Equities Trustees Limited (EQT) has confirmed that The Trust Company's annual financial results satisfy the offer conditions in their bidder's statement.
The condition noted that in the six months ended February 28, The Trust Company's consolidated operating earnings before interest, tax, depreciation and amortisation (EBITDA) was to be no less than $9 million.
In results released on the Australian Securities Exchange (ASX) yesterday, The Trust Company reported that EBITDA for the second half of the 2013 financial year reached $10.1 million, exceeding forecasts of October 2012 by more than 10 per cent.
"That condition was in there because when we made the offer we were relying on the performance for the full year that they stated they were expecting to achieve," Equity Trustees managing director Robin Burns told InvestorDaily.
"In other words, the value of the company depends upon its performance and if they were going to perform worse than they actually said, then the company would be worth less to us and we would seek to reassess the value of our offer."
The fulfilment of the conditions means that EQT's takeover offer for the company can now reach the next stage as it awaits The Trust Company's responding target statement, expected to be released on Friday.
Following the company's financial reporting to the ASX, The Trust Company interim chief executive Shailendra Singh said that "the EQT offer materially undervalues The Trust Company".
He further "advised our shareholders not to take any action until such time as they've read the target statement".
However, Mr Burns said that EQT awaits the target statement to see essentially what the board thinks of the situation and of their company's valuation.
"There are significant synergies that are available from the two companies operating as a group, and the two companies are very similar in operation, history and culture," Mr Burns said.
"The two together will just be a much more powerful organisation than if they continue to operate individually."
