Masfen awaits explanation from exchange

By DANIEL RIORDAN markets writer

Montana chairman and 20 per cent shareholder Peter Masfen is awaiting an explanation from the stock exchange as he considers what action he may take over its handling of Lion Nathan's takeover bid for the winemaker.

There has been speculation that Mr Masfen may seek legal redress from the exchange, but he said yesterday that he had not discussed legal action with anyone.

"I'm not going to comment on what I think of the prospects of that. It's too early. The stock exchange obviously has a problem and a dilemma and until they advise what they're going to do about it, it's not appropriate for me to comment."

Lion Nathan is expected to wrap up its bid for Montana within seconds of the stock exchange opening at 9.30 this morning, leaving most of the winemaker's 10,000 small shareholders out in the cold.

It has already lifted its stake to 46.5 per cent, aided by the exchange's market surveillance panel decision to grant it a waiver from listing rules which enabled it to line up as many institutional shareholdings as it was allowed on Thursday night.

It needs to buy only another 4.5 per cent from retail investors to reach its 50.1 per cent target.

Chief financial officer Paul Lockey said yesterday that Lion's stand this morning for 9,760,343 shares at $4.65 each would be filled on a first-come first-served basis.

He advised shareholders wishing to sell to contact their brokers first thing and said that with a maximum parcel size of 5000 shares at least 1900 of Montana's retail investors could participate in the offer. However, brokers estimate a logjam of tens of millions of shares.

The exchange suspended trading in Montana's shares on Friday in what appeared a belated attempt to redress some of the damage the panel had caused with its waiver.

The panel has 11 members but in most cases three members (termed a division) make a ruling.

A division is set up to comprise a combination of members appropriate for the matter at hand, who don't have conflicts of interest and who are available.

A division's members communicate with the panel executive in Wellington.

The panel operates independently of the exchange's directors. The Business Herald understands few, if any, of the directors were aware of the panel's decision until it was announced.

The three members who granted the waiver on Thursday evening were Tower Asset Management managing director Paul Bevin, retired Court of Appeal judge Sir Ian McKay, and Ernst & Young director of corporate finance Denis Wood.

Mr Bevin and Sir Ian declined to comment yesterday and Mr Wood could not be contacted.

Panel chairman Keith Familton said one of the reasons he was not involved was his conflict of interest as a consultant to law firm Bell Gully, which acts for Montana.

Another panel member, Bell Gully partner David Flacks, said he had the same conflict of interest and was not prepared to comment on the decision.

Panel secretary Philippe Leloir yesterday maintained his "no comment" stance.

Meanwhile, a spokesman for Lion's beaten rival bidder, Allied Domecq, said the British company's New Zealand lawyers, Chapman Tripp, had asked the exchange on Friday for clarification of its actions but had yet to hear back last night.

Through its lawyers, Allied asked that the waiver be rescinded, that the exchange require Lion to release institutions from any undertakings to sell their holdings, and that Lion be required to comply with the notice-and-pause rules.

Commerce Minister Paul Swain yesterday called the takeover a fiasco and said he would set up an independent takeovers panel when he introduced his Takeovers Code in July.