in the analytics to this deal, I reached out to Australia's Takeover Panel on general considerations/factors when evaluating acute takeover situations.
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As always, more below the fold. 
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In Metlifecare/EQT: Avoiding Contractual Obligations and Takeover Defenses, MACs &amp; Deal Breaks, I discussed the all-but-broken deal for Metlifecare Ltd (MET NZ) from Asia Pacific Village Group Limited (APVG), an entity owned by EQT Infrastructure IV fund and managed by EQT Fund Management.

MET announced on the 16 March that the Scheme Implementation Agreement (SIA) contained limited termination events and does not include any market fall or force majeure termination event.
On the 26 March, MET added it was continuing to advance its SIA with APVG. But softened its earlier commentary by adding "APVG has termination rights under the SIA, including termination rights in the event of a MAC. Metlifecare does not consider that a MAC has arisen at this point in time but can give no assurance that a MAC might not arise in the future." 
I argued (unsuccessfully it has now been shown) it would be challenging for EQT to get out of the MAC carve-out. It was also not evidently clear why they would want to get out.
But at an 80%+ spread to terms, very few deals complete from this far back. 
The New News
The inevitable. Metlifecare announced today it received notice of an intention to terminate its SIA with APVG/EQT in around 10 business days.

APVG has asserted that COVID-19 is a specified event triggering the MAC clause because it has reduced or is reasonably likely to reduce the consolidated net tangible assets of Metlifecare by at least $100m and/or that it is reasonably likely to reduce the consolidated underlying net profit (as described in the MAC clause) of Metlifecare by at least 10% in FY20, and/or FY21 and/or FY22 against what it would reasonably have been expected to be but for the COVID-19 event.
APVG has also asserted that Metlifecare has not provided some information to APVG and made decisions in relation to its response to Level 4 Government directives without consultation and/or consent of APVG, contrary to clauses 9.2 and 9.3 of the SIA.  (my emphasis)

Metlifecare said it is taking legal advice on the APVG correspondence, but its initial take is that the assertions are without substance and that APVG does not have a lawful basis to terminate the SIA. 
To assist in the analytics to this deal, I reached out to Australia's Takeover Panel on general considerations/factors when evaluating acute takeover situations.

As always, more below the fold. 




Metlifecare Ltd

Metlifecare's Options As EQT Walks