Takeovers Panel decisions relating to Otago Power Limited

19 May 2002

The Takeovers Panel has issued its decisions on four matters relating to Otago Power Limited (OPL).

The Panel met on 17 May 2002 to consider submissions and hear evidence from the parties concerned. It released its decisions on the four matters today and they will be published on the Panel's website (www.takeovers.govt.nz) tomorrow.

The decisions

The first issue

The first issue related to the refusal by the board of OPL to register transfers of shares to Electricity Invercargill Limited and The Power Company Limited. These actions were alleged to be defensive tactics under the Takeovers Code.

Decision on the first issue

The Panel is not satisfied OPL has complied with the Code because it refused to register transfers of shares to Electricity Invercargill Limited and The Power Company Limited when the company's constitution did not justify such a refusal.

The Panel has restrained OPL from refusing to register transfers presented for registration by Electricity Invercargill Limited, The Power Company or One Otago Limited. This is a new restraining order.

The second issue

The second issue related to an acceleration of the asset sale process by OPL which would not comply with the Code. An interim order was made on 10 May 2002 restraining OPL from any action inconsistent with the previously set asset sales timetable.

Decision on the second issue

The directors of OPL gave the Panel an undertaking that OPL would follow the sales process in the previously set timetable. Accordingly the Panel is satisfied that the directors intend to comply with the Code in this regard. The existing restraining order will expire at 5.00 pm on 19 May 2002.

The third issue

The third issue related to a proposed notice of a meeting of OPL shareholders called by OPL for 6 June 2002 to amend its constitution. It was alleged that this could effectively frustrate the Code offer for OPL made by Electricity Invercargill Limited and The Power Company Limited.

The directors of OPL presented a revised draft notice of meeting. With the consent of all parties the Panel considered the revised draft notice.

Decision on the third issue

The Panel considers that the revised notice of meeting does not raise issues of possible non-compliance with the Code because the elements in the previous draft which could have frustrated the offer by Electricity Invercargill Limited and The Power Company were no longer proposed.

The Panel is satisfied that OPL intends to comply with the Code in respect of this third issue.

The fourth issue

This issue related to the power of attorney provisions in the acceptance forms attached to the offer for shares in OPL by Electricity Invercargill Limited and The Power Company Limited and in the notice of intention to make an offer by One Otago Limited. These provisions have the effect of transferring voting rights to the offeror in each case.

Decision on the fourth issue

The Panel is not satisfied that Electricity Invercargill Limited and The Power Company Limited have complied with the Code by acquiring or attempting to acquire voting rights in OPL on signed acceptance forms which do not comply with the Code.

In the case of One Otago Limited its offer would not have complied if dispatched in its present format. The Panel has not made any order in respect of One Otago Limited because that company intends to change the terms of its form before sending it shareholders.

The Panel has ordered that Electricity Invercargill Limited and The Power Company Limited be restrained from acquiring or exercising voting rights in OPL obtained from acceptances from the offer sent to shareholders on or about 11 May 2002 except

  • where Electricity Invercargill Limited and The Power Company Limited have obtained ownership of the underlying shares as a result of acceptances of the initial offer for 20% of the shares of OPL, but then only in respect of those underlying shares; or
  • after their offer has become unconditional.

The Panel has directed Electricity Invercargill Limited and The Power Company Limited to write to all OPL shareholders to explain the situation regarding shareholders' voting rights.