Victorious GPG invites Rubicon directors to resign

By PAM GRAHAM

Guinness Peat Group vs Rubicon, the corporate stoush, was back in play yesterday as GPG's Tony Gibbs called on Rubicon directors to consider their future.

A High Court judgment last week stripped US hedge fund Perry Corp of part of its Rubicon shareholding and boosted GPG's stake in the Fletcher Challenge spin-off to 20.9 per cent.

The court criticised Rubicon chief executive Luke Moriarty - also a Rubicon director - for his part in the dispute.

Perry Corp fought back yesterday, saying it would appeal against what it called an astonishing judgment, and would request a stay of orders to divest and forfeit its Rubicon shares.

GPG took legal action after buying a minority stake in Rubicon, only to discover that Perry had an interest in the company hidden in an equity swap with a third party.

The court ordered Perry to forfeit 12 million Rubicon shares and sell a further 24 million shares within 180 days, leaving Perry with 7.2 per cent of the company and boosting GPG's holding to 20.9 per cent.

US hedge funds are expected to defend equity swaps, which allows the sale and later buyback of shares, this week.

"The way in which we used equity swaps to gain economic exposure to Rubicon shares did not differ from accepted international practice," said Perry spokesman Carl Berg.

One US hedge fund manager, who declined to be named, said yesterday that the New Zealand court decision was "out of whack" with the rest of the world.

Meanwhile, back in the New Zealand forestry sector, where the saga began, GPG is considering whether its enlarged shareholding and the knockback to Perry will deliver it control when it has only two members on the nine-seat Rubicon board.

Its options include calling an extraordinary general meeting or making another bid for the company.

Gibbs said directors who supported Perry should examine their position.

"Perry has promoted a nominee to the board.

"I would have thought that that gentleman would like to reconsider his future in light of the judgment.

"Without naming names, I'm also saying some of the existing regime in the company might like to consider their futures as well."

He said the appeal was up to Perry.

"My only point is that the appeal judges may well in their wisdom penalise them more."

A Rubicon spokesman said the court case had not awarded damages against Rubicon and pointed to a sentence in Justice Judith Potter's judgment which said: "I make no criticism of Rubicon in respect of its efforts to check on compliance by Perry Corp with disclosure requirements."

The judgment, however, also refers to Moriarty's replies at one point as evasive and said that attempts by Moriarty and others to reconstruct the situation were unconvincing.

The judgment said that at a substantive level Rubicon continued to regard and treat Perry Corp as a major shareholder.

Fund managers who formed a brief alliance to reject an earlier bid by GPG for Rubicon said that alliance was for that specific matter.

Rubicon directors

* Michael Andrews (chairman)

* Luke Moriarty (chief executive)

* Hugh Fletcher

* Tony Gibbs

* Gary Weiss

* William Hasler

* Stephen Kasnet

* John Villiger

* Juoko Virta