TAKEOVER target Hastings Diversified has deferred payment of part of a multimillion-dollar performance fee to its manager as it awaits the outcome of the takeover lodged by pipeline owner and manager APA.
Thanks to its strong performance during the six months to December, Hastings Diversified is due to pay $54.1 million to its manager, Westpac unit Hastings Funds Management.
It will pay $30.7 million of this in cash, leaving payment of the balance, which is the portion of the fee it calculates is due since APA launched its takeover offer on December 14, to be decided in the future.
Hastings Diversified will decide whether to pay this balance depending on whether a rise in the unit price that began when the bid was launched is sustained and whether control of the company changes hands.
The units outperformed their relative benchmark in the December half, it said, with Hastings Diversified's market value rising to $1.09 billion by the end of 2011, up from $876 million a year earlier.
Unit holders who had participated in all rights issues and reinvested all dividends would have achieved an annual 12.5 per cent return since its inception, it said, with a 34.25 per cent return since the last performance fee was payable in mid-2011.
APA said yesterday the payment meant Hastings Diversified had paid more than $110 million in performance and management fees since listing in 2004 - more than 30 per cent of total distributions paid to unitholders in the same period.
"Under APA's internally managed model, security holders benefit from APA's performance, not an external manager," its APA managing director, Mick McCormack, said.
Broker Wilson HTM said in a note to clients: "We detest these performance fees being paid, given [the] share price outperformance is mostly due to its low beta/defensive assets [80 per cent pipelines, 20 per cent cash] which should outperform in a falling market."
APA shares traded down 1? to $4.47 yesterday. Hastings Diversified shares slipped 2? to $1.98.