In July the company announced a net profit after tax of $13.05 million for the 2012/2103 financial year, which was up 884 per cent on the previous year’s result.
In an annual report to shareholders released this week, Cadence Capital managing director Karl Siegling pointed to announcements made since the end of the reporting season by two of Cadence’s largest positions.
McMillan Shakespeare Limited, a 4.8 per cent position in the Cadence portfolio, has been “negatively impacted by the [Labor] Government’s proposed changes to the [fringe benefits tax] treatment of motor vehicles”, he said.
RHG Limited, the largest position in the portfolio at 8.1 per cent, has received competing proposals from non-bank lender Pepper Australia Pty Ltd and a syndicate involving Resimac and Australian Mortgage Acquisition Company Pty Ltd (‘Resimac Syndicate) to acquire the company, said Mr Siegling.
Cadence owns 17.1 per cent of the shares in RHG, which was formerly known as RAMS Mortgage Corporation before the RAMS brand was sold to Westpac in November 2007.
RHG no longer writes new loans and is running down its $2.1 billion mortgage book.
On July 8, RHG entered into a merger implementation deed under which the Resimac Syndicate would acquire 100 per cent of RHG shares for 44.1 cents cash per share.
On August 16, Pepper announced a scheme of arrangement to acquire 100 per cent of RHG for a consideration of 49.65 cents per share, comprising of a combination of 36 cents per share cash and shares in Cadence (at a ratio of one fully paid up ordinary share in Cadence for every 10 ordinary shares in RHG).
An increased offer from the Resimac Syndicate for 49.5 cents per share cash was received by RHG on August 23 and then accepted by the RHG board on August 29.
But on September 9, Pepper and Cadence made a counter offer worth 50.8 cents per share including a scrip offer with Cadence, which was criticised by Resimac as "highly conditional" and favourable to Cadence "on both terms and benefits".
On September 25, the Resimac Syndicate made an application with the government's Takeovers Panel that Cadence be "restrained from voting against the Resimac Syndicate scheme of arrangement unless the RHG board has withdrawn its recommendation of the Resimac Syndicate offer, and that Cadence make additional disclosure in relation to the details of its proposed buyback".
