Unusual trading in Chch Press shares

Press, 24 April 1987, Page 27

Unusual trading in Chch Press shares

By ADRIAN BROKKING More than 200,000 Christchurch Press Company shares changed hands yesterday — unusually active trading in this normally very tightlyheld share. The bulk, 196,357 shares, sold at $lO.OO, the price Independent Newspapers, Ltd, will be offering as soon as it has permission to do so. The identity of the buyer or buyers has not been revealed, and the market is buzzing with rumours about possible motivation, as most sharebrokers and analysts are shaking their heads in wonder. The reasons for selling now rather than waiting for the INL offer are the most easily understood. It will be more than three weeks before INL can bid for the minority shareholdings in The Christchurch Press Com-

pany, as it will be at least 20 working days before the necessary consents from the Commerce Commission and the Overseas Investment Commission may be expected. “As soon as the necessary consents are obtained INL will offer to purchase shares held by the minority shareholders at $lO.OO a share through the New Zealand Stock Exchange,” INL said yesterday. The sellers are obviously acting on the principle of the “bird in the hand ...” By selling now and investing the proceeds say in the shortterm money market the interest for the interim period (call rates were 37.0 per cent yesterday) one would retrieve the brokerage on the deal. In any case, INL’s statement seems to suggest that all minority shareholders will have to pay

brokerage. It should perhaps be said again that this is not a take-over but a “market stand,” and that there are no conditions such as 90 per cent acceptance, and in consequence no compulsory acquisition of the last few shares. The buyers’ motivation is not as easy to fathom.' The contract between INL and Pyne Gould Guinness is no doubt binding, which means that everyone else will be in the position of a minority shareholder. Some market observers suggested a “warehousing operation,” but against that the question must be asked, why bother. If the buyer is Wilson and Horton, already a substantial shareholder, additional shares could put it in a position to seek a place on the board of the Christchurch Press Company.

Such a place is not likely to be granted to another newspaper, or for that matter to any other shareholder. A buyer intent on a “spoiling” action might bank on the possibility that INL might be moved, ultimately, to pay more than $lO a share to tidy up its ownership and to get rid of a possibly wayward .minority shareholder. However, in this connection it should be observed that although it is a legal principle that a majority should not oppress a minority (the benchmark is 10 per cent) that minority would still have to prove in a legal action oppressive behavious under Section 209 of the Companies Act. In other words, INL would be able to live with a minority shareholder as long as it stayed clear of that section.