Judges asked to protect Richmond

Hawkes Bay meat company Richmond would be left in a "big black hole" if southern rival PPCS were forced to give up its shares in it, the Appeal Court was told yesterday.

The five judges hearing appeals over how PPCS should be punished for breaches of the Securities Amendment Act's disclosure regime have retired and will deliver a reserved judgment.

The court heard three appeals arising from rulings made by Justice William Young in the High Court at Christchurch last year.

Justice Young found that PPCS had breached Securities Act disclosure requirements in the way it had secretly gained control over a one-third shareholding in Richmond and it had also hidden ownership of another share parcel.

He ordered the forfeiture of 6.7 million shares and the loss of voting rights of the remaining 14.6 million shares that PPCS owned.

He described this as an incentive for PPCS to either sell out of Richmond or launch a full takeover bid.

PPCS went ahead with the bid, but failed to acquire at least half of the available shares. Pending the appeal, it has 69 per cent of Richmond's shares but 35 per cent of the voting stake.

Robert Dobson, QC, lawyer for the Bell Group of Richmond shareholders, urged the judges to take away all of PPCS's Richmond shares. He suggested the forfeiture of a third and the divestment of the rest, under the supervision of a committee of independent Richmond directors.

The hidden ownership of the one-third holding gave PPCS a springboard from which to acquire further parcels - in on-market stands and purchases from other shareholders, he said.

Richmond lawyer Bill Wilson, QC, agreed, saying that leaving PPCS with a stake from which it could launch a takeover would be seen by the market as a win for PPCS.

However, PPCS lawyer Alan Galbraith, QC, told the judges they had no jurisdiction under the act to take such a step. The legislation was not up to the interpretation of individual judges, he said. "It was not contemplated to be used to strip away the benefits of lawful transactions and I cannot find any legislation that allows this."

If the judges intended to go ahead, he said, they would be leaving Richmond in a "big black hole".

- NZPA