PPCS regains Richmond stake

12.15pm

UPDATE - South Island meat company PPCS has won the upper hand in the long-running battle for New Zealand's biggest meat company Richmond Ltd.

Richmond shares were placed in a trading halt this morning ahead of the release of the Court of Appeal's judgement, which ruled that voting rights that PPCS was forced to forfeit be returned.

PPCS was initially found by the High Court to have breached the Securities Amendment Act during its attempt to secretly win control of Richmond in 1997 and was ordered to forfeit a 16.76 per cent share stake and to lose voting rights on a further 38 per cent.

The Court of Appeal said in its judgement today that:

"Our conclusion is that the order for forfeiture of shares owned by PPCS comprising 16.76 per cent of the company should remain, but the order prohibiting exercise of voting rights on the remaining 35.78 per cent shareholding should be quashed.

"The appeal of PPCS is allowed to that extent. The appeals of Richmond and the Bell Group are dismissed.

"The consequence would appear to be that PPCS holds 62.94 per cent of the shares in the company post forfeiture."

The court made no ruling on costs.

"This is not a situation in which costs should follow the relative success of the parties in the appeal. The parties may, however, be able to reach agreement on costs."

A spokeswoman for PPCS said the company was pleased with the outcome, although it would take some time to digest the 40-plus page judgement.

"We're smiling, it's looking good for us," Bridget Feely said.

"We're just checking there's nothing in the detail at this stage."

Richmond chairman Sam Robinson could not be reached for comment.

The acrimonious dispute between the meat companies PPCS of Dunedin and Hawke's Bay's Richmond went to the Appeal Court in July.

Justice Young in the High Court at Christchurch last year found that PPCS had breached Securities Act disclosure requirements in the way it had secretly retained control over an effective one-third shareholding in Richmond and had also hidden ownership of another share parcel.

He described the forfeiture as an incentive for PPCS to either sell out of Richmond or launch a full takeover bid.

PPCS went ahead with a bid but failed to acquire at least half of the available shares.

Richmond asked the Appeal Court to rule that because PPCS had hidden its ownership of the second shareholding it was a defaulter under Richmond's constitution.

The other appeal was from a group of Richmond shareholders, known as the Bell Group, who said that because the takeover bid failed, PPCS should lose all its Richmond shares.

Richmond's appeal stemmed from the purchase in 1997 of about one-third of Richmond from the Meat Board by a company called HKM, found by Justice Young to be a nominee of PPCS.

Within a year, HKM sold its shares to PPCS but the sale was found to be in breach of Richmond's constitution and PPCS was ordered to sell all shares in which it had a relevant interest.

PPCS sold the shareholding to Active Equities but did not sell the second parcel, known as the Nelson holding, also held by a secret nominee.

- NZPA