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Richmond shareholders fight takeover

By Chris Hutching

Friday 31st March 2000

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Richmond shareholders who exchange their shares for a stake in a farmer-owned defensive company called Richold risk losing the benefits of negotiable securities and may incur costs that undermine their value.

This is the view of Forsyth Barr chairman Eion Edgar who was commenting this week on the move by some Hawke's Bay farmer shareholders to set up an unassailable block of shares to combat a takeover by Dunedin-based co-operative PPCS.

The southern meat processor wrote an open letter to Richmond shareholder suppliers a few months ago outlining its desire to increase its 30% shareholding to 51% in a "friendly" suit.

Richmond shareholder suppliers feel threatened and plan to stave it off. The Richold offer of a share swap opened this week and it was too early to tell mid-week what kind of response could be expected.

But Mr Edgar said he could not see the logic in farmers swapping their Richmond shares for shares in Richold because if they did not want to sell to PPCS they should just hang on to them. If they took up Richold shares they would be locked into a security of doubtful negotiability if they wanted to cash some or all of their shares for any reason.

The farmer directors of Richold include James Aitken, Thomas Cross and John Culwick who were unavailable for comment during the week. But a Richmond source said the reasoning behind setting up Richold was that it would create a united block that would be responsive to any new challenges.

"Sometimes when there's a crucial issue it's hard to get all the necessary proxies because farmers tend to be so busy. This way the votes will always be with the directors of Richold who will carry out the will of shareholders."

Parochial loyalty seems a main reason for setting up Richold.

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