Ruling on PPCS takeover bid put on hold

A judge has reserved his decision after South Island meat co-operative PPCS' takeover attempt on meat company Richmond continued in the High Court at Christchurch.

PPCS is trying to overturn an interim injunction that stops it from trading in Richmond shares until the High Court clarifies PPCS' status as a Richmond shareholder, at a hearing scheduled for August 6.

After hearing submissions from counsel in the High Court at Christchurch on Friday, Justice Ron Young reserved his decision.

It is expected to be released in the next two weeks.

Counsel for Richmond, Bill Wilson, QC, said the main issue was whether the shareholding, both direct and indirect of PPCS in Richmond, should remain under the control of the court pending the August 6 hearing.

Richmond readily accepted that PPCS should be free to seek a court order for any transaction involving its shareholding, but it opposed a claim by PPCS that it should be free to do anything it wanted with its shareholding before the hearing, he said.

Since PPCS contended it had no current intention to dispose of its direct or indirect interest in Richmond shares, there was no justification for discharging the interim injunction, Wilson said.

Richmond, acting in the interests of its shareholders, sought resolution of whether all or some of the shares PPCS held in it were defaulter securities for the purposes of its constitution, he said.

Appearing for PPCS, Adam Ross said the potential damage to PPCS in the case of an injunction could be very high.

An injunction would dislocate what was a major company from the market, and less drastic means should be favoured by the court, he said.

In the other proceeding before the court, a group of shareholders in Richmond sought redress under the Securities Amendment Act 1988 on the ground PPCS had breached the provisions of the act.

Active Equities, owned by former Brierley Investments executives, has announced it is exercising a put option requiring PPCS to buy its 51 per cent stake in Hawke's Bay Meat, which is alleged to have warehoused shares for PPCS. The other 41 per cent of Hawke's Bay Meat is already owned by PPCS.

The Richmond shareholders, called the Bell group, as they are led by lawyer Robin Bell, believe the Hawke's Bay Meat arrangement may now come under the Takeovers Code because the put option was exercised earlier than agreed.

Ross said provisions of the Takeovers Code meant almost all deals would be made under its close supervision.

Counsel for the group of Richmond shareholders, Robert Dobson, QC, said the concerned shareholders recognised that if PPCS was prepared to pay the highest price in a genuinely open stand, then Richmond shareholders might well accept.

Dobson said PPCS had so far acquired its stakes in Richmond secretively. The concerned shareholders considered that it would not have obtained a position of effective control if the market and all of Richmond shareholders knew in advance of PPCS' intentions, as they were entitled to.

- NZPA