Insider probe at Tenon dropped

The Securities Commission has discontinued a probe into share trades by former Tenon chairman Sir Dryden Spring and other senior executives.

Spring yesterday confirmed to the Herald that he was in the clear following an exhaustive investigation into the managers' purchase of Tenon shares just days before a forecast net profit upgrade from $28 million to $32 million for the June 2004 year.

The investigation has attracted strong interest from the commercial community - particularly from directors and senior executives - who were worried about the "negative signal" the commission would send if it launched insider trading proceedings against people who had prior company approval for their trades.

"It is important that the commission upholds the rights of boards to use 'safe harbour' provisions so that directors and executives can acquire shares in their companies," said an Auckland commercial lawyer.

"If the regulators start second-guessing board decisions with the benefit of hindsight, it will simply become too risky for directors or executives to buy or sell shares in the companies which employ them."

Spring said he was "absolutely clear" the right process was followed.

"I have never had a single day's worry about it."

He said it was Tenon policy that senior executives should hold shares in the company, but they had not been able to acquire shares until the troublesome Tarawera forest sale was resolved early last year and announced to the sharemarket.

"This was the first time in 2.5 years that we felt trading could occur."

The Tarawera sale was a key part of the company's plan to rid itself of its forests, return the net $669 million proceeds to shareholders and focus on wood processing.

Spring bought 13,000 preference shares on April 3, three days before Tenon lifted its profit forecast. But it had indicated the month before that the result would increase by $7 million to $28 million thanks to foreign exchange gains.

"We're really talking about $3 million," said Spring.

Chief executive John Dell bought 76,000 preference shares on April 1; corporate counsel Paul Gillard 10,000 preference shares on April 1, Brett Cruickshank 50,000 ordinary shares on April 2 and Mark Eglington 30,000 preference shares on April 5.

Gillard said said last year that managers did not have any information not available to the market.