On Tuesday, Brierley’s investment company Mercantile NZ announced that it had increased its takeover offer from $2.75 to $3.00.
This is one cent above the directors’ original assessment ($2.99) of what would be available to shareholders in a low-scenario liquidation.
Mercantile also extended the closing date of its offer to June 12.
Since the 153-year-old department store closed its doors for the final time in January, not much remains of the Kirks brand.
The company’s shareholders opted to sell the struggling brand to David Jones last year in a deal worth $400,000.
But Kirks’ board still considers the Mercantile offer too low, and advised its shareholders not to take Brierley up on his offer.
“In the directors’ opinion the revised price offered by Mercantile remains at a level which the directors are presently unable to recommend. Accordingly their original do not sell recommendation remains in place,” chairman Falcon Clouston said.
There are a couple of property leases the company is wanting to sell or pay to get out of, including its Petone lease, the Pantry lease and the Thorndon Quay lease.
Clouston said the $2.99 assessment was calculated as a “worst case view” of what shareholders could get paid if the company was locked in to paying the full terms on all three leases.
This includes the Petone property being locked in for the remaining seven years of its lease until 2023, which is estimated to cost about $1.4 million.
However, the board is optimistic it can negotiate a deal to reduce the impact of the Petone payout, along with its other leases for the Pantry and Thorndon Quay.
The board also knocked down claims Brierley made to shareholders about the risk of a controversial, expensive and drawn out liquidation.
“The Board’s current plans are to be in a position to commence a liquidation well within a year, and to position the company for an early and substantial distribution of surplus cash. The Board is also unaware of any matter which would make a liquidation controversial,” Clouston said.
He also emphasised that the possibility of a higher payout range – from $3.08 and $3.58 –was dependent on the outcome of a deal on its lease of its Pantry property.
There was also a mention of David Jones, the Australian department store moving into Kirks’ old premises.
Clouston said that under the terms of the agreement of the sale of the Lambton Quay store to David Jones, Kirkcaldie & Stains has to change its name prior to the refurbishment and store opening being completed.
He said a consultation process with David Jones about the possible names and timing for the required change was underway.
“We will keep you informed in order that any change of name does not cause confusion," he said.
Brierley is well known within the industry as a feared corporate raider.
His most well known company, Brierley Investments Limited, was a force to be reckoned with in the 1980s, but Brierley was later removed as chairman after the 1987 sharemarket crash.
He was revealed in 2011 to be one of the largest investors in Kirks, owning 5.7 per cent of the company.