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High Court asked to review Restraining Order

Delegat’s asks High Court to review Restraining Order

Delegat’s has applied to the High Court today for a review of the Takeovers Panel ruling restraining Delegat’s from declaring its offer for shares in Oyster Bay Marlborough Vineyards Limited unconditional and proceeding to settle with shareholders.

The Panel’s ruling arose from its finding that Oyster Bay had failed to comply with the Takeovers Code because of shortcomings in respect of information disclosed by Oyster Bay in the Target Company Statement sent to shareholders.

The Panel made no finding against Delegat’s.

Delegat’s has asked the Court to address the matter with urgency, to avoid further unnecessary delay in completing the offer and making payment to shareholders.

Delegat’s is also writing to shareholders who accepted its offer to enable them to request either settlement or withdrawal. The text of the letter follows this announcement.

The Delegat’s partial offer included conditions all of which were fulfilled according to their terms on 3 October 2005. However, the restraining order issued by the Panel on 22 September prevents Delegat’s from declaring the offer unconditional. This restraining order lasts until 13 October 2005 unless earlier cancelled or varied by the High Court.


4 October 2005


Important Update – Your Action Needed

1. I am now able to write to you as a shareholder of Oyster Bay who has accepted our partial offer, to reassure you that it is Delegat’s intention to proceed to complete the offer and pay out promptly your entitlement under the acceptances you have sent to Delegat’s.

2. Many shareholders will be aware that the Takeovers Panel (which supervises takeovers) has intervened and issued orders preventing Delegat’s from declaring its offer unconditional and from acquiring any shares under the offer. This is despite the fact that the Panel has not found Delegat’s to have done anything wrong. Yet it is you the shareholders, and we the bidders, who are prejudiced by the Panel’s action.

3. The reason for the Takeovers Panel’s orders is its belief that shareholders should have been told by the independent directors of Oyster Bay in their Target Company Statement of not only the value of the shares based upon its existing long term contractual relationships with Delegat’s (which the Panel calls the “encumbered value”), but also the hypothetical value of those shares if those relationships did not exist (which the Panel calls the “unencumbered value”).

4. The Panel, in its decision, accepted the view that the encumbered value of the land was some $45 million, whereas the hypothetical unencumbered value might be up to $90 million. It believes this hypothetical information may be potentially material to the decision to be made by shareholders, and wishes that it be put to them before acceptances are actioned by the Share Registry. This is despite the fact that Oyster Bay will continue to be bound by its contracts with Delegat’s and the Panel itself accepted that it was:

“… extremely unlikely that Oyster Bay could sell its vineyard assets on an unencumbered basis.”

5. The Panel has acted on the complaints of two significant shareholders, Messrs Rankin and Yealands (through his company Peter Yealands Investments Limited). Significantly:

(a) The Target Company Statement relating to the Yealands’ Partial Takeover Offer was sent out to shareholders without the hypothetical information that he now complains should have been included in the Target Company Statement issued in respect of the Delegat’s offer. The Takeovers Panel at its hearing on 20 September 2005 was told by his representative that at the time of Yealands’ takeover offer he was conscious that the hypothetical unencumbered value was not included in the target company statement issued by Oyster Bay. The Panel was told that he was comfortable with this non-disclosure because disclosure would have reduced the prospect of the Yealands’ offer being successful;

(b) Mr Rankin, who has been arguing for this hypothetical unencumbered value for a year or more, himself accepted into the Yealands’ offer at $3.50 compared to $4.00 which we have offered


shareholders. It is difficult to see why he argues other shareholders will be influenced by this hypothetical unencumbered value when, knowing of it, he accepted the lesser figure;

(c) Both Yealands and Rankin have accepted the Delegat’s offer;

(d) Ferrier Hodgson & Co, who provided the independent reports for both the Yealands and the Delegat’s offers, told the Panel that this hypothetical unencumbered value was neither relevant nor material;

(e) Nobody disputed that the Independent Advisers Report was correct in valuing the encumbered land at $45 million.

(f) Despite the publicity surrounding the Panel’s decision not one shareholder who has accepted the offer (not even Yealands and Rankin) has contacted Delegat’s or the Share Registry to seek to withdraw their acceptances.

6. For these, and a number of quite powerful legal reasons, Delegat’s is taking a case to the High Court seeking an urgent hearing so that it can settle with its shareholders on due date or as soon as possible after it. Delegat’s is grateful for the support and patience shown by the Oyster Bay shareholders to date in what has been a difficult and disputative takeover procedure.

7. Delegat’s is asking the High Court to assist in allowing the partial offer to settle and the payment to be made to you. In order to assist the High Court in its deliberations we enclose a notice to all accepting shareholders inviting them to acknowledge that they are aware of the hypothetical valuation issue but nonetheless wish Delegat’s to proceed as soon as possible on or after 10 October 2005 to make the payment and acquire the shares according to individual entitlements.

8. In anticipation that such a course may find favour with the High Court I attach the form of acknowledgment which I invite you to sign and return promptly. You should take advice on this document from your usual advisers. I urge you however, if you wish to settle under the offer, to return this document. Your signing of the document will not automatically mean that you will be paid, but it will assist in achieving finality.

9. The greater the number of acknowledgements received from shareholders by 10 October 2005 (which is the date for payment) the greater is the likelihood that our Partial Takeover Offer can be promptly settled.

10. There is a portion on the form which entitles a shareholder to seek to withdraw the shares from the offer. Subject to compliance with the minimum acceptance condition of the Partial Offer (and the current offer is heavily over-subscribed), any shareholder seeking to withdraw will be permitted to do so by Delegat’s subject to any contrary order of the High Court, the Takeovers Panel, or required enforceable undertaking given by Delegat’s to either of those bodies.

11. Again, Delegat’s thanks you for your support and patience over this difficult period and ends by reassuring you that it is doing everything within its power to honour its obligations under its Partial Takeover Offer to you as it has done up until now.

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