'Lock-up' deal under scrutiny

By PAUL PANCKHURST

Rod Petricevic's Bridgecorp Capital may have broken the Takeovers Code when snaring a 19.9 per cent stake in financial services company Dorchester Pacific.

The Takeovers Panel says Dorchester managing director Brent King - the main party to sell to Bridgecorp - may also have breached the code.

The $20 million buy-up fuelled speculation that Petricevic - a 1980s sharemarket high-flyer - was planning to back Bridgecorp into Dorchester for a stock-exchange listing.

Bridgecorp is a specialist property lender, while fellow Auckland company Dorchester is a broad-based financier.

The panel has zeroed in on a share "lock-up" deal that sat alongside King's sale of 15 per cent of the company to Bridgecorp on or about August 13.

Under the deal, King and one of his companies, Snowden Peak Investments, gave Bridgecorp an option to buy another 5.05 per cent of the company before June 30 of next year.

The issue is that the lock-up agreement may have made Bridgecorp, King and Snowden Peak "associates" as defined by the takeovers rules - pushing them jointly into the so-called "no-fly zone" over 20 per cent that requires a full or partial takeover offer.

Simply: 19.9 plus 5.05 equals 24.95.

Petricevic said: "We acted on legal advice. I can't comment any more than that."

King said the parties had expected the panel to take a look "and we're comfortable to chat it through with them". The lock-up ensured that he worked to improve the company's value.

Bridgecorp can buy the shares in the lock-up for $3.30 each - compared with yesterday's closing price of $2.85. It paid $4.04 per share for the rest of the King stake.

The panel also says a purchase by King on or about August 16 of 0.9 per cent of the company's shares may also have been a breach if King was, in fact, a Bridgecorp "associate".

The panel slapped restraining orders on Bridgecorp, King and Snowden Peak on Monday to stop them buying, selling or voting shares in Dorchester.

It will hold a meeting in five days' time to decide whether to act under section 32 of the Takeovers Act.

The panel can make or continue restraining orders for 21 days and can go to court seeking a wide range of orders including restrictions in share dealings.

The Takeovers Panel's newsletter, Code Word, said in March that lock-up agreements were permitted - but not if they led to a potential bidder controlling more than 20 per cent of a company's voting stock.

Bridgecorp was rejected in at least two attempts to list on the stock exchange before Mark Weldon took over as the chief executive of NZX.

Petricevic is on record as blaming this on his past, which includes the 1980s woes of the listed company Euro National.


Dorchester Pacific

Bridgecorp