Investors are lining up behind the Accident Compensation Corporation's call for a rethink of the $8 billion merger of Contact Energy and Australian rival Origin Energy.
And at least one fund manager has pledged financial support for the ACC, which will ask the High Court to raise the number of
shareholder votes required to approve the controversial plan.
BT Funds Management's Paul Richardson said the ACC's question was one among a number of matters that needed to be clarified.
"I would certainly be happy [to contribute] if necessary," Richardson said. "When these issues come up we can contribute, they are part of operating a funds business."
The merger of the two energy giants is to be brought about by two shareholder votes on the proposed scheme. The first vote will be on a special resolution, requiring a 75 per cent majority of all shareholders.
The second, an ordinary resolution, requires the support of at least half of the shareholders other than Origin, which already owns 51 per cent of the New Zealand company.
However, the ACC, New Zealand's mandatory workplace insurer, believes the proposal alters the rights attached to Origin shares in quite a different way to the way it affects minority shareholders.
As a result, the second vote should be a special resolution, requiring 75 per cent of minority shareholders to vote in favour.
The ACC will if necessary ask the High Court to support its view and has engaged barrister Bill Wilson, QC, and Gibson Sheat lawyer Nigel Moody.
Under the terms of the plan, Contact investors effectively swap their holdings for a stake in ContactOrigin, formed by a contract between the two companies. Contact and Origin shares will continue trading on the New Zealand and Australian exchanges.
Contact will be seeking orders from the High Court, proposing two shareholder resolutions to approve the merger proposal. Details are due to be delivered to shareholders early next month before a vote in August.
The ACC has told other fund managers that the broad principle of its objection was that support of more than half Contact's minority investors should be needed to force all minorities to accept a fundamental change in its investment.
Tyndall Investment Management's Rickey Ward said he had already indicated its support for the ACC, but was not considering financial support.
"I would expect there would be a lot of support for the move," Ward said.
Contact's independent directors Phil Pryke, John Milne and Tim Saunders have already said the merger is in the interests of shareholders.
Contact has told the Business Herald the proposed arrangements were consistent with the NZX Listing Rules for related-party transactions and the Takeovers Code.
"Contact Energy considers these thresholds meet statutory and regulatory requirements, and are consistent with those required for previous schemes of arrangement," said the company's general counsel, Ross O'Neill.
The merger would create the largest integrated energy company in Australia and New Zealand, with 2.6 million customers and sales of A$5.5 billion ($6.6 billion).
Sydney-based Origin says the plan would help alleviate Contact's dwindling gas supplies and rising fuel costs. But sceptical shareholders say there's nothing to stop Origin lifting exploration under the current structure.
Contact's shares have more than doubled since the company went public in May 1999. The shares closed up 7c yesterday at $7.42.
Investors are lining up behind the Accident Compensation Corporation's call for a rethink of the $8 billion merger of Contact Energy and Australian rival Origin Energy.
And at least one fund manager has pledged financial support for the ACC, which will ask the High Court to raise the number of
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