Pressure goes on Adams investors

By Geoff Senescall

Ernest Adams minority shareholders received two letters this week.

One was from directors urging them not to sell; the other, from shareholders representing 75 per cent of the company, said Goodman Fielder's 235c a share offer was fair and should be accepted.

Special shareholders' briefings have been set up in Auckland on Monday and in Wellington the following day to consider the arguments.

This is ahead of the annual meeting on Wednesday in Christchurch.

Acceptances of Goodman's offer are now at 82.2 per cent. Unless it waives the requirement, it needs to reach 90 per cent before going unconditional. Its offer is open until at least September 9.

Ernest Adams directors noted in their letter that, of the company's 1085 shareholders before the offer was first announced, about 900 held under 5000 shares.

Apart from the three major holders who had accepted the offer, 120 small shareholders had accepted so far.

The directors again said they believed the company was starting to turn around and promised dividends next year.

But the shareholder group, lead by Tower Asset Management, is not convinced. It points to the company's poor track record and notes that for every $250,000 shortfall in this year's earnings, the valuation for the company is lowered by around 10c a share.

As recently as July last year, it says, directors forecast earnings through to March 1999 of $5.2 million. The actual result was $775,000.

If the Goodman bid fails, it is unlikely that this shareholder group will support the present board.