Dorchester Pacific: Possible Breach Takeovers Code

Bridgecorp Capital And Brent King May Have Breached The Takeovers Code Over Dorchester Pacific

On 16 August 2004 Bridgecorp Capital Limited and Mr Brent King separately announced to the market a series of transactions affecting the ownership and control of Dorchester Pacific Limited. Mr King is managing director of Dorchester Pacific, a listed company. Mr Rodney Petricevic is managing director of Bridgecorp Capital.

After these transactions Bridgecorp held 19.99% of the voting rights in Dorchester, mostly acquired from King and entities under his control at $4.04 per share. King and entities under his control retained, following a further acquisition, control of 5.93% of voting rights in the company.

In addition, Bridgecorp and King and Snowden Peak Investments Limited, a company controlled by King, had entered into a lock-up deed in respect of 5.05% of the voting rights in Dorchester held or controlled by King. The duration of the lock-up is until 30 June 2005.

During that period King and Snowden cannot sell or procure the sale of the 5.05% of Dorchester voting shares to anyone other than Bridgecorp. Bridgecorp also has an option to buy these shares at $3.30 per share. King has also committed to accept any takeover offer made by Bridgecorp for Dorchester during this period at $3.30 or more per share.

The Takeovers Panel met on 30 August 2004. It considers that Bridgecorp and King and Snowden Peak may not have complied with the Code or may not be complying with the Code or may intend not to comply with the Code in a number of respects:

Bridgecorp, by acquiring 19.99% of the voting rights in Dorchester from King and his associated companies on or about 13 August 2004, at the same time that it entered into the lock-up deed with King, may not have acted in compliance with rule 6 of the Code because, as a result of entering into the lock-up Bridgecorp, King and Snowden Peak may have become associates for the purposes of the Code and the aggregate shareholding held or controlled by Bridgecorp and King was in excess of 20% of the voting rights in Dorchester; King, by acquiring some 0.9% of the voting rights in Dorchester from A E and N M Vink on or about 16 August 2004, at which time King may have been an associate of Bridgecorp, may not have acted in compliance with rule 6 of the Code because in aggregate King and Bridgecorp already held or controlled in excess of 20% of the voting rights in Dorchester.

The Panel will hold a meeting in Auckland on Monday 6 September 2004 to determine whether to exercise its powers under section 32 of the Takeovers Act in respect of these matters. The meeting will be a private meeting.

The Panel has issued five restraining orders which are in effect until Wednesday 8 September 2004.

The orders:
restrain Bridgecorp from exercising the voting rights attached to any of the shares in Dorchester that it holds or controls;
restrain Mr King and his company Snowden Peak from exercising the voting rights attached to any of the shares they hold or control in Dorchester;
restrain Bridgecorp from acquiring or disposing of any shares in Dorchester;
restrain King from acquiring or disposing of any shares in Dorchester;
and restrain Dorchester from issuing any shares to Bridgecorp and its associates or Mr King and his associates, whether on conversion of the September 2005 warrants issued by Dorchester or otherwise.

The Panel has issued summonses to a number of parties requiring attendance at the meeting. The full text of the notice of meeting is on the Panel’s website at www.takeovers.govt.nz

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