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Former Abano shareholders ordered to pay $429k in disputed takeover costs

Friday 27th April 2018

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Abano Healthcare's former shareholder Healthcare Partners Holdings has been ordered to pay the listed medical services investment firm $429,000 in dispute costs that arose from a failed partial takeover bid. 


Justice Mathew Downs today ruled in favour of Auckland-based Abano, all-but ending a five-year running dispute with what was its biggest shareholder, and ordering Healthcare Partners was liable for costs claimed. Those costs would have been higher if Abano hadn't offset the expenses by withholding a dividend payment to Healthcare Partners. Under the Takeovers Code, a company can seek reasonable costs that arise from an unsuccessful bid. 


Among the fees claimed, were $375,000 for Forsyth Barr to provide investment bank advice, $67,000 for Ellis & Co to provide public relations, $74,400 for extra work borne by Abano's directors, $277,000 in legal fees from Harmos Horton Lusk, $21,000 for financial services from Abano's former financial controller Brendan O'Sullivan, $2,900 for Red Consulting Group for information services, $2,700 for Merlin Consulting to identify shareholders, and $6,000 for an investor roadshow. 


"To recapitulate, the true boundary between properly incurred expenses and other unrecoverable expenses lies not with an elusive common law distinction, but rather with articulated behaviours expressly prohibited by the Code: defensive tactics and misleading or deceptive conduct," Justice Downs said. "It follows conduct hitherto regarded as 'resisting' should not, without more, disqualify as unrecoverable otherwise properly incurred expenditure of the target company in relation to an offer or takeover notice." 


The judge encouraged the parties to reach an agreement on costs but reserved his decision with Healthcare Partners seeking to be heard on the matter. 


Healthcare Partners was set up by Peter and Anya Hutson and James Reeves, who pooled their Abano stock into the one entity before mounting a partial takeover to seize control of the listed company. Peter Hutson and Reeves had lobbied for change at Abano for several years, including an earlier takeover bid with Australian private equity firm Archer Capital in tow. 


The judgment showed Healthcare Partners would have paid a fee of more than $3 million to the investment bank it retained in partial takeover had it been successful. 


Abano shares slipped 0.6 percent to $8.40 and have dropped 16 percent so far this year. 



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