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Ngai Tahu struggles to mop up Shotover Jet

Chris Hutching

Friday 5th December 2003

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A burst of speculative buying of Shotover Jet shares in recent days saw the price jump to 98c, well above the 90c a share being offered to minority shareholders by majority owner Ngai Tahu.

Soon after Ngai Tahu announced the pending 90c a share bid last week some minority shareholders immediately bought more shares.

At least six brokers are understood to have "buy" orders at various trigger levels.

Ngai Tahu has 88.3% of the jet boat company based in Queenstown, which underpins its tourism investments in the region. The timing of the bid may be connected with Ngai Tahu's plans for a $100 million gondola linking Glenorchy with Milford Sound, a joint venture with gondola operator Skyline Enterprises whose chairman Barry Thomas expects to make an announcement about proceeding in a month.

Tauranga investor Lloyd Christie is one of the larger minority investors in Shotover Jet with about 350,000 shares. He was a recent buyer of shares at prices as high as 98c, averaging around 95c. He said the company is in better shape than it had been for years and was confident that an independent valuation could find as high as $1.20 a share.

"They'll get it in the end. It's just an argument about what's a fair price."

No dividends have been paid for the past year as the company upgraded its jet boat fleet. The lack of dividends was a hot topic directed at Shotover's independent directors at last week's annual meeting in Queenstown. They assured shareholders they had made decisions based on what was best for the company.

Christchurch investor Peter Rae has also been active in the market and he said yesterday that the 90c a share offer from Ngai Tahu was an insult that he would reject and advised Ngai Tahu to ask some hard questions of their investment bankers advisers. Peter Rae Industries is the fifth-largest investor in Shotover, which still has about 700 minority investors.

"To make an offer of 90c when the market already has the shares trading at that price, and on the brink of an extremely buoyant South Island tourism season is naïve and will do nothing to enhance their already strained relationship with the minorities," Rae said.

There are some technicalities in the takeovers code that would make Ngai Tahu's job difficult, Rae said. Ngai Tahu must obtain at least half of the outstanding 11.7% of shares held by minorities, not just achieve the 90% level that would normally trigger compulsory acquisition.

During Ngai Tahu's earlier bid last year (when it had 83%) it only obtained about 5% of shares when it offered 70c a share.

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