November 4 for PPCS hearing

By Chris Hutching

Monday 16th September 2002

Justice Willie Young will be asked to consider the financial effect of any share forfeiture on Dunedin-based meat processor PPCS on November 4 when hearings resume over the High Court case brought by rival listed North Island company Richmond.

The five-year spat driven by disgruntled Richmond shareholders fearful of their fate under the southern cooperative's raids on the share register culminated in a two-week hearing recently in the High Court at Christchurch, fought by four Queen's counsel and their retinues.

Justice Young found in favour of the Richmond parties in two of five counts, that HKM Associates was an undisclosed nominee company for PPCS when it bought a 34% stake of Richmond shares from the Meat Board in 1998, and that PPCS failed to disclose its interest in a small parcel of 290,000 shares in several notices lodged by PPCS between February 1999 and July 2000. The other counts alleging "warehousing" of Richmond shares by PPCS were withdrawn by the Richmond parties as the case proceeded.

Justice Young now faces the difficult task of deciding an appropriate penalty and the commercial effect it might have.

One of the PPCS lawyers has raised arguments that PPCS is already paying $20 million more than it might have in securing the Richmond shares because it was forced to sell them in 1999 when the Richmond the board ruled the PPCS-HKM deal breached the company's constitution.

Another company, Active Equities, then bought the 34% stake and PPCS has a deal to repurchase them but has to pay $20 million above the earlier price.

PPCS has a put option with Active Equities that will give it 51% of Richmond in February 2003.

In his recent judgment Justice Young outlined the series of deceits played by executives and legal advisers on both sides in their attempts to outmanoever each other.

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