PPCS about-turn stuns Richmond chairman

By ELLEN READ

South Island meat processor PPCS yesterday renewed its manoeuvring to take over the country's largest meat company, Richmond Ltd, prompting an angry response from Richmond's chairman.

Sam Robinson said surprise was too mild a word to describe his reaction to PPCS' issuing a restricted transfer notice stating its intention to offer between $2.70 and $3.24 per share for up to 24.6 million Richmond shares.

Mr Robinson said the PPCS move - which would take its Richmond holding to 60 per cent - was in sharp contrast to earlier assurances about its intentions and would make future trust or cooperation very difficult.

Late yesterday, the Richmond board announced it had established a subcommittee of three independent directors, including Mr Robinson, Michael Morris and Jim McCrea, to formulate a response to the PPCS notice.

In making the announcement, the board declared that "the highest standards of corporate governance will be demonstrated in the management of this process in view of the scrutiny past transactions of PPCS have been subject to, with respect to Richmond shares."

PPCS owns 16.75 per cent of Hawkes Bay-based Richmond, having last week bought a 10 per cent stake from New Zealand's richest private farmer, Peter Spencer.

PPCS chairman Stewart Barnett said then that the company did not intend raising its Richmond holding at this stage.

After yesterday's change of direction, a statement from Mr Barnett said PPCS had issued the transfer notice as a protective measure, to give it the flexibility to ensure Richmond remained a stable, New Zealand-owned company.

But Mr Robinson said the transfer notice raised questions of trust, openness and integrity, and militated against co-operation for any possible high-quality, tangible financial benefits.

"There appears an abyss between what PPCS says and what it does, and this concerns me greatly."

Mr Robinson said Richmond remained open to detailed, quality proposals for mutual tangible benefits and had always accepted, in principle, that there could be benefits in working more closely with PPCS.

"However, cooperation benefits are inherently based on trust and are not related to investment," he said. "The fact that PPCS feels the need to start with control rather than persuasion is more of an impediment to co-operation than a facilitator."

The latest confrontation between Richmond and PPCS follows a bitter struggle last year.

PPCS built up a stake of around 35 per cent in Richmond but was forced to sell out after Richmond directors ruled that the manner in which PPCS had acquired its shares breached the company's rules.

It sold its stake to Hawkes Bay Meat, a division of Active Equities, made up largely of former Brierley Investments executives.

Wellington lawyer Peter Ratner, who acted last year for Richhold, a group of Hawkes Bay Richmond shareholders formed to campaign against the PPCS acquisition, said at the time PPCS was made to sell its Richmond shares there was no rule covering when, and if, it could repurchase them.

"At the end of the day, one can only enforce the legal rights that existed," he said.

"And the legal rights were 'you bought these things in a way which you weren't allowed to, therefore you've got to sell'.

"But there's no way you can go along and say, 'and by the way you're never allowed to buy again'."

Mr Ratner added that no agreement about the future disposal of the shares could have been made between PPCS and Active Equities at that stage as it would be a breach of the stock exchange listing rules.

Paul Collins, an Active Equities director, was not available to comment yesterday on whether his company would consider selling its holding in Richmond.

After the PPCS notice, Richmond shares - the company listed on the stock exchange in February - rose 21 cents to close yesterday at $2.81.