Retirement village operator Metlifecare is denying claims that its profits are going to take a big hit because of the Covid-19 pandemic.
File photo Photo: 123RF
The suggestion was made by the Swedish private equity firm EQT and was one of its grounds for pulling the plug on a $1.5 billion takeover of Metlifecare.
Metlifecare said in a statement of claim filed in the High Court its latest financial estimates did not support EQT's assertions that its underlying profit would fall by at least 10 percent, and the value of its assets would fall by at least $100m.
The company's chair, Kim Ellis, said the Metlifecare board was still in favour of the deal, and would not let it collapse.
"In refusing to fulfil their contractual obligations under the Scheme Implementation Agreement ... [EQT] has left us with no choice but to take this legal action to protect the rights of Metlifecare and its shareholders."
EQT pulled out of the takeover offer of $7 a share last month claiming that the Covid-19 outbreak was a "Material Adverse Change" (MAC), which would lower the value of Metlifecare's assets, its earnings, and profits.
It also claimed it had not been consulted about decisions relating to the government-ordered lockdown.
In a statement of claim Metlifecare said its most recent forecast of underlying profit was $88.7m, which was within the previous given range.
It also said EQT had no reasonable grounds to claim the value of its assets had fallen beyond the $100m level, nor that any of its other actions forced by the lockdown such as the suspension of development work and unit sales, or taking the wage subsidy were not allowed for in the takeover agreement.
"Regardless of whether the MAC metrics are triggered, the MAC clause does not apply because this would have been the result of changes in general economic conditions and/or changes in law, which are exclusions under the MAC clause," the statement of claim said.
A preliminary hearing of the case is expected by the end of the month.