Lion pursues share challenge

By DITA DE BONI

Lion Nathan may have lost the war for Montana but it intends to keep fighting to trip rival Allied Domecq on a transaction conducted almost four months ago during the heat of battle.

It is pursuing a complaint that Montana chairman Peter Masfen and Allied had an "arrangement" on May 15, when Mr Masfen sold a parcel of 16 per cent of Montana to the British liquor concern.

The sale - conducted by Montana group adviser JBWere - was by tender and supposedly open to both Allied and Lion, but Allied scooped all the Masfen shares for $4.80 each, giving it a substantial leg-up in the stockmarket stoush.

While evidence has been submitted to the Stock Exchange standing committee - which decided the case had merit to be properly heard in October - a question hangs over tapes requested by the committee from unnamed brokers. They appear to have been wiped or lost.

Parties to the case would not comment on evidence, having signed a letter of confidentiality.

It is understood that only counsel for the parties can access the evidence provided to the committee, the same scenario that applied when Allied Domecq had the committee look into charges of defaulter securities against Lion and its broker, CSFB.

Lion is not saying what it hopes to gain by pursuing the case, set for the weekend of October 13-14. Spokesman Warwick Bryan would say only that despite the company's aborting its bid for Montana, "the rules have still been breached".

Lion is thought to be looking at a finding of defaulter securities against Allied, the same charge proved in June against Lion itself.

If Allied is found to be in default, a strict interpretation of the stock market listing rules could strip it of its entire stake in Montana.

But as Lion did not lose its entire stake for the same offence, it is unlikely such a harsh punishment would be handed down to Allied.

While Allied, Lion and Montana are named as parties in the case, documents have been requested of Mr Masfen, the Montana independent directors, JBWere, UBS Warburg and the ANZ Bank.

JBWere head Clark Perkins would not comment on proceedings when contacted yesterday, confirming only that his company had not been named as a party and expressing surprise that Lion had decided to go ahead with the hearing.

The case hinges again on the meaning of the word "transfer", as it did with Lion and CSFB, and whether arrangements made before shares are allowed to be sold or bought are binding or irrevocable, which is illegal, or "not binding", which is permitted.

When Lion was judged to be in default, it was said to have arranged "irrevocable" purchases from sellers before the starter's gun at midnight on February 8.

In the Masfen case, the issue is whether Mr Masfen unfairly favoured Allied to buy his stake and had some sort of prior arrangement with the Bristol-based liquor concern.

Most of the shares sold by independent directors during the stoush went to Allied, and the directors have long voiced their preference for offers from the Allied camp because they were offered to everyone at the same price.

Mr Masfen was overseas yesterday - attending Apec meetings, as he was when his stake was sold to Allied in May - and was unavailable for comment.

He has previously described Lion's challenge to the sale of his shares as "mischievous".