Judge enforces Cue meeting

WELLINGTON - Minority shareholders in energy company Cue have won a major legal battle, forcing directors to call a shareholders' meeting to vote on their future.

Cue Energy Resources is based in Melbourne but has its main listing in New Zealand, and is the subject of a tug-of-war between its board and some small shareholders.

Last week in the High Court at Wellington, Justice Wild ordered Cue to proceed with a special meeting of shareholders as soon as possible.

That meeting was called by minority shareholders Browse Petroleum, Todd Petroleum and Anzoil NZ, which between them hold an 11.5 per cent stake in Cue.

In November at Cue's annual meeting in Wellington, the directors put up motions calling for a share issue. But shareholders, led by Todd and Browse representatives, rejected the motions and also declined to re-elect one of the directors.

Shareholders were also critical of plans to seek more money for Cue to invest in technology rather than focus on its key oil and gas interests.

On December 1, three days after the annual meeting, the small shareholders called a special meeting to remove two of Cue's three directors, appoint new directors and remove any other directors who may be have been appointed since the annual meeting.

Cue's problem was that it was also fighting the stock exchange on another front.

To retain a main New Zealand listing, a company must have at least two directors living in New Zealand. Cue does not, though it does have New Zealand-based alternate directors, including Wellington corporate lawyer David Quigg.

That was not good enough for the stock exchange's market surveillance panel, which has given Cue until April 1 to appoint Kiwis to the board.

While Cue's lawyers tried to sort out that mess, nothing was done to call the special shareholders' meeting.

Meanwhile, Cue's directors had announced a pro-rata rights issue, a form of share issue that did not need the agreement of shareholders. So Browse asked the High Court to direct a meeting and stop the rights issue.

Justice Wild ruled in favour of Browse, saying the annual meeting in November had conveyed some clear messages to Cue's directors and in his view the special meeting should have been convened long ago, by mid-January at the latest.

"I regard it as seriously oppressive for Cue's directors, having thus delayed, now to proceed with the proposed rights issue before the requisitioned meeting is held," he said.

Bill Wilson, QC, representing Cue, had told the court there would be serious financial consequences for the company if the rights issue did not go ahead.

Cue told the court it needed to have another $A1 million ($1.22 million) by the end of March and attempts to borrow the money had failed.

Justice Wild said if the special meeting was properly convened, Cue's financial position could be maintained.

- NZPA