N.Z.R. shareholders clear way for Waitaki merger

Press, Volume CXV, Issue 33932, 27 August 1975, Page 1

N.Z.R. shareholders clear way for Waitaki merger

(By our commercial editor)

The shareholders of the N.Z. Refrigerating Company, Ltd, yesterday cleared the way for a merger of their company with Waitaki Industries, Ltd, by approving the proposals of their directors necessary for the merger to proceed.

At the same time the meeting—one of the largest company meetings in Christchurch for many years, with an attendance of 350—defeated completely the, attempt by the Southland Frozen Meat Company, Ltd, to block the company’s move to merge with Waitaki.

In one of the deftest legal procedural moves in New Zealand company history, the directors of the N.Z. Refrigerating Company pulled the rug from under the feet of Southland Frozen Meat directors.

The S.F.M. representatives had come to the meeting confident that they could block the move of N.Z. Refrigerating to merge with Waitaki.

They had sufficient proxies to defeat the two special resolutions put to the meeting: these required the approval of the holders of 75 per cent of voting shares. As it was thought that the three ordinary resolutions—which required only a bare majority—were conditional on the passing of the two special resolutions, it seemed that S.F.M. would be able to block the whole deal. Conditions waived However, the directors of Waitaki Industries, at a board meeting just before the N.Z. Refrigerating general meeting, decided that they would waive the conditions contained in the special resolutions. This meant that the merger could proceed if only the three ordinary resolutions were carried. These three resolutions asked shareholders to approve the terms of the merger offer to Waitaki shareholders, the conditional bonus issue, and the creation of sufficient new shares to be able to give effect to the merger. The preamble to one of the ordinary resolutions which made it conditional on the passing of the special resolutions was amended by the meeting by ordinary majority vote. Large margin

Although the special resolutions — containing alterations to the articles regarding such details as the numbers of the directors, some of their powers, their quorum, the creation of convertible notes, and the change of the company’s name—were lost (the necessary 75 per cent majority not being obtained), the three

ordinary resolutions were passed by a large margin.

The number of votes for and against was not disclosed at the meeting. The chairman (Mr C. S. Peate) relied on one of the company’s articles.in not doing so, but he said that “even 100,000 votes” would not affect the issues. The S.F.M. representatives demanded a poll on every resolution. These were taken. The counting of the votes, by scrutineers appointed by the meeting, took a few hours. Votes weighted The counting was complicated by the provision in N.Z. Refrigerating articles that votes carry weight according to the number of shares held. Up to 500 shares, each share has one vote; from 500 shares to 1000 shares, the additional shares vote only two shares to one vote, etc, until a maximum of 5000 votes. In spite of the procedural ploy aimed at defeating the objects of S.F.M., the wellrun meeting was a good example of shareholder democracy in action. There is no doubt that the majority of those present favoured a merger with Waitaki Industries. No dissent While some shareholders seemed disappointed that at this special meeting only the specific business before the meeting could be discussed, when the resolution asking shareholders to approve the merger terms was put, not a dissenting voice was heard.

One attempt from the floor to make this resolution again conditional on the passing of the special resolutions was overwhelmingly defeated.

The result of the meeting’s deliberations therefore is that shareholders approved the terms of the merger with Waitaki, which can now proceed. But a number of minor details — such as the new name of the merged company, and the number and functions of its directors — will have to be decided at a further meeting of shareholders. Hurdle only Although the successful outcome of the N.Z. Refrigerating meeting has cleared an important hurdle on the way to a merger between the company and Waitaki Industries. it does not make this a foregone conclusion. While S.F.M. failed to block the steps N.Z.R. had to take to prepare the way, it is still in the field with a take-over offer to N.Z.R. shareholders.

This take-over will take effect if 51 per cent of the N.Z.R. shareholders accept; no doubt S.F.M. will step up its efforts to win over that number. An overwhelming majority of N.Z.R. shareholders at yesterday’s meeting was clearly in favour of a merger with Waitaki. But it is obvious that S.F.M. has already received the support of more than 25 per cent of N.Z.R. shareholders. Half way Even if a number of these shareholders were to change their minds because .of yesterday’s meeting, S.F.M. must be more than half way already towards achieving its goal. This would make it clearly impossible for a

merger between N.Z.R. and Waitaki to succeed.

Assuming that S.F.M. were to receive insufficient acceptances to its offer, the proposed merger between N.Z.R. and Waitaki would still need the support of 75 per cent of the Waitaki shareholders. While it seems likely that the Waitaki shareholders will agree, this is still conjecture. No-one will know until the acceptances begin to come in. It also seems likely at this stage that S.F.M. will not obtain the majority it is seeking — but likewise, that offer is still open. If the required number of Waitaki shareholders accepts, so that the merger becomes a fact, the newly merged company would for the time being be called N.Z. Refrigerating Company. Present articles It would also have to work under the present articles of this company, since the special resolutions seeking the necessary changes in the articles were not passed. This would mean, for instance, that instead of the proposed 10 directors, with a quorum of four, there would be — no doubt temporarily — only seven directors, with a quorum of three.

Neither could the board for the time being appoint executive directors.

The newly merged company would be unable to give immediate effect to some other details worked out by the two .companies during their merger negotiations.

But most of these details are of a minor nature, and would certainly not affect the efficient running of the new company.