PPCS shares sale 'not warehousing'

PPCS' decision to sell its major Richmond shareholding to Active Equities was not warehousing, rival bidder Talley's Fisheries has told the High Court at Christchurch.

Director Andrew Talley yesterday outlined how Talley's was seen as a friendly bidder by Richmond, and a way of keeping Active Equities from acquiring the shareholding.

He said that although he believed at the time PPCS' actions were warehousing, with the benefit of hindsight he did not have evidence. Later, it became clear there was no arrangement between Active Equities and PPCS.

Hawkes Bay-based meat company Richmond is taking action against Dunedin-based PPCS, alleging it retained a relevant interest in Richmond when it sold its shares to Hawke's Bay Meat (Active Equities) in July 2000, making it a defaulter under Richmond's constitution.

In June 2000, PPCS was ordered to sell its 33 per cent stake in Richmond to an independent party, after a committee of independent Richmond shareholders ruled that PPCS had not complied with Richmond's constitution when it bought the shares.

Talley said in his affidavit that he was not giving evidence willingly. He had been subpoenaed by PPCS.

In July 2000, Talley's considered the opportunity to buy a strategic portion of Richmond shares very attractive, and lodged a bid, he said.

During the bidding period he spoke to Richmond chief executive John Loughlin and Richmond lawyer Andrew Morrison several times.

"I became aware that they and a group of people were very anti-PPCS and were prepared to go to some lengths to ensure that the sale of PPCS' shares saw Richmond shares fall into friendly hands."

Talley was given the impression Talley's would be welcomed by Richmond as a shareholder.

When Active Equities emerged as a bidder "both ... made it clear to me that Active Equities would not be welcomed by Richmond ... "

Talley's was keen to exploit this. Talley said he began working with Loughlin and Morrison to see if discussions between PPCS and Active Equities could be exposed as a warehouse arrangement to remove Active Equities from the bidding.

Talley said he had no evidence of warehousing, but did say at the time he believed the PPCS-Active Equities discussions were warehousing because he was trying to exert maximum pressure on Richmond to remove Active Equities from the bidding process.

In hindsight, if he had had evidence of warehousing he would have used it.

An Active Equities approach to Talley's, in 2001, to sell shares in Hawke's Bay Meat made it clear there was no Active Equities-PPCS arrangement.

"I do not believe Active Equities would have made an unconditional offer to us if they had some understanding with PPCS," Talley said.

From a commercial perspective, PPCS' decision to sell to Active Equities was entirely defensible, he said.

"I have no doubt that any commercial operator in the same situation would have perceived Active Equities, with its history of trading, to be a more attractive proposition than Talley's, which was effectively a competitor ... and [would] be a long term holder."

In a separate action being heard concurrently, a group of Richmond shareholders, R. J. Bell and others, allege PPCS breached the Securities Amendment Act.

- NZPA