Lawyers want meat firm punished

Lawyers representing shareholders in North Island meat company Richmond say South Island competitor PPCS deserves to be punished for serious breaches of the Securities Amendment Act.

Justice Young yesterday reserved his decision on what orders he might make as a result of his August ruling that PPCS breached the act - and Richmond's constitution - by setting up other parties to buy Richmond shares with PPCS' financial backing, while keeping the arrangements quiet.

Robert Dobson, representing shareholder plaintiffs RJ Bell and others, told the court yesterday that Richmond shareholders were prepared to allow PPCS three months to acquire 90 per cent of the company at a specified price.

The price which the shareholders were willing to accept was suppressed.

If PPCS was unsuccessful in obtaining 90 per cent within three months, the plaintiffs wanted orders for divestment of PPCS' remaining 52 per cent holding in Richmond.

If that was not acceptable to the court, the plaintiffs sought orders for divestment of all PPCS' shares in Richmond, Dobson said.

There were strong arguments in favour of punishing PPCS for breaching the act.

"This is the most serious case revealed since the passing of the 1988 amendment act on every scale of measurement,"he said.

"It is the first case where breaches of the act have led directly to successful transfer of control of a major publicly listed New Zealand company in what was effectively a hostile takeover situation.

"Having run such a large risk in respect of so high-profile a transaction, an effective deterrent should be commensurately large."

Alan Galbraith, QC, for PPCS, argued that the court did not have the power to make an order for divestment or forfeiture of PPCS' shares in Richmond, since all the shares now controlled by the company were acquired in conformity with the act.

The relevant section of the act, section 32, did not create an offence or provide for a penalty.

"Instead it provides for a range of possible orders, the bulk of which are unarguably directed towards ensuring compliance or preventing a party taking the benefits of non-compliance."

The aim was to provide the market with full information.

"The market was not disadvantaged. At all times those buying and selling shares on the market have benefited from a higher price than would have occurred had PPCS not been a buyer."

The Bell Group's preferred outcome would result in a loss of value for Richmond and its shareholders, he said.

Richmond needed a cornerstone shareholder, and PPCS was the meat-industry participant which had consistently most highly valued the company. Richmond also needed certainty, and quickly.

- NZPA