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Cool Gould moves on from PGG to new ventures

By Chris Hutching

Friday 16th May 2003

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George Gould is a busy man. With a brace of investment projects under his belt it has become time for him to move on from being managing director at listed Pyne Gould Guinness, a company dating back to 1919.

His departure caps a two-year term as chief executive at PGG and is just three months after becoming its managing director.

He leaves the stock and station company in good heart after bedding down the merger with Reid Farmers, posting one of the company's best profits ever and this week clinching a wool-handling contract with Merino New Zealand at the expense of Wrightson.

The 41-year-old, whose full name is George Arthur Churchill Gould, is reluctant to discuss the recent events that have prompted him to hand in his resignation.

He remains on the board of the family-controlled unlisted parent company, Pyne Gould Corporation.

But his departure removes any suspicion that this huntsman was not fully focused on Pyne Gould Guinness while being involved in a series of clever deals involving his other investments in listed companies, Vertex and Designer Textiles.

Evidence revealed during a recent Takeovers Panel hearing laid bare details about the interests of Mr Gould and the investment money he manages on behalf of the Rutherford family in Canterbury, a family which has had a long association with the Goulds.

The Takeovers Panel probe was sparked after his private-investment company, Gould Holdings, announced to the Stock Exchange it had raised $6.2 million for Stock Exchange investments.

During 2002 Gould Holdings accumulated a 24% stake in Designer Textiles and Mr Gould took control of its board along with colleague Kevin Arscott.

Separately, individual members of the Rutherford family had also been building smaller stakes during 2001 and 2002 and the Takeovers Panel met to discuss whether the parties had colluded to seize a total of 33% of Designer Textiles, acquired in contravention of the new Takeovers Code.

The key element that sparked their interest was the Designer Textile announcement on February 25 of a 1:9 pro rata buyback offer to all shareholders.

The purpose behind such an offer is generally to shake out smaller shareholders while the dominant shareholder sits tight and increases its controlling percentage.

At the same time the accumulation of shares in fewer hands generally strengthens the share price ­ Designer Textiles' share price jumped from 80c a share to more than $1.20 during the period of the buy-back in March.

The Takeovers Panel subsequently ordered the Rutherfords to dispose of 2.1% of their shares and set a precedent for other players in the market. But it was a minor setback for Mr Gould's overall game plan.

Mr Gould's other high- profile sharemarket play involves Vertex, where he has also gained control and appointed Mr Arscott as a director, along with colleague Humphry Rolleston, another pedigree Cantabrian heavily involved in finance.

Mr Gould bought into the company a day before it announced a profit downgrade, so it remains to be seen if Vertex holds the same promise as Designer Textiles.

During the hearing the Takeovers Panel heard about the close association of the Goulds and Rutherfords.

The Rutherfords owned motor vehicle company Amuri Motors, which was floated to the public and listed in 1933, changing its name in 1996 to South Eastern Utilities where Mr Gould became managing director, overseeing its profitable foray into Wairarapa Electricity before selling out, winding up the company, and paying out the Rutherfords and other shareholders.

Senior members of the Rutherfords, led by Scott Rutherford and his cousin David, wanted to keep the fortune intact so they set up Amuri Securities in May 2001 to be managed by Mr Gould and colleague, Mr Arscott, former chief executive of South Eastern Utilities.

It failed to live up to expectations in its first year and the Rutherfords considered winding it up.

But in September 2002 Mr Gould offered them an opportunity to invest in his company, Gould Holdings, to be achieved by a takeover of Amuri Securities by Gould Holdings, whose sole asset at that time was a recently purchased holding of 24.69% of Designer Textiles.

The investment by the Rutherfords in Gould Holdings was done in accordance with the gentlemanly relationships between the parties.

There was no formal offer and acceptance or subscription agreements, although the transaction was formally recorded in appropriate resolutions in Gould Holdings records.

A professional independent director, John Maasland, was later appointed.

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


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