Subject: SHA
Vision requests that IRES corrects its disclosure deficiency, delays the Annual General Meeting, and excludes potentially conflicted votes at the meeting
DUBLIN, April 27, 2023 /PRNewswire/ -- Vision Capital Corporation announced that earlier today it sent a letter to Mr. Declan Moylan, the Chair of Irish Residential Properties REIT plc identifying its concerns with respect to incomplete disclosure and the potential of conflicted voting at the upcoming May 4, 2023, Annual General Meeting. Vision asserts that in the context of a contested shareholder vote, all shareholders should be treated equally and no shareholder should receive a collateral benefit that is tantamount to a "vote buying" arrangement. To protect the interests of the non-conflicted shareholders, the votes of the involved parties should be excluded. This is an issue which has been the focus of securities regulators internationally.
The letter was copied to Euronext Dublin to bring these concerns to its attention.
The full text of the letter follows.
April 27th, 2023
Mr. Declan Moylan
Chair, Irish Residential Properties REIT plc
South Dock House
Hanover Quay
Dublin 2
Ireland
Re: Irish Residential Properties REIT plc ("IRES" or the "Company") 2023 Annual General Meeting - Shareholder Concerns
Dear Declan,
We (Vision Capital Corporation, together with its affiliates, "Vision", "we", "us" or "our") are writing further to our open letters to IRES shareholders on April 12, 20231, and April 24, 20232 (the "Vision Letters"), IRES' responses to the Vision Letters and a report in the Irish Independent that IRES is in exclusive talks to sell the Marker Residences to Irish Life Investment Managers Limited ("ILIM"), which, together with its affiliated group company Setanta Asset Management Limited ("Setanta", and collectively, ILIM and Setanta are referred to as the "ILIM Group") are an approximate 11% shareholder of IRES (the "Press Report")3. In addition to the issues raised in the Vision Letters, as we approach IRES' annual general meeting on May 4, 2023 (the "2023 AGM"), we are deeply concerned that IRES: (i) has failed, and continues to fail on an ongoing basis, to ensure equality of treatment of shareholders regarding the exercise of voting rights and participation in a general meeting of the Company; (ii) continues to pursue a related party transaction in the context of a contested vote at the 2023 AGM; and, (iii) is failing to inform the public of inside information concerning IRES.
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1. Equality of Treatment of Shareholders
1.1 As you are aware, IRES has an obligation to ensure equal treatment for all members, who are in the same position, with regard to the exercise of voting rights and participation in the 2023 AGM. If the Press Report is accurate, IRES is failing in its duty to do so by pursuing exclusive talks with ILIM to the detriment of all other shareholders. Failing to disclose these discussions and permitting the ILIM Group to vote at the 2023 AGM will ensure that other shareholders are not in an equal position as ILIM. By allowing the ILIM Group to vote to continue the Board's status quo, IRES will have ensured unequal treatment for other shareholders at the 2023 AGM by incentivising ILIM to support the Board, knowing it may crystallise a lucrative business opportunity for their group. There is a clear inference to be drawn that entering these discussions after we published the Vision Letters is a quid pro quo for ILIM Group's support of the Board, which is to the detriment of all other shareholders who will be impacted by any one-off sale of a premier asset to a major shareholder of IRES.
1.2 IRES is obliged to ensure that the notice of the 2023 AGM (the "Notice of Meeting") provides a clear and adequate explanation of its subject matter and contains all information necessary to allow shareholders to make a properly informed decision on the matters to be voted on. The Notice of Meeting, which was posted on April 3, 2023, contains no information on the sale of the Marker Residences, or IRES' discussions with ILIM, and IRES has made no public statements on the matter. IRES' failure to update the market as to this information ensures that shareholders do not have the information necessary to allow shareholders to make a properly informed decision on the Company's affairs or the re-election of the Board.
1.3 To remedy the above, IRES must immediately: (i) provide an update to shareholders and the market with complete and accurate information as to the status of discussions with ILIM; (ii) postpone the 2023 AGM to ensure that all shareholders are given sufficient time to consider the implications of that information; and, (iii) so that the vote at the 2023 AGM accurately reflects the will of the IRES shareholders whose votes are cast without the prospect of a collateral benefit, and to ensure that ILIM Group's approximately 11% holding is not voted at the 2023 AGM to support the Board while ILIM has a clear conflict of interest in doing so.
2. Related Party Transactions
2.1 The ILIM Group has disclosed an aggregate of approximately 11% holding of IRES' ordinary shares. We presume IRES considers them a Substantial Shareholder (as defined in Euronext Dublin's Listing Rules) and, therefore, any transaction with ILIM for the Marker Residences to be a Related Party Transaction.
2.2 As set out in the Vision Letters, we consider any piecemeal sale of IRES' assets to be value destructive for all shareholders other than, in this case, the ILIM Group. We will not support any such Related Party Transaction and will gather shareholder support to oppose any deal hastily agreed by the Board to serve its own interests and that of the Company's management team, rather than the interests of IRES' shareholders as a whole.
3. Market Abuse Regulation Concerns
3.1 The Irish Independent published the Press Report at 17:55 on April 24, 2023. The Press Report suggests a price of between ?60 million - ?65 million may be paid for the asset which, at today's price, would represent [11% - 12%] of IRES's market capitalisation. That figure is self-evidently material and, in the circumstances, we are concerned that it comprises information a reasonable investor would likely use as part of the basis of his or her investment decisions in IRES.
3.2 We were therefore surprised that IRES did not update the market as to the status of the ILIM discussions as soon as possible following the Press Report given the Press Report was evidence that IRES had failed to maintain confidentiality of the information. Even if there are no discussions with ILIM, IRES' continuing failure to update the market on the issues included in the Press Report is likely to mislead the public and represent an unknown overhang on the price of IRES' ordinary shares.
3.3 Accordingly, IRES should now immediately clarify whether discussions with ILIM are ongoing or, if they are not, clarify whether discussions were ongoing prior to being abandoned. Failure to do so in advance of the 2023 AGM has the potential of seriously misleading IRES shareholders. We trust that IRES will also bring these matters to the attention of the Central Bank of Ireland, as necessary.
In light of the above, we urge the Board not to proceed with any asset sales until a clear, longer-term strategy that benefits from a shareholder-aligned Board is advanced and communicated.
In the interim, and pending receipt of the various confirmations and clarifications requested above, please note that we reserve all of Vision's rights in connection with this matter, including taking whatever action considered necessary to protect our position, and seeking relevant legal undertakings or contesting the 2023 AGM voting results.
As set out in the Vision Letters, as well as the press release issued by Vision on April 25th, 20234, we continue to call for all IRES shareholders to vote against Resolutions 2a, 2b, 2c, 2d, 2g, 6, 8a, and 8b at the 2023 AGM as a first step to communicate to the Board and IRES management our dissatisfaction and to lay the foundation for the consideration of a new governance framework for IRES.
We have copied this letter to:
1. the Corporate Enforcement Authority, so that it may consider IRES' failure to ensure equal treatment for all shareholders at the 2023 AGM and direct IRES to remediate matters as it sees fit; and
2. Euronext Dublin, to consider the Listing Rule implications of the issues we have raised on the equality of treatment of shareholders and related party transactions.
Yours sincerely,
VISION CAPITAL CORPORATION
With a copy to:
Company Law Complaints & Concerns Division, Corporate Enforcement Authority
Market Surveillance Division, Euronext Dublin
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CONTACT: [email protected]
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