Hastings defers fee

Hastings Diversified Utilities deferred part of a multimillion-dollar performance fee payable to its manager while it awaits the outcome of a takeover offer lodged by APA Group. The company decided to pay some of the fee in cash now and delay the remainder until the bid situation is clearer.

Hastings was due to pay a total performance fee of $54.1 million to its manager for the six months to December 31. It paid $30.7 million in cash and deferred the balance for later consideration.

The manager is Hastings Funds Management, which is a unit of Westpac. That entity is the recipient of the $54.1 million performance fee, with part of the payment currently deferred.

Hastings said its decision on the remaining fee will depend on whether the uptick in its unit price since APA launched the takeover offer is sustained and on whether control of the company changes hands as a result of the bid.

Units outperformed their relative benchmark in the December half. Hastings’ market value rose to $1.09 billion by the end of 2011, up from $876 million a year earlier.

According to the report, APA Group shares traded down about 4% to $4.44, extending a decline from a December high of $4.70. Hastings shares slipped about 2% to $1.98.

Yes. Hastings has deferred the portion of the fee it calculates is due since APA launched its takeover offer on December 14, and will decide later whether to pay that portion depending on developments related to the bid.

Everyday investors should monitor the sustainability of Hastings’ unit-price uptick and the progress of APA’s takeover offer. Those factors are the ones Hastings has said will determine whether the remaining performance fee is paid, and they can influence the company’s control and valuation.