Stock exchange suspends trading in Carter Holt shares

Press, 10 April 1980, Page 23

Stock exchange suspends trading in Carter Holt shares

The plot in the drama of the Fletcher-Carter Holt takeover took a new twist yesterday as the Stock Exchange Association suspended trading in Carter Holt shares because Carter Holt Holdings. Ltd, made a move to dilute the Fletcher shareholding.

Carter Holt, calling it a “drastic course” said that it had exchanged shares for the full amount of its unissued capital (about $11.5 million) with two friendly companies; this increaed capital from $13.6 million to $25 million, and reduces Fletcher’s former 50 per cent shareholding to about 27 per cent. A statement issued by the executive director of' the Stock Exchange Association (Earle Stewart) says that the announcement by Carter Holt that the directors have exchanged shares for the previously unlisted capital of Carter Holt with two companies sympathetic to the main body of shareholders is in breach of the listing agreement between Carter Holt and the association.

He says that in view of the injunction granted on Tuesday preventing Fletcher Holdings proceeding with their take-over bid, and the circum-

stances within which the directors made the placement, the suspension will remain in force until the association had assessed the effects of all related events of a free and informed market for the company’s shares. The association released its statement simultaneously with the text of the Carter Holt announcement, which was signed by the chairman of directors (Mr K.C.A. Carter).

It said that the drastic course being taken would no doubt be criticised in some quarters, but was one which directors had concluded must be taken to fully protect the vast majority of shareholders.

The full text of the Carter Holt announcement is: “As at March 28, 19S0, there were in excess of 5500 shareholders on the register of Carter Holt Holdings, Ltd. “In various capacities 15 institutions held about 6,324,616 or 46.53 per cent of the issued shares.

“Media reports indicate that by March 31, 1980, institutions and maybe other large shareholders had sold or agreed to sell 6,013,626 shares, or 44.24 per cent, of Carter Holt’s capital to

Fletchers or its nominee. “There were further reported sales of large parcels during the rest of last week and on April 3, 1980, Fletchers advised the Stock Exchange that it controlled more than 50 per cent of the capital of Carter Holt Holdings. “No share transfers have yet been sighted by this company but media reports indicate that reported sales were by holders of large parcels and could be as few as 18 in number. “The duty of the directors of Carter Holt Holdings, Ltd, is to all shareholders whether large or small and shareholders who have not sold to Fletchers (and these could be well over 5000 in number) are owed no less a duty now than that to which they were entitled before the recent events.

“Those events appear to have resulted in Fletchers and as few as possibly 18 shareholders depriving the rest of the shareholders (the vast majority) of any possibility of a competitive situation arising: depriving the vast majority' of shareholders of any real or effective choice and to have

forced shareholders, to their detriment, to conclude the platter to be a fait accompn and that there is no prospect of doing better than the Fletcher offer.

“Since Monday, March 31, 1980, when directors first became aware of Fletchers proposed offer, investment analysts and other experts have been examining all aspects of the offer and the value of the shares of Carter Holt Holdings, Ltd'. While their work is not complete present indications are that the advice to directors will be that the value of the Carter Holt Holdings, Ltd, shares is well in excess of the value of Fletchers offer. Their full report will be available within the next few days at which time directors will

make a further release to shareholders. “The directors cannot assume that other agencies can protect that vast majority of shareholders but must in the exercise of th>”'duty take what steps are open to them to obtain tnac

protection. “Time and circumstances permit only one course of action, a drastic course. A course which will no doubt be criticised in some quarters i but nevertheless one which i the directors, after deep iconsideration, have con-, eluded must be taken to fully protect the vast majority of the shareholders of Carter Holt Holdings, Ltd. : “Accordingly the directors i have effected exchanges of j shares for the full amount of

the previously unissued capital of Carter Holt Holdings, Ltd, with two companies. sympathetic to the interests of the main body of shareholders. The issued and fully-paid-up capital of Carter Holt Holdings, Ltd. is now $25,000,000 and Fletchers’ formerly reported 50 per cent control of shares now reduces to about 27.19 per cent of the now authorised and issued capital of $25,000,000.

“This step has been taken reluctantly and with full appreciation of the possible consequences including the possibility of suspension of quotation of the shares of Carter Holt Holdings, Ltd. But under the circumstances the directors had no other immediate method of prop-

erly protecting the rights of shareholders. Should the exchange determine to suspend quotation of the shares of the company then the board of directors would concur in that action.

“The exchange, its officers and other appropriate authorities and, of course, shareholders, will be kept fully informed of developments and in this regard directors are now able to advise that an interim injunction has been issued by the High Court restraining Fletchers from pursuing its bid until the further order of the Court.” The full text of the statement issued by the Stock Exchange Association is:— “Carter Helt Holdings, Ltd — The placement by the

directors. announced on April 9, of all the unissued) shares in Carter Holt Hold-' ings to two companies is a; breach of the listing! agreement between the com-! pany and the Stock Exchange' Association. I “Accordingly trading in the company’s shares on New Zealand stock exchanges has) been suspended. “In view of the injunction granted yesterday preventing Fletcher Holdings proceeding with their bid, and the circumstances within which' the directors made the place-; ment, the suspension will remain in force until the, association has assessed the’ effects of all related events: on a free and informed' market for the company’s shares.’’