Oyster Bay fight goes to High Court

Jim Delegat

The battle for Oyster Bay Marlborough Vineyards has taken another turn, with wine company Delegat's asking the High Court yesterday to review a Takeovers Panel ruling.

The ruling has kept Delegat's from declaring its partial takeover bid for Oyster Bay unconditional and taking up its controlling stake.

Delegat's cannot settle with shareholders until the matter is addressed.

Two weeks ago, the panel found Oyster Bay's directors had contravened the Takeovers Code by omitting material information from critical takeover documentation.

Now Delegat's is writing to Oyster Bay shareholders who accepted its offer, assuring them that it still plans to complete the offer, and urging them to indicate whether they want to withdraw.

The restraining order lasts until October 13, three days later than Delegat's target for paying shareholders out. Delegat's offered $4 a share, double the price of a share when Oyster Bay was floated in 1999.

Managing director Jim Delegat noted the panel had made no finding against his company.

"Yet it is you the shareholders, and we the bidders, who are prejudiced by the panel's action," he said in the letter.

The panel agreed with a rival bidder for Oyster Bay, Peter Yealands, that Oyster Bay shareholders should have been told what their share was worth if the company did not have its existing long-term contracts with Delegat's.

Without the Delegat's contracts, the "unencumbered" value of Oyster Bay's land was estimated to be up to $90 million - twice its value with the contracts - but Delegat said this was hypothetical.

He said Oyster Bay was bound by its contracts with Delegat's and the panel had accepted it was unlikely the vineyard assets would be sold without them.

Delegat noted that Ferrier Hodgson & Co, who provided the independent reports for both offers, had told the panel the "unencumbered" value was neither relevant nor material.

He also noted Yealands and another complainant, David Rankin, had since accepted the Delegat's offer. Yealands had about 14 per cent of Oyster Bay while Delegat's had just under 40 per cent before its offer.

Delegat said Yealands had made his offer without the hypothetical information and that he had admitted to the panel that such a disclosure would have reduced his prospects.

Just last week, the Oyster Bay board fell foul of the NZX when it was found to have not met listing rules issued last year in the procedure adopted for setting the price of grapes sold to Delegat's Wine Estate.

NZX has decided the matter is not serious enough to be handed to its disciplinary arm, but said Oyster Bay must right the matter by seeking shareholder endorsement of the sales procedure at November's annual meeting.

Although he had won his case, Yealands expressed disappointment that the panel had not called for a rerun of the takeover bid.

- NZPA