Iris’ $3.87 Per Unit Bid Offers 42% Premium in Reef Casino Trust Takeover

Background to the Offer

Reef Casino Trust (RCT), owner of the Reef Hotel Casino Complex in Cairns, has been the subject of an off-market takeover bid by Iris Cairns Property Pty Ltd, trustee for the Iris Cairns Property Trust. The offer price of $3.87 per unit represents a substantial premium of approximately 42% over the undisturbed trading price prior to the bid announcement in February 2025.

The bid follows a competitive process involving rival proposals, with Iris ultimately increasing its offer to $3.87, the highest among contenders. The offer values RCT’s total equity at around $192.7 million and is supported by major unitholders Casinos Austria International Ltd (CAIL) and Accor Casino Investments, who collectively hold nearly 72% of units.

Board and Independent Expert Endorsement

RCT’s independent board committee, alongside the full board including non-independent directors, has unanimously recommended unitholders accept the offer, subject to no superior proposal emerging and the independent expert maintaining a reasonable opinion. Lonergan Edwards & Associates Limited, the independent expert appointed to assess the bid, concluded the offer is fair and reasonable to unitholders.

The expert’s valuation places RCT’s controlling interest value between $3.24 and $3.55 per unit, making the $3.87 offer a premium of 13.8% to the midpoint. The expert also found no evidence of collateral benefits to major unitholders arising from related share purchase agreements for RCT’s responsible entity Reef Corporate Services Limited (RCSL) and the casino operator Casinos Austria International (Cairns) Pty Ltd.

Conditions and Offer Mechanics

The offer is conditional on several regulatory approvals, including casino and liquor licensing consents from Queensland authorities, and a minimum acceptance threshold of 80% of units. Iris has the discretion to waive this threshold under certain conditions. The bid period is scheduled to close on 13 March 2026 but may be extended.

In addition to the unit offer, Iris has entered into inter-conditional share purchase agreements to acquire all shares in RCSL and the casino operator, consolidating control over the entire Reef Casino Complex operations. These transactions are integral to the offer becoming unconditional.

Implications for Unitholders

Unitholders who accept the offer will receive cash consideration, providing immediate liquidity at a premium price. The offer is particularly attractive given RCT’s historically low trading liquidity, which has limited unitholders’ ability to sell units on market without discounting.

However, unitholders should consider the loss of future participation in RCT’s financial performance and potential tax consequences, detailed in an Ernst & Young taxation report accompanying the target’s statement. Minority unitholders remaining post-offer may face reduced liquidity and potential delisting from the ASX, as Iris has indicated it may seek to delist RCT.

Outlook and Next Steps

The offer represents a significant liquidity event for RCT unitholders, backed by major stakeholders and an independent valuation. The key uncertainties remain the satisfaction of regulatory conditions and the possibility, albeit considered unlikely, of a superior proposal emerging before the offer closes.

Investors and analysts will be closely watching regulatory approval progress and any market developments that could influence the bid’s outcome. Meanwhile, unitholders are encouraged to review the detailed target’s statement, expert report, and tax implications before making their decision.