KEY POINTS:
The Takeovers Panel has rejected a complaint about complex shareholder relationships between financiers St Laurence, Dorchester Pacific and Bridgecorp.
Kerry Morrell, the panel's senior executive officer, said yesterday no wrong-doing had been found in the deals which saw the financiers take stakes in each other.
Bruce Sheppard, chairman of the Shareholders' Association, lodged a complaint as a shareholder a few weeks ago alleging a breach of the Takeovers Code.
At issue was whether St Laurence indirectly controlled 28.7 per cent of Dorchester, which could have breached the code's 20 per cent threshold rule that states when a shareholder reaches that level, a full offer must be made to all shareholders.
At the time of the complaint, St Laurence owned 13 per cent of Dorchester but has since increased its holding to 19.9 per cent.
St Laurence Mortgage Holdings had loaned Bridgecorp money and the security for the loan was 15.7 per cent of Dorchester, owned by Bridgecorp. St Laurence could have taken possession of Bridgecorp's stake, giving it 28.7 per cent of Dorchester. But after examining the situation closely, the panel decided there was no breach and it rejected Sheppard's complaint.
"We have not found any evidence to suggest that St Laurence might have breached the code," Morrell said yesterday.
Kevin Podmore, managing director of St Laurence, welcomed the move and said he had received a letter from the panel this week. "It didn't really worry me," he said of the complaint. "We had legal advice and we were comfortable with our position. We didn't believe we had done anything wrong and it's quite welcome that it's been verified by the Takeovers Panel. The concern was that we were associated parties. Our view was that it was not an issue because the [Bridgecorp] loan was not in default and we had not exercised that security."
At the end of last month, Dorchester took a 25 per cent stake in St Laurence for $29.6 million.
"Dorchester will own shares in St Laurence Ltd, a property-based investment and finance group of companies, which manages more than $1 billion in assets for over 16,000 investors," Dorchester announced on March 28.
On Wednesday this week, the relationship took a further step forward when St Laurence Property & Finance announced that Dorchester chief executive Andrew Walker would join its board. That followed the resignation of former St Laurence director Phil Newland. Walker was also appointed to the board of National Property Trust, managed by St Laurence.
St Laurence Property & Finance is listed on the secondary market. Commentators said yesterday they expect St Laurence to make an imminent move on Dorchester via a reverse takeover. Podmore did not rule this out.
"A takeover is an option. I'm happy to look at it but there's nothing on the plate at the moment," he said.
Dorchester was keen to get involved in St Laurence's two main funds, National Property Trust and St Property and Finance, Podmore said, and Walker's appointment was part of that shift.
Sheppard said yesterday he was not surprised that his complaint was rejected. "I knew that Bridgecorp still owned the stock, not St Laurence. But I made the complaint just to see what the panel would say."
Who owns what
*Unlisted St Laurence of Wellington owns 19.9 per cent of Dorchester.
* Listed Dorchester Pacific of Auckland owns 25 per cent of St Laurence.
* St Laurence owns the manager of listed National Property Trust.
* Hugh Green Investments owns 19.9 per cent of Dorchester.
* A shakeout between the parties is expected in the near future.
* A complaint about cross-shareholder dealings has just been rejected.
