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Richmond parties cash up

By Chris Hutching

Friday 24th January 2003

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Richmond's independent directors yesterday came out fighting against the PPCS takeover, asking the Takeovers Panel to rule the bid in breach of the takeovers Code.

The Richmond directors asked the panel to consider whether a clause allowing PPCS to waive the 90% minium acceptance condition breached the code's rule 25.

Meanwhile, some Richmond minority shareholders opposed to the takeover bid have been cashing up their shares over the past few weeks while taking court action that could have denied other shareholders the benefit of the $3.05 offer, which is considered generous by most analysts.

In the High Court at Christchurch this week Justice Willie Young threw out an application from the minority Bell group seeking a court order that PPCS should either obtain 90% acceptances or be forced to sell all its shareholding in Richmond. He said the Takeovers Code allowed PPCS to take control via the acquisition of just 50% of Richmond shares (PPCS currently has 42%).

It was the latest skirmish in a five-year battle for control which PPCS now looks likely to win unless the Bell group can persuade other shareholders to reject the PPCS offer due to be mailed to Richmond shareholders yesterday.

Justice Young said his earlier orders were aimed at providing the opportunity for PPCS to make a bid for control or disengage, without resort to price-fixing by the court.

Allowing PPCS to take control at a 50% acceptance threshold would make a full takeover more likely in circumstances "... where there are no likely buyers for their shares at anything like the $3.05 currently on offer," Justice Young said.

The recent share dealings have given Lowe Corporation about a 10% stake and UK meat marketer Bernard Matthews a 4.3% stake. These stakes might potentially have blocked the PPCS bid if the Bell group had been successful in their court action this week.

But other Richmond shareholders were denied the same opportunity to sell shares at optimum market prices according to an affidavit by Ian Farrant, a former Securities Commission member, that was produced in court by PPCS, recording share transactions over the past three weeks.

His investigations reveal members of the Bell group sold shares in early January when the shares were trading at $3.03. The Bell group now holds less than 1% of Richmond's shares.

Another seller was Richmond director David Pearce via his company Waitotara Holdings which announced on January 16 an oral agreement to sell 1.4 million Richmond shares (4.3%) to Bernard Matthews subsidiary North Meats.

"I note that the sale to North Meats occurred off market on January 15 at $3.03. At the time the market closed there were approximately 50 vendors willing to sell on market at up to $3.03 but who obviously did not get an opportunity as the sale proceeded as a single transaction off market," Mr Farrant said in the affidavit.

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