Rainbow’s claims stall sale vote

Press, 18 June 1986, Page 38

Rainbow’s claims stall sale vote

PA Auckland The sale of the cigarette interests of Rothmans Industries, Ltd, has been stalled by Rainbow Corporation, Ltd, because it claims Rothmans has made misrepresentations to shareholders. And the liquor industry stands in the sidelines awaiting the outcome. In an eleventh hour manoeuvre, Rainbow called for a court injunction against the extraordinary shareholders’ meeting planned by directors of Rothmans Industries for a vote on the sale of the cigarette interests — representing 75 per cent of the New Zealand tobacco market. When it appeared the court action would succeed, Rothmans volunteered to postpone the vote until shareholders have been more fully informed.

The meeting to consider the sale of its tobacco interests and a change of name will now be held on July 15. Rainbow claimed the Information given by Rothmans on the Rainbow offer was inaccurate, and that its notice to shareholders about the proposed sale to Rothmans Holdings, of Australia, omitted information. It also claimed the company refused to say how much the managing director of Rothmans Industries, Mr Bob Matthew, was paying for the 21 per cent of shares held by Rothmans, which is based in Britain. The main shareholders in Rothmans Industries are now Rainbow with 18.1 per cent, valued at about $4O million, Rothmans International, with 21 per cent, the Butland family with 17 per cent, Bri-

erley Investments with 17 per cent and the public with about 27 per cent. Rothmans International has already said it will sell its share to Rothmans’ New Zealand managing director, Mr Bob Matthew — a bundle on the market worth about S4OM and currently held by the Rothmans International subsidiary, 100 per cent owned by Magnum Corporation. The story began in the New Year when Rainbow began its play for Rothmans, spotting what it considered were cheap shares, coupled with the potential to improve the company’s performance — especially in its hotel and property development interests. Meanwhile, however, Rothmans announced its intention of selling off 60 per cent of its business to Rothmans Holdings of Australia — for just over SBIM. Rainbow replied with a S9OM offer with some conditions, such as retaining Rothmans’ trademark. Rothmans directors rejected that offer, claiming the conditions were harmful to shareholders’ interests. Rainbow fought back with a new offer — this time with no conditions attached. Again the Rothmans directors advised shareholders not to accept, claiming that a rejection of the deal directors had already signed with Rothmans in Australia would open the company to possible litigation. So on Monday Rainbow took the matter to court and won the voluntary postponement.