BHP’s partners worry over Bell bid

Press, 24 February 1986, Page 21

BHP’s partners worry over Bell bid

PA Melbourne A number of BHP’s joint venture partners are concerned about the destabilising effect of the Bell Resources, Ltd, bid for the big Australian, according to documents released by BHP on Friday.

The documents form part of a 30-page “Statement of Position” on Mr Robert Holmes a Court’s sAust3.s billion bid for 53 per cent of BHP. BHP said the partners, who had confidence in the present direction and management of the company, were also worried about the destabilising effect of control passing to "what at this time might be a somewhat unstable, company.”

BHP said the sort of relationships it had established with such corporations as “Exxon, Shell, Mitsubishi, Chevron, RTZ and BP, to name just a few” were extremely valuable to BHP and its shareholders and were essential to the development of Australia’s resource infrastructure.

It was important to those companies that they have confidence in BHP’s management and financial strengths, the company said. Unions, community groups, governments and employees had also shown great concern, as their position was often dependent on the sound development of such a major enterprise as BHP.

There was no doubt of the responsibility of the BHP directors to oppose the bid, BHP said in the document.

In a partial offer situation, a majority of shares would probably remain with the public and the interests of the holders of these shares had to be kept in mind when considering the bid, BHP said.

“There is more than enough evidence available to satisfy and persuade that, except in exceptional circumstances, the securing of control of BHP by Bell would be contrary to the interests of shareholders as a whole,” the company said.

The case would be even stronger if it was the duty of the board to consider equally the interests of employees, the community, the Australian economy and its institutions, and the Australian people in general, BHP said. Bell’s chairman, Mr Robert Holmes a Court, was seeking to gain control of BHP through a scheme in which Bell would attempt to obtain voting power over sufficient shares to defeat the

existing board at an extraordinary general meeting, BHP said.

A key aspect of the bid was that Bell may be looking to acquire votes only temporarily but nevertheless long enough to entrench a position of control, the company said.

Bell would acquire this position without having paid an adequate price for shares as many of the votes in any majority Bell might obtain would come from shares not owned by Bell but from shares subject to an options agreement between Bell and the Adelaide Steamship Company, Ltd, BHP said.

It seemed the scheme was a way of obtaining control of a company capitalised at more than $9.0 billion by outlaying just $2.0 billion for the shortest possible period. “It is highly likely that Bell, after gaining control, will have to start immediately selling down its shareholding to reduce its financing charges, otherwise its cash flow will be negative,” the company said. “Alternatively, it will be forced to draw upon BHP’s cash flow and existing assets.”