Expat puts challenge to Vector

A New Zealand investor in energy company Vector is launching a legal challenge after his foreign address shut him out of the biggest share float of the year.

Tim Bridges, who lives and works in the Cayman Islands, bought Vector bonds in 2002 - with the special rights in any future share float one of the attractions.

But when the community trust that owns Vector partially privatised the company this year and floated $592 million of shares, Bridges and other bond holders living overseas were not offered any part of it.

He said nothing in the bonds prospectus said anyone living overseas, could not take part in the initial public offering.

Bondholders paid $2.32 for each new Vector share, while other new shareholders were issued theirs at $2.38. Each bondholder had the right to subscribe for $500 of new shares in the IPO for every $1000 of bonds held.

The prospectus said: "Bondholders will have the right, in priority to all other parties, but equally among themselves, to subscribe for new shares offered in that public offering."

Bridges said: "Non-New Zealand resident investors would have been reasonably entitled to expect that this would be the basis on which they would also be entitled to participate in the public offer."

Vector said Bridges could not take part in the IPO as he did not pre-register. A letter was sent to all New Zealand resident bondholders, telling them they had to pre-register, but not overseas for it would have breached securities law in those jurisdictions.

The announcement to the New Zealand Stock Exchange in June made it clear a New Zealand-registered address was needed to pre-register.