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14 September 2005
The Takeovers Panel will hold a meeting under section 32 of the Takeovers Act 1993 to determine whether to use its powers in relation to Oyster Bay Marlborough Vineyards Limited (Oyster Bay). See notice of meeting.
Oyster Bay is currently the subject of a partial takeover offer by Delegat's Wine Estate Limited (Delegat's) dated 7 July 2005 which is due to close on 19 September 2005. That offer has been successful in that Delegat's has already received sufficient acceptances that would take its holding of voting rights in Oyster Bay to 50.1% after the offer has closed and after scaling.
On 19 July 2005 Oyster Bay issued a target company statement in response to the Delegat's offer. That statement included an independent adviser's report prepared by Ferrier Hodgson & Co.
The Panel has been considering complaints from Peter Yealands Investments Limited (PYIL) which made a competing but unsuccessful partial offer to obtain 51.1% of the voting rights of Oyster Bay, and from Mr David Rankin, a shareholder in Oyster Bay.
PYIL's first complaint related to the non-disclosure of certain detailed information about Oyster Bay's grape harvest and the sale of its grapes to Delegat's under existing long-term arrangements. After considering information summoned from Oyster Bay and comments from the independent directors, the Panel has decided to take that complaint no further.
PYIL's second complaint, and that by Mr Rankin, concerns the market value of Oyster Bay's vineyard properties.
The target company statement refers to a net tangible asset basis of valuation of Oyster Bay using a valuation for the vineyard properties prepared by Logan Stone Limited. Logan Stone used a discounted cash flow or income approach in its valuation of the vineyard properties. The reason provided for adopting the income approach was because there was no market value as the properties are subject to long-term agreements with Delegat's.
Both Mr Rankin and PYIL allege that the target company statement should have included information about the market value of Oyster Bay's vineyard assets, possibly valuing the vineyards on an unencumbered basis for the purposes of the net tangible asset calculation.
The independent directors of Oyster Bay submitted that this information would be inappropriate and misleading for shareholders because the sale of the properties is subject to contracts with Delegat's.
The Panel considers that information about the market value of Oyster Bay's properties, suitably qualified to reflect Delegat's contractual entitlements, may be information that could reasonably be expected to be material to the making of a decision by Oyster Bay's shareholders to accept or reject Delegat's offer. By issuing the target company statement without this information the panel considers Oyster Bay may not have complied or may not be complying with clauses 18(5) and 24 of Schedule 2 of the Code.
The Panel has made interim restraining orders under section 32(2) of the Takeovers Act. These orders direct Delegat's not to declare its offer unconditional. Oyster Bay is restrained from registering the transfer or transmission of any securities arising from the acceptances of Delegat's offer.
These restraining orders expire on the close of Thursday 22 September 2005. The restraining orders do not prevent Oyster Bay shareholders from accepting Delegat's offer prior to its close on 19 September 2005. They are intended solely to preserve the status quo until the matter is resolved.
The Panel will meet in Wellington on Tuesday 20 September 2005. It will be a private meeting. Thenotice of the meeting is on the Panel's website.