NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

<i>Gaynor:</i> Contact's tactics leave sour taste

Brian Gaynor
By Brian Gaynor
Columnist·
12 Mar, 2002 09:23 AM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

By BRIAN GAYNOR

Contact Energy's annual meeting was a game of cat and mouse between several determined shareholders and equally determined directors.

The shareholders knew that they could not carry their resolutions but efforts to obtain a moral victory were thwarted by chairman Phil Pryke.

The Shareholders Association proposed that two shareholder resolutions
be moved up the order paper. This was to counter the usual plan of dragging out the meeting so that shareholders were bored and hungry when the more contentious issues came up for discussion.

True to form, Pryke rejected the request and then spoke for 12 minutes. He was followed by chief executive Stephen Barrett who gave a 31-minute address that could have been shortened to half that length.

By the time the first shareholder resolution came up for discussion - the motion to restrict directors' retirement allowances - the meeting had been going for an hour and 40 minutes.

It went on and on and shareholders desperately tried to score a few winning points. But they were always on the back foot because Edison Mission holds 51.2 per cent of Contact shares. Its representative said he would vote for these shares.

Several times Pryke was asked to put resolutions to a show of hands but he refused. One of the minority shareholders' few victories was when Bruce Sheppard asked all shareholders who supported the resolution on directors' retirement allowances to stand. About 75 per cent responded.

Observers might ask why shareholders have taken an aggressive stance towards Contact.

The reason is that the Government aggressively promoted the company to the public and it attracted 225,000 new shareholders in May 1999. Since then, the company has taken an arrogant approach towards these shareholders and 106,400, or 47 per cent, have sold out.

Monday's meeting confirmed the dissatisfaction of minority shareholders, with 49.3 million shares voting against the board on the directors' retirement allowance.

Only 3.2 million shares, excluding Edison Mission, voted with the directors.

On the other shareholders' resolution, demanding restrictions on deals between Contact and related parties such as Edison Mission, the voting was 39 million shares against the directors and 14 million, excluding Edison, supporting the board.

Pryke and his fellow directors might have won Monday's battles but their attitude has done little to encourage New Zealanders to invest in the sharemarket.

UTILICO

There were some red faces when Utilico International announced last week that it suffered big losses on its ERG investment. This was just a few months after the company's new investment manager committed all of Utilico's funds to ERG convertible notes and ordinary shares.

It is a poor reflection of Utilico's corporate governance and raises questions on whether it has complied with Stock Exchange rules.

Utilico, then known as Infratil International, was listed on the sharemarket in May 1997 after the issue of 98.3 million ordinary shares to Infratil New Zealand shareholders on a one-for-two basis at 50c each.

The plan was to invest in infrastructure assets outside New Zealand. It had three directors: chairman Kevin O'Connor, Lloyd Morrison and Liberato Petagna.

Morrison and Petagna were associated with Morrison & Co, the company's investment manager, and O'Connor was also Infratil chairman.

Utilico made several unsuccessful investments and in 2000 its share price hit a record low of 24c, less than half the original issue price.

Several UK-based groups associated with Duncan Saville became big shareholders. Saville, who was also a director of Infratil and Morrison & Co, was appointed to the Utilico board in May 1999.

The board structure was hardly consistent with sound corporate governance.

Companies associated with Saville continued to increase their shareholding and held 48 per cent at the end of 2000.

Utilico has since sold all its investments and made three capital repayments:In December 2000, $19.7 million was returned through the cancellation of two shares, at 50c each, for every five shares held.

A further $19.7 million was returned last October through the cancellation of two shares, at 50c each, for every three.

Last December, seven out of every 10 existing shares were cancelled at 50c each and $6.2 million returned to shareholders.

Utilico has cancelled 92.4 million of its original 98.3 million shares and returned $45.6 million to shareholders. It now has only 5.9 million shares on issue and had a net asset backing of $1.01 per share before last week's announcement.

After the annual meeting last November, O'Connor, Morrison and Petagna resigned and were replaced by Charles Jillings, Paul Davenport and Terry McAllister.

Jillings is an associate of Ingot Capital Management, the investment adviser to several of Saville's group of companies. Davenport is a former Wellington broker and McAllister is Utilico's company secretary and a Morrison & Co employee.

Ingot Capital Management then replaced Morrison & Co as Utilico's investment manager. No details of the contract were disclosed.

The new directors and investment manager invested $5.54 million, out of Utilico's total investable funds of $5.96 million, in ERG convertible notes and ordinary shares. ERG is a Western Australia-based telecommunications firm that specialises in smart card applications and automatic fare collection systems.

Utilico holds two listed ERG securities - 334,084 ordinary shares and 100,000 7.5 per cent A$13.50 ($16.45) convertible notes - and one unlisted security - two million 8 per cent A$1.65 ($2) convertible notes.

On February 27, ERG issued a profit warning and on Monday announced a loss of A$199.4 million ($243 million) for the December six months. Its share price has fallen from a high of A$9 ($11) during the Nasdaq technology boom to 32Ac.

On March 7, Utilico told the exchange that its $5.54 million investment in ERG was now worth $4.82 million. The convertible notes can be converted into cash but the listed notes, which convert in October 2005, are trading at a 55 per cent discount to face value.



Why were shareholders not asked to approve the appointment of Ingot as investment manager when it is a related party?

Why were shareholders not asked to approve the investment in ERG when it represents 92 per cent of gross assets.

Why did Utilico invest in a highly speculative technology firm when its stated aim is to remain in the infrastructure sector?

Why did Utilico announce the ERG investments more than two months after they were made?

Who did Utilico buy the ERG investments from?

* bgaynor@xtra.co.nz

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from New Zealand

New Zealand

Tongan family win temporary immigration reprieve after tsunami

09 Jul 07:33 PM
Herald NOW

Uber drivers: Contractors or employees?

CrimeUpdated

Man charged with murder after fleeing Hamilton crime scene, car stolen at gunpoint

09 Jul 07:14 PM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.

Latest from New Zealand

Tongan family win temporary immigration reprieve after tsunami

Tongan family win temporary immigration reprieve after tsunami

09 Jul 07:33 PM

Their home was flattened by a tsunami after the Hunga Tonga-Hunga Haʻapai volcano erupted.

Uber drivers: Contractors or employees?

Uber drivers: Contractors or employees?

Man charged with murder after fleeing Hamilton crime scene, car stolen at gunpoint

Man charged with murder after fleeing Hamilton crime scene, car stolen at gunpoint

09 Jul 07:14 PM
New measles cases: Masterton Pak’nSave, Carterton library visited by 3 infected people

New measles cases: Masterton Pak’nSave, Carterton library visited by 3 infected people

Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP