Mogal’s task more difficult

Press, 24 April 1980, Page 19

Mogal’s task more difficult

Success might prove more difficult for Mogal Corporation, Ltd, in its take-over bid for Brambles Burnett, Ltd, because of action taken by Brambles Burnett yesterday.

The chairman of Brambles Burnett (Mr N. Barclay) said that the company would buy the 50 per cent of Cameron Construction Services, Ltd, it did not already own — by the issue of shares.

Mr Barclay said that the four largest company shareholders were siding with Brambles Burnett in rejecting the Mogal offer, and their combined holding would represent more than 40 per cent after the issue to Cameron Construction Services. . Brambles Burnett was committed to the transaction "well before the Mogal bid was announced,” he said. He described the 60c cash bid by Mogal as “totally in-

adequate.” The Brambles Burnett directors had made an appraisal of the group assets, and considered that a realistic asset backing for the company’s shares was about 120 c. “This is based on market values considered to be reasonably attainable,” Mr Barclay said. The group had built modem freight terminals at Auckland, Wellington, Christchurch, and Dunedin. The replacement- cost of those buildings was very substantial, he said, and their real worth was not adequately reflected in the books.

“Mogal is a significantly smaller company in the freight forwarding industry and is faced with the need to construct adequate terminal facilities costing millions of dollars if it is to expand and remain competitive in the industry.”

Mr Barclay said that the Mogal offer was an attempt to obtain the company’s “very valuable assets very cheaply.” He said assets worth more than $9 million were effectively being valued by the offer at $4.5 million.

Three conditions in the offer, he said, could not be satisfied. “In part because Mogal is a competitor to Brambles (Burnett) in a number of fields and it would thus be quite improper for (the company) directors to provide Mogal with information they may require.” The chairman was also, critical of the time Mogal has provided to declare the offer unconditional. He said: “. . . an acceptor may not know for up to four months whether the offer wfill proceed but during that time he is bound by his acceptance and cannot deal with his shares.”

: Mogal, up until that time : (August 20), ’ reserved the ; right to withdraw at any ' time. i Mr Barclay said that another reason, shareholders should not accept the offer • was that the company prospects were good. The direct-

ors had been taking steps to restore profitability and “these measures are having a more immediate effect than expected, with positive results." The company was well placed to take advantage of a number of opportunities provided there was no abnormal industrial unrest, he said. The management of the company had been restructured after the appointment of Mr F. J. Cameron as managing director. Mr Cam? eron previously was managing director of Cameron Transport Holdings, Ltd, a

join t-venture company created through the merger of Brambles Burnett and Freightways Holdings general road transport operations with Cameron Construction Services.