Broadway take-up confounds

Friday 6th July 2001

By Chris Hutching

About 95.4% of the 600 minority shareholders in Broadway Industries have taken up their entitlements in a 1:3 rights issue to raise $1.23 million, confounding analysts who saw the move primarily as a device to allow key shareholder Duxford Investments to consolidate its position.

Duxford Investments is one of the investment vehicles associated with Canterbury businessmen Alan Hubbard and Humphry Rolleston.

It had 40% of Broadway before the rights issue and some analysts assumed its entitlement, combined with a stand in the market for ordinary shares, would take its holding to almost 66% and allow Duxford to consolidate Broadway's tax losses.

If minority shareholders had stood aside Duxford would have ended up with a greater proportion of the capital by default.

As it turns out, there was strong support from minority shareholders, many of whom were faced with a relatively small call of a few hundred dollars in some cases.

The situation now is that Duxford has just over 50% and Messrs Rolleston and Hubbard also have another stake understood to be about 8% in their own right.

Mr Rolleston said yesterday Duxford had wanted to exert the control a majority stake would provide while recapitalising the operations of the Mercer Stainless subsidiary.

The new Takeovers Code was also a factor in taking up more shares now.

Mr Rolleston said the support by Duxford had given other shareholders confidence to support the rights issue, which was recommended by brokers.

He said he and Mr Hubbard tended to be long-term holders in companies as their experience of Broadway showed.

Mr Rolleston said he had great faith in the skills of the Mercer team, which was benefiting from the dairying surge and the independent directors were forecasting a profit of around $800,000, which was on track.

Comments from our readers

No comments yet