Opinion: New season's slaughterhouse saga opens

By Kate Perry of NZPA

Friday 18th June 2004

The PPCS/Richmond takeover soap opera looks to have been renewed for a new season, but whether it still has the dramatic pull of previous series remains to be seen.

Much of the core cast from one of New Zealand's longest running dramas has returned, but so far the scripts look like tired rewrites of what we've seen before, as the `will-they-won't-they' storyline gets dragged out just a little bit longer.

In the tradition of Bruce and Cybill on Moonlighting, and Ross and Rachel on the freshly-departed Friends, this story has revolved around the bickering relationship of two parties the audience suspects are likely to end up together in the final scene.

Here's a brief recap of the latest episodes:

On Monday the South Island-based meat company PPCS announced a $3.11 per share takeover offer for the remaining 37% of Richmond shares it did not already own. The bid is conditional on reaching a 90% shareholder threshold.

Every action deserves a reaction, and on Tuesday Richmond, which has been playing hard to get for the past seven years, revised its full year profit forecast, saying it now expected to exceed the $20 million net profit it had previously forecast.

Its share price promptly shot up 37 cents to $3.05.

Brokers said aside from its continuous disclosure obligations, Richmond seemed to have timed the announcement to try to curry favour with its shareholders.

The tightly held stock only has about 500 shareholders on its register and its fate basically rests in the hands of just one of them - North Meats.

Stepping up from supporting cast member to a star role, the UK company, which itself launched a failed takeover bid for Richmond a few years back, holds just over 10% of Richmond and is pivotal to the success or failure of PPCS' bid.

"The bid is for 90% of the company and one shareholder has the ability to stop that.... If they haven't come to some sort of an agreement with PPCS then it's not going to happen," said a sharebroker from Richmond's hometown of Hastings.

North Meats' chairman Norman McRae has said the company will not decide on the offer until it sees an independent assessment, which will be sent out when the offer opens on June 28.

`But you would have to assume if they (PPCS) have done their homework... they would have got agreement there prior to actually launching the takeover," the broker said.

The broker added the bid did not come as a big surprise, as it came on the heels of a $75 million bond issuance by PPCS in April.

The result of the latest bid by PPCS to create a new rural dynasty will not be known until after the offer closes on July 27.

The saga has dragged on for years and like all so-bad-they're-good soap operas, in PPCS it even has a character which has managed to come back to life after seemingly being killed off.

It looked like PPCS had been written out of the series in 1999 when it had to sell its 36% stake in Richmond, after the acquisition was found to have contravened Richmond's constitution. The shares had been bought in 1997 from the Meat Board by a company called HKM, which the court found to be a nominee of PPCS.

PPCS sold the stake to Active Equities' subsidiary Hawke's Bay Meat, and appeared to exit stage left.

Richmond breathed a sigh of relief - they seemed to have kept the PPCS wolf from the door.

But a couple of years later a few Richmond shareholders began to suspect that the big bad wolf was back at the door, had in fact possibly never left, and was actually just hiding out in sheep's clothing.

In a dramatic plot twist, PPCS was accused of helping bankroll Active Equities' purchase of its parcel of Richmond shares. The knives were out - and they weren't confined to the companies' boning rooms.

In July 2001, PPCS announced it had entered an agreement with Active Equities to buy a 49% stake in Hawke's Bay Meat, with an option to buy the remaining shares in 2003, prompting allegations of `warehousing'.

For several months the show genre-hopped, part traditional soap, part courtroom drama.

Eventually the warehousing allegations were dropped, but the court did find PPCS had failed to disclose a parcel of 290,000 shares when it was ordered to sell its Richmond shares.

As a result PPCS was ordered to forfeit 16% of its Richmond shares as well as voting rights for 38%.

Down but not out, PPCS launched an unsolicited takeover offer in January 2003, of $3.05 per share, later upped to $3.11 per share, and also introduced some new characters - the Bell group - to the drama's core cast.

The Bell group was made up of a number of minority Richmond shareholders who hold about 1% of Richmond's shares.

"We were not opposed to PPCS, we were opposed to their methods," said Napier solicitor Robin Bell, who fronted the group.

He called PPCS' use of nominee companies to buy Richmond shares "covert", putting Richmond shareholders in an unenviable position of having a majority shareholder they were unaware of. Their concerns prompted the Bell group to launch litigation against PPCS.

Before long Richmond, the Bell group and PPCS had all filed law-suits.

The upshot of the drawn out legal fight was another unexpected plot twist which saw the Court of Appeal hand PPCS back the voting rights it had been forced by the High Court to forfeit - leaving PPCS with its current majority holding of 63%.

The Bell group fought on, launching fresh legal challenges which culminated in two failed attempts to take the matter to the Privy Council.

They may have lost that war, but the Bell group was still in battle mode and launched a fresh campaign, to get PPCS to buy the outstanding shares at $3.11 each.

Bell said he thought Richmond's shareholders deserved the opportunity to reconsider the bid now the litigation had ended. " We felt that they (PPCS) did have an obligation to do this. Whether or not shareholders take the opportunity to sell their shares is up to them.

"I don't want to say to people that `yes, you should or no, you shouldn't'," Bell said.

Although all signs point to this being the final series in the takeover soap opera, Bell said nothing should be taken for granted. "It may well not be the end of the road, because we ... have had various false dawns before," he said.

Stay tuned.

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