GPG ambushes Perry in Rubicon court case

By CHRIS DANIELS

Claims of a US hedge fund's secret stake in New Zealand company Rubicon were made yesterday in the High Court at Auckland.

Lawyers for corporate raider Guinness Peat Group, which bought 19.9 per cent of Rubicon in early July, said Perry Corporation had concealed its ownership of nearly 16 per cent of Rubicon, despite a legal obligation to disclose stakes of more than 5 per cent.

Perry claimed to own just 4.9 per cent of Rubicon.

GPG lawyer Richard Craddock, QC, said Rubicon chief executive Luke Moriarty had on several occasions told his board of directors that Perry owned up to 15 per cent of the company.

Perry Corporation lawyers yesterday made an application to have their witnesses give evidence from New York by video link, but GPG objected, saying the men should travel to New Zealand for next month's trial.

In a bid to convince Justice Barry Paterson that it was necessary for top Perry executives, including its enigmatic chairman and owner Richard C. Perry, to come here, Craddock yesterday outlined GPG's case against them.

He said Perry had tried to disguise how many Rubicon shares it owned, and that it was in fact the second-largest shareholder, with at least 15 per cent of the company.

Despite Perry claiming it was only a minor shareholder, Moriarty repeatedly told his board that Perry was the second-biggest stakeholder and had taken an active interest in the company.

Referring to minutes of Rubicon board meetings, Craddock cited several occasions when Moriarty had told the board of Perry's status.

Hundreds of phone calls and emails went between Perry Corporation and Rubicon, said Craddock, which was entirely consistent with it being a major shareholder.

Senior Rubicon executives, including Moriarty, had even travelled to New York to met Perry.

It was not until GPG bought 19 per cent of Rubicon in early July that Perry recovered shares held on its behalf by brokers UBS Warburg and Deutsche Bank.

Craddock described "frantic efforts" by Perry to get its shares registered back in its name, so it could vote at the looming Rubicon shareholders' meeting.

He said GPG director Tony Gibbs had met Moriarty the day after buying 19 per cent of Rubicon, only to be told there was another major shareholder - namely Perry.

An email from Moriarty to Perry on July 8, immediately after his meeting with Gibbs, said: "Now that someone else [GPG] knows ... you should not delay too long to ensure that you are the ones that announce it first."

Craddock said another sign of Perry's continued ownership of a big Rubicon stake was when GPG's brokers were looking for Rubicon shares to buy - or "making a book" - a call came from Perry in the US, asking if they were interested in buying 20 million of its shares.

No commitment was given and no purchase resulted, but this call was a clear indication that Perry must have had more than 5 per cent of Rubicon, said Craddock. Twenty million shares would account for more than 7 per cent of Rubicon.

Perry lawyer Michael Camp, QC, said there was no need for the chairman, managing director and head of trading for a US$7 billion ($14.8 billion) fund company to travel to New Zealand for the case.

The deal in question was worth just US$16 million, and the cost to Perry of having its top executives out of action for so long would be great.

There was no reason that GPG could not conduct its case and cross-examine witnesses over a video link.

On the matter of whether Perry had an interest in the shares sold by UBS Warburg and Deutsche, Camp said there was a difference between a legal interest and an economic interest. Perry had kept an economic interest in the Rubicon shares but the brokers were under no obligation to hand them over when Perry wanted them.

Justice Paterson reserved his decision on the video link application, telling the court he expected to deliver it early next week.

* GPG is considering a new takeover offer for Rubicon, after its initial offer of 75c a share to secure either a 51.99 per cent controlling stake or a stake somewhere between 30 and 50 per cent was found to breach the Takeovers Code.