High Court ruling encourages buyers to low-ball figure

By Mike Ross

Friday 14th July 2000

The High Court ruling against Infratil in its minority buyout dispute with Natural Gas will encourage buyers to low-ball the buyout figure.

Infratil was ordered to hand over its shareholding in Natural Gas, even though it argues the $34.5 million provisional payment is too low.

Infrastructure holding company Infratil triggered the Companies Act new compulsory buyout rules when it objected to Natural Gas buying into energy retailer Transalta.

Holding 26.5 million Natural Gas shares, Infratil decided to exit the company and gave statutory notice to Natural Gas requiring it to buy the shares at a "fair and reasonable" price, or find another buyer.

The statutory buyout rules require payment of a provisional price. If that price is not acceptable, a final price is settled by arbitration.

Infratil refused to hand over title for the shares, arguing the provisional price paid last May was "grievously low."

The High Court was told the shares were held by a neutral stakeholder, pending a ruling on who owned the shares.

Justice Doogue ruled the provisional price was not a deposit or part payment.

Once paid, the minority shareholder had to surrender title to the shares.

Justice Doogue indicated if there was a large movement between the provisional price and the final price, the minority shareholder might be entitled to interest as compensation.

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