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New twist in Horizon takeover saga as panel investigates directors

Tuesday 9th March 2010

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Directors of the listed electricity network monopoly Horizon Energy Distribution are under investigation by the Takeovers Panel, following allegations of takeovers code breaches by a jilted suitor, Marlborough Lines.

Marlborough had sought the investigation and made "a large number of allegations…against various parties" involved in the unsuccessful partial takeover offer made by Marlborough for Horizon last September. 

The allegations relate to whether Horizon directors had any basis for issuing a revised outlook for Horizon's profitability in response to the Marlborough bid; and stating that Marlborough's valuation range of $3.96 to $4.68 per share did not reflect the full value of Horizon, if they had no reasonable basis for making that statement. 

"The Panel considers that there may have been contraventions of the Code in respect of (these) two… allegations made by Marlborough relating to rule 64 of the Takeovers Code," the Panel chair, David Jones, said in a statement. 

Horizon is 77.3% owned by the Eastern Bay Energy Trust, which has also run foul of minority shareholders, who blocked an attempt to buy the shares not already owned by EBET, last month. 

A Maori trust affiliated to Ngati Ringitini objected to the quality of disclosure in EBET takeover offer documents.  That led to cancellation of the offer, which EBET pitched at $4.10 a share.  

Marlborough Lines had offered $3.96 a share for Horizon.  The Horizon share price, which was hovering around $3 a share a year ago, jumped to around $3.50 on announcement of the Marlborough bid, and slumped when the offer failed. It rose again to the $3.90 after the EBET offer, and last traded at $3.75 on February 17. 

A private hearing on the issues is scheduled this Friday and next Tuesday, in Wellington.

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