Lion takes its Montana case to High Court

By DITA DE BONI liquor writer

Lion Nathan's lawyers look set for a rosy Christmas. The brewer is legally challenging the stock exchange committee's decisions in the stoush over Montana Group.

Lion said yesterday it had lodged an application for judicial review with the High Court at Auckland over three decisions which have stymied it during the bitter dispute.

The brewer will first appeal against the Market Surveillance Panel's standing committee finding of June 5 that Lion breached listing rules by prematurely lining up sellers of Montana shares on the evening of February 8.

The second finding under fire is the committee's decision to punish Lion by ordering it to sell 19 per cent of Montana.

The third decision to be challenged was made on July 16, quashing Lion's two-tiered bid for Montana, in which the Australasian brewer offered $5.50 for 11 per cent of the wine maker and $3.70 for the remainder.

The combination of decisions cost Lion control of Montana.

It has yet to relinquish the 19 per cent of Montana as required under the committee's rulings, and is likely to hold on to the coveted stake until the judicial review process has been concluded.

The initial finding against Lion hinged on the book-building actions of its broker, Credit Suisse First Boston (CSFB), on the night of February 8.

CSFB brokers were charged with soliciting sellers for the shares before midnight, which was not allowed under the provisions of the restricted transfer notice filed by Lion with the market.

It is understood the complaint against Lion Nathan was sparked when a broker inadvertently called an associate of Montana chairman Peter Masfen before the midnight starter's gun.

But brokers and sources associated with Lion have argued that the book-build undertaken in February was regular stockmarket practice.

The third ruling said Lion's two-tier offer contravened a condition of the committee's earlier ruling ordering Lion to sell the 19 per cent of Montana found in default.

The two-tier offer was judged to imply an arrangement with buyers of the defaulting securities, explicitly prohibited by the committee's ruling.

Lion Nathan chief executive Gordon Cairns said application for a judicial review "reflects Lion's belief that the Montana standing committee's rulings were incorrect and that the penalty imposed was, in all the circumstances, inappropriate".

Rival Montana bidder Allied Domecq said the Lion strategy was yet another outrageous delaying tactic, which could hold up today's release of an independent appraisal of its $4.80 a share offer for Montana.