BHP to control Helenus board?

Press, 21 August 1989, Page 13

BHP to control Helenus board?

p A Wellington The giant Australian steel producer, BHP, and its associate, Steel and Tube, will dominate the board of Helenus Corporation, the company bidding for New Zealand Steel.

Details of the Commerce Commission’s ruling on the Helenus bid for NZ Steel, released on Friday under the Official Information Act, show BHP, through its subsidiary, Australian Iron and Steel, will have three of eight seats on the Helenus board and Steel and Tube will have two. The acting chairman of Helenus, Mr Michael Walls, previously said the composition of the Helenus board was not final, and that the partners had not yet nominated their appointees. The rival bidder, Fletcher Challenge, has told the Commerce Commission that BHP would strongly influence the Steel and Tube vote, giving it effective control over the board, daily management and competitiveness of NZ Steel. The commission has given itself another 100 days to investigate the likely effects of BHP controlling NZ Steel after concluding the two would act as one in markets where they both had interests. It said BHP could exert substantial influence over Tubemakers of Australia through a 49.75% share-

holding. Tubemakers could exert the same influence over Steel and Tube through a shareholding of 49.98%, it said. Tubemakers has permission to take 100% of Steel and Tube. The current chief executive and acting managing director of Steel and Tube Holdings is Mr Robert Every, who has been seconded under a management contract from Tubemakers. An independent submission to the commission said it was impracticable to import galvanised steel from anywhere but Australia, and imports from Tubemakers had to be made through Steel and Tube. The commission said Helenus claimed BHP conducted its business with Tubemakers on an arms-length basis. Helenus was emphatic that it would not be effectively controlled by any of its shareholders, or substantially influenced by them, and that no shareholder would control the composition of the majority of the board.

ANZ Banking Group, with 19% of Helenus, will have one seat on the Helenus board, and the 25% shareholder, Fisher and Paykel Steel, will have two. Australian Iron and Steel owns 31 % of Helenus, and Steel and Tube owns 25%. Also in the Commerce Commission documents were plans by the Elders Resources NZFP subsidiary, Simsmetal, to set up a metalshredding plant in the South Island aimed almost entirely at export markets. Freight costs to the North Island market are so high that it is easier to export scrap metal. Elders Resoures, which is owned 13.5% by a joint venture between Elders IXL and Fletcher Challenge, applied to the commission for approval to buy NZ Steel in March, but withdrew when the Chinese company, Minmetals, was announced as the successful bidder. Elders later got approval to buy all of NZ Steel and is connected to the Fletcher-led consortium, which only has approval to buy NZ Steel’s assets.