Workspace (WKP) has blasted the latest proposals for its turnaround from Saba Capital, its second largest investor, as “high-risk, short-sighted and not suitable” for the flexible office provider.
Responding to the latest materials posted this week by 28% shareholder Saba on its makeworskpacework.co.uk website, Workspace said the activist hedge fund’s revision to its original plan by making selected disposals within “clusters” of its properties still amounted to an “accelerated wind-down”.
This would entail “the execution of a higher number of disposals at narrower discounts than recent volumes or realised discounts suggest can be achieved” and risked a “fire sale” that would further damage shareholders, a charge that Saba has previously denied.
Workspace said the US firm’s suggestion there were 50-75 “credible potential buyers” was “unrealistic” as it urged shareholders to vote against Saba’s resolutions to replace its experienced board of real estate professionals at the annual general meeting on 23 July.
Calling for shareholders to support the share price revival strategy of new chief executive Charlie Green, Workspace said Saba’s assertion of a long tail of willing buyers overlooked the fact that the investment market for its “non-conventional character buildings” often in secondary locations and with short-term leases “remains slow by its nature”.
Workspace said it had over £200m of assets marketed for sale by leading global and specialist London agents and that “the level of interest received to date does not support Saba’s estimation”.
It also rebutted Saba’s argument that Workspace sold 13 properties in the year to 31 March at an average discount of 7.2% to the most recent book value. The company said this ignored the fact that most of these valuations had been adjusted to reflect the level at which bids were being received.
“If looking at the valuation six months prior to this last valuation, the average discount of the sales price was 19.6%. Since the start of FY27, a further three properties have been sold at an average discount of 22.3%,” Workspace stated.
It also criticised Saba’s plan appoint an unidentified external manager to improve some properties as lacking “the clarity that shareholders need to make an informed decision”.
“The board continues to firmly believe Saba’s proposal to accelerate or increase the volume of disposals is unrealistic in the current market, and it positions Workspace as a forced seller and will likely result in wider discounts than we have recently achieved, Workspace said.
Workspace shares firmed 1.7p, or 0.5%, to 326.5p. They have fallen 17% since January when Saba launched its campaign. Over five years, they have shed nearly two thirds of their value.
Our view
Richard Williams, senior analyst at QuotedData, said: “The key message in the latest Workspace announcement is the board’s belief that “Saba’s proposal to accelerate or increase the volume of disposals is unrealistic in the current market, and it positions Workspace as a forced seller and will likely result in wider discounts than we have recently achieved”. I think it is hard to argue with this and, for me, would tilt the balance in the incumbent board’s favour.”
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