Richmond ignoring reality, court told

South Island meat company PPCS has denied all the accusations levelled against it in the High Court at Christchurch, other than one breach over a small shareholding it should have sold.

Counsel for PPCS Alan Galbraith QC outlined the defence case yesterday after the plaintiffs, Hawkes Bay meat company Richmond, and R J Bell and others, a Richmond shareholder grouping, had completed their cases.

Richmond alleges PPCS breached the rules of Richmond's constitution when it bought back a controlling parcel of shares a year after it had been ordered to sell them. The Bell group alleges PPCS breached the Securities Amendment Act.

Galbraith said much of what was alleged against PPCS was "pedantic and technical".

"It is notable that the critical issue in the case - the disposal of PPCS's Richmond shares to Active Equities in July 2000 - has become concentrated on extremely technical and artificial arguments, which were a far cry from the types of allegations that were made to support initially the interim injunction and then the commencement of these proceedings." It has been alleged that Active Equities "warehoused" 33 per cent of Richmond shares for PPCS, when PPCS was forced to sell those shares in July 2000, after it was determined it breached Richmond's constitution. PPCS bought the shares back in May last year.

Galbraith said that any suggestion PPCS had any control over what happened to Active Equities' shares was wrong.

"If any evidence is needed to demonstrate the absence of an arrangement or understanding, it is the action that Active Equities conducted to procure the best price for its shares when it decided to sell in May last year."

He said Active Equities had done what it could to create a bidding duel between North Meats and PPCS. "They were able to create enough tension to force the bidding up to $3.65 (a share)."

He said that when an interim injunction was sought to bar PPCS from acquiring Active Equities' shares, Active Equities realised it would lose the bidding tension if the injunction was granted. It was forced into accepting the PPCS bid, which was the highest at the time.

The one breach by PPCS was that it did not disclose a parcel of 443,016 shares when it was ordered to sell its HKM shares in 2000 (which Active Equities bought), Galbraith said. PPCS still has 297,000 of those shares.

Galbraith said any remedy by the court should be commercially realistic. "There is no market for the volumes of shares which the Bell Group want sold. Even the Nelson shares (297,000) will substantially depress the market."

Galbraith said the saga was a misguided refusal to face reality. "Richmond was a chronically poor performer, had a gross mismatch between assets and earnings, an unstable share register, declining shareholder support, and its only hope of survival lay in a strong industry shareholder."

PPCS was not a corporate raider, but a co-operative of farmers. Unlike Richmond, all its shareholders were farmers, he said.

- NZPA