Todd Energy pushes on with Cue Energy battle

Thursday 12th April 2001

RICHARD TWEEDIE: Calling up a storm of writs

By Nick Stride

The brawl over control of Cue Energy intensified yesterday as the two warring factions exchanged a storm of writs.

Todd Energy chief Richard Tweedie and his allies want voting at the March 30 special shareholders' meeting declared void, while the biggest shareholder, Australia's Cable & Telecomms, maintains the Todd camp's shares are defaulter securities.

Also at issue are last week's share placement, a proposed rights issue, and C&T's plans to transform Cue from an oil and gas exploration and production outfit into a technology investor.

Cue is one of New Zealand's smallest listed companies with a market capitalisation of just $13 million.

Its chairman, Leon Musca, and fellow C&T appointees survived a resolution put to the special meeting two weeks ago that they be sacked. Resolutions proposing the board seats be filled with appointees from Todd and its allies, Browse Petroleum and Western Australia's Anzoil, were defeated.

The only resolution passed was authority for the board to place up to 10% of Cue's share capital. This was done within 48 hours with the issue of 28.2 million shares to an unidentified party.

The subsequent barrage of legal action is unsurprising.

Although its stake in Cue is small - its shareholding is worth less than $1 million - Todd is notable for its determination not to be bested in corporate squabbles.

On the other side is Mr Musca, an Australian commercial lawyer previously best known as Lawrie Connell's counsel.

Wellington commercial lawyer David Quigg, who has acted for Todd on numerous previous occasions, is an alternate director, as is John Horner, a partner in Mr Quigg's law firm.

The two camps have been sparring since Mr Musca and C&T bought a 30% stake in late 1999 and began selling mining assets and investing in Australian technology companies.

The Musca camp was defeated at the November annual meeting. As an associated party underwriting a proposed share placement C&T couldn't vote its shares and the placement was voted down.

After the special meeting two weeks ago Cue declared all the Todd camp resolutions defeated but it didn't give details of the votes cast for and against. The Todd camp claims it wielded 125 million votes, easily enough to defeat C&T's 95 million, and it has asked the High Court to order Cue to give it access to the voting forms.

Cue has responded with a claim Todd, Browse, Anzoil and possibly others are acting in concert with one another and should have disclosed this by filing a substantial security holder's notice, disclosing their aggregate holding, with the New Zealand Stock Exchange.

It has served notice on 18 shareholders - many of them associate companies of Browse - that it considers their shareholdings to be defaulter securities and will sell them, within a month, unless they remedy the default.

Mr Quigg said yesterday the filing of a notice would be an adequate remedy.

Cue has also invited the Securities Commission to investigate the alleged breach. It is also asking the court for an order restraining "the concert party" from selling or dealing in their shares until the alleged breach is remedied.

Browse, acting as frontman for the Todd camp, has asked the court to cancel the 28.2 million share placement to the unknown party.

In the meantime, the Australian Stock Exchange has banned quotation of those shares.

The Todd camp also argued in court on Tuesday that Cue was wrong to invalidate, at the special meeting, votes cast on a pre-completed proxy form which it had circulated to Cue shareholders.

Cue argued the form contravened its constitution.

Cue has agreed not to make any further share placements. It has also agreed not to go ahead with its mooted rights issue.

In the High Court on Tuesday, Justice Anthony Ellis heard the kernel of the arguments - Cue's allegation the Todd camp is acting in concert in contravention of securities laws, and Todd's allegation Cue improperly disallowed votes cast at the special meeting.

He adjourned them to a judicial conference on April 23, for a substantive hearing on May 15.

In the meantime, Cue continues to be in breach of Stock Exchange listing rules despite censure by the exchange's market surveillance panel.

New Zealand listed companies are required to have at least three directors, two of whom must be resident here. Cue still has only one New Zealand-resident director.

It has invited the Todd camp to appoint a representative to the board.

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