Lion ready to fight any 'unfair, unjust' penalty

By DITA DE BONI liquor writer

Lion Nathan took a pre-emptive strike at Montana Group's independent directors yesterday, saying it was prepared to fight any "inappropriate" penalty imposed on it for defaulter securities.

Lion could lose its entire 62 per cent stake in Montana under listing rules. The fate of its shareholding is being decided by four independent directors of the company.

But the brewer says any penalty more severe than the sale of the 10 per cent which the standing committee deemed had been bought prematurely would be "unjust and unfair given all the circumstances."

Chief executive Gordon Cairns broke his silence on the hearing, saying the finding of the standing committee had fundamentally changed what could be considered acceptable industry practice.

"At all times Lion has acted in good faith and in accordance with all relevant Stock Exchange rules and long-established and acceptable stock market practices," he said.

He was referring to the practice of book-building, in which buyers are solicited for shares before transactions are cemented.

"Lion Nathan's view is that the breach was, at worst, technical, could not have been anticipated, and that our behaviour has at all times been beyond reproach."

In response to rival bidder Allied Domecq's comments this week, Lion said it "views with concern recent suggestions by Allied Domecq that Lion should forfeit its entire 62 per cent stake in Montana."

This was totally inappropriate.

Meanwhile, the independent directors said yesterday that they had no bias towards Allied Domecq.

The directors have said previously that they approved Allied Domecq's $4.40 takeover bid for the entire company, and some have since sold parcels of shares to Allied.

Montana chairman Peter Masfen followed suit, selling his 19.5 per cent shareholding to Allied Domecq last month.

But the chairman of the independent directors, Barry Neville-White, said yesterday that the sale of some shares by independent directors had not been made exclusively to "either Allied or Lion Nathan."

He sold his own 0.23 per cent holding to both Allied and Lion Nathan brokers, he said.

Montana company secretary John Nuthall said the directors were not obliged to say to whom they had sold their holdings.

Mr Neville-White said the directors "have not, and do not" favour either bidder.

They had "remained committed to trying to obtain a full takeover offer for all shareholders at a fair price," which was the only reason for supporting the Allied Domecq bid originally.

Allied Domecq joined the fray, rejecting suggestions that it was hanging on only to save face because of failed takeover bids elsewhere.

Representative Jane Mussared said Allied had made a string of very successful acquisitions - she challenged critics to identify a single failure.

A company statement reiterated its credentials as a partner for Montana and predicted "further delaying tactics" from Lion. .

Lion Nathan is also addressing the court of public opinion with a series of full-page newspaper adverts, in the form of an open letter from chief executive Gordon Cairns.