Duke refuses to pay Kearns share call

Press, 23 May 1989, Page 25

Duke refuses to pay Kearns share call

Duke Group, of Australia, has refused to pay $2.02 million to Kearns Corporation (in receivership) for a share issue made last year. The listed Australian company told the Adelaide Stock Exchange that it considered the Kearns share issue to be in breach of the New Zealand Securities Act.

Duke was replying to an exchange query on why it had failed to meet the call through its wholly owned New Zealand subsidiary, Duke Securities (N.Z.) on the required date of March 31.

The shares in question were issued at 180 c each. Kearns had assigned to the Prudential Building and Investment Society of Canterbury (an 80 per cent-owned subsidiary) an agreement for the subscription of the shares with Duke Securities (N.Z.) whereby the New

Zealand subsidiary agreed to take up the Kearns shares. In its statement to the exchange, Duke alleged that the offer documents relating to the issue contained several "misdescriptions.” In particular, Duke alleged that the documents failed to show the true, accurate state of Kearns’ assets and liabilities.

Duke also alleged that because of the “misdescriptions” Kearns was shown to be solvent when this was not the case. The Australian company has held a stake in Kearns of between 30 per cent and 34%. The receiver of Kearns, Mr Bruce McAlister, said yesterday that he had sent a letter to Duke Securities (N.Z.) about the $2.02M due on the share issue, but the matter was complicated because of the assignment over the

shares to the Prudential Building Society.

Meanwhile, some Kearns shareholders have received letters about the second 40c call on the partly paid shares issued last October. Kearns made the one-for-four cash issue to shareholders last October, with the 120 c payment being split into three 40c calls. Only one-third of the shares on offer was taken up, with the first 40c instalment payable on application. The second call was payable on April 21, but Kearns was put into receivership in March.

Mr McAlister, of Deloitte Haskins and Sells’ Christchurch office, said that he had sent letters to those shareholders who had accepted the offer, but who had not yet paid the second call.

Some payments had already been made, he said.