Lion hearing moves behind closed doors

Press, 20 February 1988, Page 26

Lion hearing moves behind closed doors

PA Wellington The Securities Commission inquiry into the merger of Lion Corporation and L. D. Nathan and Company abruptly moved behind closed doors yesterday for a private hearing between the commission and merchant bankers, Fay, Richwhite and Company. As the inquiry resumed after lunch the commission’s chairman, Mr Colin Patterson, announced he wanted a private discussion with Fay, Richwhite’s chief executive, Mr David Richwhite and his counsel, Mr Jim Farmer.

Mr Patterson said he was reluctant to make transcripts of the discussion available to the media or to counsel for the parties at the hearing. He is expected to give a final decision on this when the public hearing resumes on Monday. The commission is using its powers to probe dealings by which Fay, Richwhite acquired a 35 per cent shareholding in Nathan and then agreed

to sell to Lion as part of the merger. Under the merger terms announced two weeks ago, Fay Richwhite would be paid 920 c a share for its holding, while other Nathan shareholders would be offered a lesser cash-equivalent value of one Lion share for each Nathan share. Lion, Nathan, and Fay Richwhite have legal counsel present as do the minority shareholders of Lion who are opposing the merger — Malayan Breweries and Fraser and Neave.

The inquiry opened with long discussion on its basis and confidentiality surrounding documents involved. The commission’s chairman, Mr Colin Patterson, told the parties he had initiated the inquiry after hearing of the merger proposal and discussing it with the Stock Exchange. “I have been waiting for a case like this, and I thought this might be the one in which we can examine clearly issues re-

lated to the treatment of shareholders (in a merger),” Mr Patterson said. The exchange’s executive director, Mr Roger Gill, told the hearing the exchange had still to decide on aspects of the merger with respect to its takeover code. It would be “some days” yet before the exchange would be able to “rule on whether we want to pursue compliance under the takeover code,” Mr Gill said. It is understood that Lion may have applied to the exchange for a dispensation under the code, similar to that granted last week to permit a merger proposal between property companies Richmond Developments and Smart Group. Mr Patterson opened by indicating the commission wanted its inquiry to be as public as possible with much of the volumes of documents which have been submitted not kept confidential. Mr Patterson said evi-

dence to do with the acqusition of the Fay, Richwhite holding in Nathan would not be covered by a confidentiality order made by the High Court.

The court considered last Friday, and has since dismissed, a bid by Malayan Breweries, a minority Lion shareholder opposed to the merger with Nathan, for the discovery of documents. Of particular contention is a letter written on behalf of Malayan Breweries to the Stock Exchange.

The commission heard arguments from Mr Myer’s counsel, Mr David Williams, that this document should be among those circulated to all counsel since it had been what “activated the exchange’s request” to set up the inquiry. The Malayan Breweries’ counsel, Mr Bill Wilson, opposed that, and Mr Patterson declared that he had not seen the letter.

Hearings as part of the inquiry are expected to resume on Monday.