KEY POINTS:
The defence in the landmark insider trading case involving the acquisition of Southern Petroleum by Fletcher Challenge says the plaintiffs' case is misconceived.
Seven hundred former Southern Petroleum minority shareholders are seeking tens of millions of dollars from Shell, which bought Fletcher Energy in 2001.
The claimants are
seeking to recoup the difference between the 75c they were paid for the shares and what they would have been worth had certain information been made public.
The High Court case centres on claims that Fletcher Challenge Petroleum chief executive Jim Patek, a director of both Fletcher subsidiary Petrocorp and Southern, knew that the potential size of a Taranaki gas prospect, in which the two companies operated a joint venture, was greater than what the Southern minorities had been told when they accepted the bid.
Plaintiffs claim Patek came to know of this when a Petrocorp "deep gas study team", partially funded by Southern, presented the results of its study of the Mangahewa field on November 2, 1995.
Eight causes of action have been brought by Southern minority shareholders against Patek and Shell under the Securities Markets Act.
The case is the first insider trading case to make it to the High Court and last year shareholder spokesman Tony Gavigan said getting the matter to trial had cost about $8 million, similar to the amount he claimed Shell had spent defending the case.
Lawyer for Shell, Sarah Katz, yesterday told the High Court at Auckland the key issues for determination centred on whether Patek and Petrocorp had inside information about Southern and whether they were insiders as defined by the law.
The case also hinged on whether Patek or Petrocorp encouraged the takeover vehicle Petroleum Industries to buy shares in Southern.
"The defendants submit that the insider trading claims brought in this proceeding are misconceived," she said.
Patek did not have non-public or price sensitive information regarding the deep study or Mangahewa field during the takeover period during the second half of 1995, and completed in January 1996.
Katz said the information Patek did receive before and during the takeover was very high level but he was no differently informed than other Southern directors. Southern board papers were also provided to independent advisers assessing the deal.
She said a claim Patek got price sensitive information at a November 2 gas study meeting was without foundation.
The meeting was in New Plymouth but since the original claims had been made travel records had been found showing he had flown between Auckland and Wellington that day.
Further allegations he was briefed by two of his executives would also be refuted in evidence from the two men, who would say they did not regard the information as significant enough to report on, Katz said.
THE CLAIM
* Former Southern Petroleum shareholders claim they lost tens of millions of dollars in a takeover after a Fletcher executive and the company acted on inside information.
THE HISTORY
* 1993: Southern Petroleum and Petrocorp agree to share their interests in a gas prospect in Taranaki called Mangahewa.
* July 1995: Fletcher Challenge, through its Petrocorp subsidiary, decides to buy Southern Petroleum, a listed company.
* November 1995: a presentation to Petrocorp/Southern Petroleum suggests Mangahewa has potential as a major gas field. The information is not made public.
* November 1995-January 1996: Southern Petroleum shareholders sell to Petrocorp.