NZX won't cancel Lyttelton Port trades after routine notice included takeover details

Wednesday 6th August 2014 1 Comment

NZX, the stock market operator, says it won't cancel trades in Lyttelton Port Co shares made after the release of a substantial security holder (SSH) notice that included first news of a takeover proposal for the company.

Port Otago sent an SSH notice to the NZX last Friday afternoon that announced it had entered a lock-up agreement for its holding of about 15.5 percent with majority owner Christchurch City Holdings (CCH), which intended to make a full takeover of the listed Lyttleton Port at $3.95 a share. Port Otago gave Lyttleton no advance notice of the plan, which included a special dividend of 20 cents.

Investors who saw the notice drove the price up 24 percent to $4.10, leaving some shareholders disgruntled that they had been blindsided and demanding the trades be reversed. The stock was subsequently halted for the release of statement from CCH about the plan.

About 42,534 shares changed hands in 13 trades ranging from $3.30 to $3.59 between the SSH being released at 2.24pm and the stock being halted at 2.57pm, for a total value of less than $150,000. Lyttelton Port has 102 million shares on issue, although more than 90 percent is held by CCH and Port Otago. The shares traded recently at $4.10, valuing the company at $419 million.

"NZX is confident that all market participants, traders and investors, both on the buy and sell sides, had access to the same information at the same time in relation to the proposed takeover," the market operator said in statement, as part of its review of Friday's events.

Because Lyttelton Port had no prior knowledge of the proposal it didn't breach any disclosure rules, while CCH and Port Otago are not listed companies required to disclose anything beyond their SSH filings, NZX said. It described Lyttelton's lack of prior knowledge as "unusual" but doesn't consider there has been a breach of its rules for market participants.

Still, the stock market operator said it is reviewing its process for the release of SSH notices.

BusinessDesk.co.nz

Comments from our readers

On 11 August 2014 at 6:35 pm Donald said:

FMA was not too impressed with NZX's stance & going to investigate. It should, NZX should be an example of compliance, when sharemarket confidence is concerned.