GPG in dark over Perry's big stake in Rubicon says lawyer

By CHRIS DANIELS

The case against US hedge fund Perry Corporation in its dealings with New Zealand listed company Rubicon was yesterday laid out in the High Court at Auckland.

Raynor Asher, QC, spent four hours detailing the case brought by Guinness Peat Group (GPG) against Perry, a New York hedge fund with nearly US$4 billion ($7.9 billion) in worldwide investments.

He said GPG, when it bought 19.9 per cent of forestry and biotech company Rubicon last July, had no idea that Perry had concealed its ownership of 15 per cent of the company.

"Had GPG been aware that Perry Corp/Perry were substantial security-holders in Rubicon, then it would not have acquired the Rubicon shares, or certainly not at the 13.6 per cent premium that it paid for those shares," said Asher.

In May last year, Rubicon chief executive Luke Moriarty visited Perry in New York, and in a note he made of the meeting, said that Perry generally held stakes of less than 10 per cent in companies, and liked to "avoid market disclosure".

Moriarty said Perry had been annoyed at an article in the Herald referring to his recent filing of a substantial security-holder's notice.

On several occasions, Moriarty told the Rubicon board that Perry was one of its largest shareholders.

Despite saying it owned less than 5 per cent of all Rubicon shares, Perry played a part in the appointment of two of the company's six directors and was regularly consulted on company matters, Asher said.

Perry says it used an equity swap deal to keep an "economic interest" in Rubicon, not a "relevant interest", which would have required revealing its presence on the share register.

But GPG says Perry acted like one of the two largest shareholders in Rubicon, and was treated as such.

This was because it had a deal with merchant banks UBS Warburg and Deutsche Bank to take its shares back whenever it wanted.

Perry had earlier sold down its stake to just under 5 per cent, which is the threshold beyond which ownership must be disclosed to the market.

Asher said this was done with the obvious intention to avoid disclosure of its true Rubicon holding.

GPG director Tony Gibbs is due to give evidence today and is expected to relate what he knew when the Rubicon shares were bought - specifically whether he knew that Perry was a major shareholder.

In GPG's opening submission, Gibbs is quoted as being "a little distant and distracted" when informed by Moriarty of the presence of another apparently unknown to him big shareholder.

GPG, which failed in a recent partial takeover attempt for Rubicon, is expected to ask for all of Perry's shares to be forfeited and cancelled.

The case, being heard before Justice Judith Potter, is expected to finish next week.