Kupe shareholders vent their feelings

Press, 22 December 1987, Page 23

Kupe shareholders vent their feelings

PA Wellington Kupe Group shareholders had their final dividend for the year cancelled yesterday and were told their company may have to sell down some “non-strategic” assets.

At a lengthy annual meeting shareholders gave vent to their feelings over events involving Kupe in the past year. A recurring theme in shareholders questions was the subject of independent directors. Kupe chairman, Mr Peter Grayburn assured shareholders he would be striving to keep more independent directors on the board than those representing a single major shareholder.

Shareholders also expressed frustration at the lack of information. They also felt major shareholder. Judge Corp, had taken advantage of Kupe and were keen to see that such 9 situation could not occur again. In his speech to shareholders, Mr Grayburn said in the new deregulated environment a new type of public activity had arisen which saw the growth of influence and control by one company over another through the

mechanism of part ownership. Until recently, Kupe has been 47 per cent owned by Judge Corp but the majority of Kupe directors have been Judge Corp nominees. Mr Grayburn said he intended early in the new year to have the Institute of Directors study overseas takeover regulations to find a way of operating which was more protective of minority shareholders and make recommendations to the Government.

“Under the current takeover regulations in New Zealand cash-rich companies are very vulnerable to the action, well intentioned or otherwise, of their major shareholders,” he said. Mr Grayburn had hoped to inform shareholders of a new major shareholder in Kupe at yesterday’s meeting. However, he said negotiations were not finalised, but were proceeding.

“If this meeting today focuses its attention solely on the events of the recent past it will achieve nothing except to drive the price of Kupe shares even lower perhaps to a point where EuroNational and Judge Corp will refuse to accept any offer which is made at those lowered levels.

“Contingency plans are being prepared to meet such an eventuality. These plans include the orderly selling down of non-strate-gic assets.”

In an earlier report to shareholders Mr Graybum said the net tangible asset backing of the company had fallen from 186% to 116% a share following unrealised losses on investments in Judge related companies. Mr Grayburn said yesterday the net asset backing of the company had fallen by another 2c a share since. Unrealised losses on share investments were now up to $9l million.

“Sharemarket investment will not even be part of our business in future. It is too volatile. We made $5O million profit in one year and lost that and more in the next.”

Mr Grayburn said directors believed preservation of cash would result in greater shareholder benefits in the form of support of the share price than would a distribution of that cash in a taxable form as a dividend. Therefore directors have decided to withdraw the proposed 7c a share dividend.

Mr Graybum said he had already approached a prominent solicitor to become an independent director of Kupe.

No less than five directors of Kupe have resigned since Friday. On Friday Messrs Graham Hamilton, Mark Horton, Steve Girdis and Dr Nick Girdis resigned. Yesterday, Judge Corp secretary, Mr Alan Coull resigned as a Kupe director.