GPG revealed as mystery Rubicon raider

By NZPA

Thursday 4th July 2002

Sir Ron Brierley's Guinness Peat Group was today revealed as the 19.9 percent owner of Rubicon.

In a substantial security holder notice the London-based company disclosed it had purchased up to 2 percent of Rubicon's shares since June 26. It acquired the other 18 percent overnight through JB Were after approaching institutions.

GPG director Tony Gibbs told NZPA that GPG sees the Rubicon leg of the Fletcher Forests Citic deal to purchase the Central North Island (CNI) forestry partnership as a very good deal for Rubicon shareholders.

Rubicon is getting the equivalent of 37 cents per share for its 17.6 percent holding in Fletcher Forests against the current price of 25 cents.

Mr Gibbs, though, doubted the transaction would proceed. He also suggested that Rubicon could be broken up if the transaction proceeded.

"If it is implemented it would give rise to questions regarding Rubicon's future," he said. "We suspect that the total Forests-Citic deal will most likely collapse under its own weight and from GPG's position, we are comfortable with our position either way."

Mr Gibbs said that it appeared that a number of Forests shareholders were opposed to the CNI deal whereby Citic would end up with a 35 percent stake in Forests after CNI had been repurchased from the receivers for $US650 million ($NZ1.34 billion). Forests' 7 percent owner Xylem opposes the deal and its representative on the Forests board, Stephen Hurley, resigned.

Brokers have suggest that GPG and JB Were did not comply with Stock Exchange rules when it made the purchase.

The Stock Exchange said it was looking into the matter but would not comment further at this stage. Both JB Were and GPG said they had legal advice that the way the deal had been done was kosher.

Some brokers suggested GPG may have to launch a full takeover for Rubicon because of the rule breach.

Eighteen percent of Rubicon was purchased following an offmarket stand to institutional holders last night. The transaction was reported before the market opened today.

Stock Exchange rules require a member firm that receives an order to buy more than 10 percent of a company to "bid in the market for 20 percent of that order from other member firms".

If that rule is adhered to, then the buyer will be obliged to buy another 3.6 percent of the company which would take it over 20 percent of the company, thereby triggering the Takeovers Code.

A spokeswoman for the Stock Exchange said: "That's a matter that the exchange is currently looking in to."

Asked if the company had to purchase another 3.6 percent on market whether that would trigger the Takeovers Code, she said: "That's my understanding."

Mr Gibbs said there was no stand in the market.

"I'm conscious of the issues," he said. "All I can say is the purchase was done absolutely squeaky clean following the rules and Weres took advice and so did we all the way along."

He said there was no issue of having to make a full takeover.

"As far as I am concerned the transaction has been done correctly," Mr Gibbs.

JB Were's head of investment banking in New Zealand, Paul Harris, said that the issue of whether part of the purchase should have been on market was a Stock Exchange regulation and not a Takeovers Code rule.

"It's a regulation that governs conduct between members of the Stock Exchange quite a different thing than some legislation."

He said there were different legal interpretations.

"We sought legal advice in terms of what our requirements were under the regulations so that we did ensure we were adhering to the regulations before we undertook any transactions."

JB Were's legal advice was that the regulation was only intended to apply to stands which are effected on a wide spread basis.

JB Were only approached "a small number of selected institutions" and acquired the shares off market. He declined to say how many.

"Our legal advice was unequivocal. It was that section 6-17 did not apply to that sitation."

He said other brokerages were looking to share the transaction profits.

GPG said it did not need to go to the market.

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