I am sure investors would have liked to have known about the agreement between the companies, which expires in February.
In just about two months, ProLogis, which sold all its logistics assets in China to GLP in 2008, will be able to compete once again with the Singapore company in China. Many would disagree with GLP and feel that is material information.
GLP says that its prospectus “had not qualified that ProLogis is restricted from competing against the company in China under the non-competition arrangement”.
The GIC subsidiary adds: “In this regard, the company had in its prospectus already treated ProLogis as an existing potential competitor in the same manner as its other potential competitors.”
However, GLP failed to state that despite ProLogis having sold its assets in China to it via GIC Real Estate for US$1.3billion, it could reappear in the market from February next year [2011].
In late 2008, ProLogis exited the China market by selling to GLP 20.7 million sq ft of completed properties and properties under development, as well as about 290 hectares of land. It also sold its interests in five China joint ventures and one property fund, of which the firm’s share amounted to 4.4 million sq ft.
With ProLogis being one of the world’s largest owners, managers and developers of distribution facilities, it could pose as a serious competitor and threat to GLP’s expansion plans in the Middle Kingdom.
GLP now says that it treats ProLogis “in the same manner as any other existing potential competitor that does not currently have a market presence in China”.
It adds that it had declared in its prospectus that it faces increasing competition from a large number of international logistics firms that have expanded or are likely to expand their operations in China.
But this is a general statement that does not disclose the explicit threat from a really solid competitor like ProLogis.
For sure it adds: “We expect many of these providers have sufficient financial, managerial, marketing and other resources to be competitive and may have more experience in logistics facility and land development.”
But why not simply say that one of the major competitors in the very near future could be ProLogis from which it had bought substantial assets?
The man-in-the-street would probably have dismissed ProLogis as a competitor after having only recently sold to GLP its assets in China.
GLP also did not disclose that it was restricted from developing facilities in Japan until February next year. Again it does not think this is material information as it “does not currently have specific plans to develop new facilities or acquire land bank in Japan”. But it did say in the prospectus that if the market conditions are appropriate, it will consider developing new facilities in Japan next year.
The average investor is not interested in the legalese or what the legal interpretation of material or non-material information is.
He or she simply wants to know everything for him or her to make an informed decision.
Hiding does not help, even if it is legal. [hIdIng Is legal ? ? ? ?]
As Mr David Gerald, chief executive and president of the Securities Investors Association Singapore (SIAS), was quoted as saying: “Information that assists with the investment decision or helps an investor in the company make an informed decision ought to be in the prospectus.”
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