U.S.S. scheme opposed

Press, 28 February 1981, Page 20

U.S.S. scheme opposed

PA Wellington ; The Union Steam Ship Company of New Zealand, Ltd, gained the approval of the shareholders at its annual meeting, to cash in its preference shares — but only after spirited opposition from one shareholder. The Auckland cumulative preference shareholder, Mr R. Wilson, sprang a surprise on the meeting in the form of an offer to buy the shares held by the company’s superannuation fund at a price above that offered by the U.S.S. Company. There has been some opposition to the company’s plan to buy the one million 5.5 per cent 200 c par value preference shares back, because of the 120 c a share offer made by the company. But at the meeting, which was called to seek approval from both ordinary and preference shareholders, it was largely left to Mr Wilson to argue the case. He took the initiative by making an offer to the Union company’s superannuation fund to buy its 104,000 U.S.S.’ Company preference shares, at a price of 130 c. The offer was made through a company called Cascade Exploration, Ltd, and offered to buy 200,000 preference shares in total, worth $260,000. In a written reply, a short while iater the trustees for the fund turned Mr Wilson’s: offer down, saying the terms of his offer were not acceptable. Mr Wilson said after the meeting: “naturally we

■, would have used the shares I to vote against the proposi al.” Mr Wilson was not pre-, ’ pared to say who was ■ behind Cascade Exploration, ; nor what his business inter-j : ests were, preferring just to be described as “a shareholder.” Several meetings were ■ held today for various classes of shareholders. i At one stage of the prefer- ; ence shareholders meeting ; Mr Wilson moved a motion i that all people in attendance ' other than the preference shareholders, and the press, ■ be asked to leave. : Mr Wilson suggested to . the chairman, Mr J. B. Hor- ■ rocks, that two of the ■ directors at the meeting, Mr I R. A. Owen for Tauranga, and Mr O. T. Hannigan rep. i resenting the Australian pari ent, Thomas Nationwide • Transport, Ltd, be. asked to i leave. i After an exchange of words between himself and ■ Mr Wilson, Mr Owen walked • out of the meeting. Mr Hor- ■ rocks then ruled as chair- ; man, that Mr Owens could ■ stay, but Mr Owens was ali ready out of earshot. Another director, Mr W» J. I Sandman asked Mr Wilson ! who he was and whether he , was a shareholder. i Mr Wilson said:’ “It is obvious I am a shareholder otherwise I wouldn’t be : here..l own 208 shares and 11 ■ would like to know why the J other shareholders here! J haven’t identified them-j ■ selves.” | Mr Sandman replied:! i “You’re the one doing all i the talking.”

Mr Ron Brierley told the .meeting that he was present quite independently, although Brierley Investments, |Ltd, held between 50,000 and 60,000 shares, and why he disagreed with the 120 c repayment proposal. “I’m the last one to be critical of how a company wants to secure its objectives.” It would have been much easier for the company to have paid out the full 200 c par value of the shares, he said. This would have done away with the more complicated scheme of arrangement which the directors had opted for.But shareholders would now be committed to accepting the decision made at the meeting “and I’m very happy to accept the views I of the majority,” he said. ! Mr Horrocks said the directors had considered all courses, but had to have the interests of the company as well as the shareholders in mind. Mr Wilson told the meeting he felt the 120 c was unacceptable and “an insult” and he couldn’t see why the $BOO,OOO should be retained by the company and credited to reserves for the benefit of the ordinary shareholders. Preference shareholders would be better off in a liquidation, he said. Further discussion" took place between Mr Wilson and the board until director Mr Sandman told the preference shareholders: ‘ The only reason we are here at all is because of the continual approaches over the years from preference shareholders. “There is a big group of ordinary shareholders who are against this, they believe we must be the most, ben-

'evolent group of share-1 j holders in the world,” he' isaid. i ! The shares were purely a i fixed interest security and ! investors had to take the' 'risk that other rates would i rise. i Mr Wilson said the I2oc was effectively a 40 per cent discount, and could be described as U.S.S.’s “broker-; age” on the deal. In that case it was nothing more than “usury,” he said. The chairman put the rno-i tion which was passed on a: show of hands with Mr Wil-l son the sole dissenting vote.! Mr Horrocks then called a poll. The poll carried the motion overwhelmingly, with! 587,266 votes in favour and 2465 against, while more; than 50,000 discretionary! votes were not exercised. I The managing director of. the company, Mr J. N. Kee-I gan, said the directors had; gone to great lengths to bei fair to the preference shareholders.

The alternative for preference holders would have been to sell on a depressed market where the shares were unlikely to see 100 c again. The 120 c offer would at least mean shareholders could reinvest for a much higher income. Mr Keegan said that while the preference shares ranked ahead of the ordinary shares in dividend, they stood behind the ordinaries in a winding up, and therefore Mr Wilson’s assertion about a liquidation was not correct. When the shares were issued in 1013 they were issued in 1913 they were a share exchange when P and O became involved in the company, he said.