NZX's offer for second-tier Australian market operator NSX has suffered a setback with the company's board, which was backing the proposal, resigning yesterday, pre-empting the likely outcome of a shareholder meeting later this week.
In an announcement to the ASX, the company's incumbent directors said they had resigned and appointedthree new directors, Ann Bowering, Stephen Pritchard and Paul Seymour in their place.
The three new directors represent a group of shareholders who had been seeking to oust the board. A Federal Court decision late last week ensured the vote this week on a "requisition" order to remove the existing board would be held on the dissident shareholders' terms rather than those of the incumbents. Given the "requisitioners" hold in excess of the company's voting rights, the outcome of this week's vote was virtually a foregone conclusion.
The news is a setback for NZX and its bid to purchase a 50.1 per cent stake in NSX, which provides a market for trading small cap stocks, water rights and taxi licences. NZX is offering A$11.78 million ($14.84 million) or A15c a share, a sizeable discount to the company's recent share price.
NSX's incumbent directors had recommended the offer to shareholders while a report from PricewaterhouseCoopers found it "fair and reasonable" given the company's record of incurring losses.
Bowering, who is affiliated with 13 per cent NSX shareholder Brian Price, yesterday told the Business Herald it was too early to say how the new board would approach the NZX offer.
"Our first priority is to analyse and understand what the business situation is and from there we'll be looking at all possibilities and the NZX offer is one that we'll be considering."
Bowering said she was unable to say whether a shareholder meeting called for next month to vote on the NZX proposal and the enabling removal of a 15 per cent shareholding cap would proceed.
Should its offer succeed, NZX has a five-part strategy to "materially grow" NSX and its value by cutting costs, developing a transtasman small cap market, providing a cost-effective Australian listing platform for large cap NZX-listed firms, developing a listed debt market and also improving NSX's regulatory regime by introducing its own "sophisticated surveillance and supervisory capabilities".
