NZSE under fire for secret refusal of listing wannabe

Friday 15th June 2001

NBR SAYS

NZSE must lay down the law

While the Stock Exchange vacillates, deals worth hundreds of millions of dollars could be in jeopardy as a result of an exchange committee's ruling on the Montana affair.

The committee - two former judges and a Queen's counsel - have torn up the rule book under which companies conduct takeovers, substituting a definition of a deal at odds with previous committee rulings and with the interpretation of the exchange's own managing director.

A slew of pre-Takeovers Code deals now face challenges from disgruntled shareholders or corporate greenmailers.

And the rules could change again if another committee disagrees with the Montana judges.

Business needs certainty. The exchange's board wrote the rules and the board must say what it intended.

The National Business Review today calls on the exchange to stop dithering and tell the market what the rules are.

Explain yourself

'We will set up a lookalike Bridgecorp organisation in Australia ... ASX listing is an option'
- Rod Petricevic

By Deborah Hill Cone

The Stock Exchange was yesterday hiding behind listing rules and refusing to release details about why it has twice turned down applications to list from profitable niche finance company Bridgecorp.

The information blackout comes as pressure builds for the exchange to move away from what is perceived as an arrogant "old boy's club" culture and be more open in the post-Takeovers Code era.

But flying in the face of its "glasnost" policy, the NZSE is clinging to its right to turn down a company because it does not like the cut of the gib of its directors - without explaining why.

Bridgecorp, a short-term loan specialist 54% owned by Rod Petricevic, applied in 1999 and 2000 to list but has now given up on the plan.

Mr Petricevic made - and lost - a fortune in the 1980s with his merchant bank Euro-National Corporation. It reported a massive loss of $215 million in 1988 but the company did not collapse and later became part of what is now listed as CDL Hotels.

Mr Petricevic said he did not understand why people harked back to what happened in 1987. "We could have served two sentences for murder since then, with no parole ... Isn't it about performance?"

University of Canterbury senior accountancy lecturer Alan Robb said Bridgecorp's 2001 accounts looked as complete as one would expect from a good reporting organisation.

Mr Robb said he could see no obvious reason to turn down Bridgecorp's application on the basis of its accounts and questioned why the NZSE would not disclose its reasoning.

"It seems against natural justice that they do not say why," Mr Robb said.

Auditors Grant Thornton also gave the accounts an unqualified thumbs-up.

Bridgecorp was happy to answer queries on several items Mr Robb raised, including why it capitalised $11.9 million in fees and interest in its statement of cashflows and why it was paying almost $1 million in "other directors'" fees.

NZSE managing director Bill Foster would not say whether problems with the company's accounts were behind its rejection of Bridgecorp.

He refused to discuss the company's applications, explain the decisions or even identify the members of the listing sub-committee who considered them.

"We can turn them down without giving any reasons," he said.

Bridgecorp is now expanding into Australia after being given the cold shoulder by the NZSE.

A capital notes offering made last year - a fallback after being rebuffed by the exchange - was oversubscribed, raising $18 million rather than the target of $10 million.

"We will set up a lookalike Bridgecorp organisation in Australia ... ASX listing is an option, " Mr Petricevic said.

Rod Petricevic exclusive interview

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