More litigation looms in Richmond saga

By PHILIPPA STEVENSON agriculture editor

The courts will remain key to the Richmond-PPCS takeover battle.

Yesterday in the High Court at Christchurch, Justice William Young declined an application from the Richmond shareholder Bell Group to have PPCS remove a provision from its takeover offer allowing it to waive a 90 per cent acceptance condition.

The offer, which was mailed to Richmond shareholders after the judgment yesterday, allows PPCS a fallback position - to a 50 per cent stake - should it fail to achieve a 90 per cent holding.

The Bell Group argued the lower acceptance level did not accord with the judge's order in November requiring PPCS to achieve 90 per cent acceptance or lose the voting rights on a 35.7 per cent stake it controls in the company.

PPCS has already lost the voting rights on a 16.2 per cent stake in a court-imposed penalty for breaching Richmond's constitution in the way it acquired its original holding.

PPCS chief financial officer Keith Cooper said yesterday's court decision vindicated the company's view of Justice Young's November judgment, and the Takeovers Code.

The offer would now be available to all minority shareholders. Richmond's independent analysis and recommendation should be out next week, and shareholders would have a month to make their decision.

PPCS chairman Jim Pringle said the offer was fair and would benefit both PPCS and Richmond's shareholders and suppliers.

But the company will have to go back court if it fails to achieve the 90 per cent goal - a likely scenario after Lowe Corporation and Bernard Matthews' North Meats bought shares in the company this month which, combined, make a 12.4 per cent blocking stake.

However, Cooper said yesterday's decision meant PPCS could still proceed with its offer of up to 90 per cent despite the presence of other blocks of shares.

The 90 per cent goal had been set by Justice Young as an incentive, not a penalty, and the judge had given PPCS leave to explain why - if the situation arose - it could not achieve the acceptance level.

Bell Group spokesman Robin Bell said the judge's decision was unfortunate because it allowed for an incomplete takeover. Richmond shareholders would not now be presented with a clear choice.

"It's rather concerning because the principle of the judgment was an all-or-nothing approach."

If PPCS had a stake lower than 90 per cent, Richmond could still have a substantial disgruntled minority shareholding - a situation the judge had wanted to avoid, Bell said.

The onus was now on Richmond and the independent appraisal report to clearly explain the implications to shareholders.

The group would consider appealing but was torn between its desire to see an unambiguous offer and "not wanting to gum up the works," Bell said.

Justice Young awarded costs to PPCS for yesterday's hearing.