That on 30 October 2007 the Takeovers Panel met to consider information received from Turners and Growers Limited and from Grove Darlow, Barristers and Solicitors of Auckland, concerning an offer to acquire shares in Kerifresh Limited dated 18 October 2007 by Lawrence Bruce Fletcher ("Lawrence Fletcher") distributed by Grove Darlow, and to consider certain actions of a number of shareholders of Kerifresh Limited since 1 July 2001.
On 18 October 2007 the Panel published its determination following a meeting of 16 October held by the Panel under section 32 of the Takeovers Act 1993 ("the Act"). In that determination the Panel made a number of findings against various parties.
On 1 October 2007 Turners and Growers Limited gave notice of its intention to make a full takeover offer for Kerifresh. Turners and Growers announced on 30 October 2007 that it had suspended its offer pending the outcome of the Panel's proceedings.
At the date of the notice of the 16 October 2007 meeting (10 October 2007) the Panel was not in possession of information which caused it to consider that Jonathan Forbes McHardy ("Jonathan McHardy") may not have been acting in accordance with the Code in his 2002 acquisition of Kerifresh shares. Consequently, that notice was not addressed to Jonathan McHardy although a letter was sent inviting him to attend the meeting. He did not attend the meeting and the Panel did not have the opportunity to discuss with him the evidence given by Philip Hamish McHardy ("Hamish McHardy").
The offer by Lawrence Fletcher to purchase shares in Kerifresh was made subsequent to the date of the Panel's meeting on 16 October 2007.
Kerifresh is an unlisted company with more than 50 shareholders. At the relevant times when the earlier transactions occurred it had more than $20 million of assets. Kerifresh was a "code company" for the purposes of the Takeovers Code because of its number of shareholders and size of assets. At the time of the offer for shares by Lawrence Fletcher Kerifresh remains a code company with some 90 shareholders.
The Panel has decided to convene another meeting pursuant to section 32(1) of the Takeovers Act 1993. The Panel considers that:
may not have acted or may not be acting or may intend not to act in compliance with the Takeovers Code namely by acquiring voting rights in Kerifresh and seeking to acquire voting rights in Kerifresh and by being involved in the acquisition of voting rights in Kerifresh in a manner which may not have complied, may not be complying or may intend not to comply with the fundamental rule of the Code.
Alan Dougal Thompson and Helen Thompson held some 1,313,016 shares in Kerifresh, representing some 18.49% of the company's issued capital, at the time the Code came into force on 1 July 2001.
Harold Burcham Thompson ("Harold Thompson") and Helen Vera Thompson held some 346,050 shares in Kerifresh, representing some 4.87% of the company's issued capital, at that time.
On or about 29 May 2002 Philip Hamish McHardy ("Hamish McHardy") acquired 669,200 shares in Kerifresh. On the same day the trustees of the Murrayfield Trust, who the Panel learned at its meeting on 16 October 2007 were Jonathan Forbes McHardy (son of Hamish) and Hamish McHardy, acquired 597,316 shares in Kerifresh.
At its meeting of 16 October 2007 the Panel determined that Hamish McHardy and Alan Dougal Thompson ("Alan Thompson") were associates for the purposes of the Code at the time of entering into the 2002 transaction.
Hamish McHardy acknowledged that he and his son Jonathan undertook a number of investments together and that he considered he was probably an associate of Jonathan for the purposes of the Code.
The Panel considers, on the basis of information available to it and which it received at its meeting of 16 October 2007, that Jonathan McHardy was an associate of Hamish McHardy in May 2002 and may have been, for the purposes of rule 4(1)(e) of the Code also an associate of Alan Thompson at that time.
On the understanding that Hamish McHardy and Jonathan McHardy were joint trustees of the Murrayfield Trust and acquired 597,316 Kerifresh shares on 29 May 2002, that Jonathan McHardy was an associate of Hamish McHardy, that Hamish McHardy was an associate of Alan Thompson on 29 May 2002, that, in the circumstances, Jonathan McHardy may have been an associate of Alan Thompson, and given the level of shareholding in Kerifresh by both Alan Thompson and Hamish McHardy after the acquisition of the 597,316 Kerifresh shares, the Panel considers that the acquisition of 597,316 Kerifresh shares may have not been made in compliance with the fundamental rule of the Code.
Turners and Growers allege that Harold Thompson and his wife Helen are associates of their son Alan Thompson and his wife Helen. If this were so, it may have implications for the extent to which acquisitions by Alan Thompson and any other of his associates may breach the Code. The Panel was unable to resolve this issue satisfactorily at its meeting on 16 October 2007 because Harold Thompson did not attend the meeting. The Panel proposes to explore the nature of the relationship between Harold Thompson and his son Alan at the meeting being held on 7 November 2007.
On or about 18 October 2007 Grove Darlow circulated a letter to existing shareholders of Kerifresh detailing an offer by one Lawrence Fletcher who is making an unconditional offer at $2 per share for 335,000 Kerifresh shares to add to 10,000 shares already held for him by GDP Trustee Limited.
The Panel has been advised that Lawrence Fletcher is a friend of Jonathan McHardy, that Lawrence Fletcher discussed his investment intentions in Kerifresh with Hamish McHardy, and that Hamish McHardy made the initial contact with Grove Darlow concerning Lawrence Fletcher's proposed investment. The Panel has also learned that Alan Thompson may have been promoting and facilitating the acquisition of shares by Hamish McHardy, whether on his own behalf or on behalf of interests associated with him.
The Panel considers that Lawrence Fletcher may be an associate of Jonathan McHardy and of Hamish McHardy and of Alan Thompson for the purposes of the Code, and/or may be acting on behalf of one or the other or both of the McHardys and Alan Thompson in making his offer.
The current shareholdings of Jonathan McHardy and Hamish McHardy, as trustees of the Murrayfield Trust, amount to 617,316 or 7.89% of the voting rights in Kerifresh. The current shareholding of Sundry Investments Limited, Hamish McHardy's personal investment vehicle, in Kerifresh is 812,200, or 9.94% making a combined interest of 17.83%.
The current shareholding of Alan and Helen Thompson in their own right and as shareholders of the Thompson Family Trust, of Anbran Trustee Company Limited (an associate of Alan Thompson), and of Helen Thompson in her own name, currently amount to 1,678,176 shares or 22.45% of the voting rights in Kerifresh.
If Lawrence Fletcher is an associate of Jonathan and Hamish McHardy and/or of Alan Thompson then the acquisition of 345,000 Kerifresh shares, or 4.56% of the voting rights in Kerifresh would, when aggregated with the holdings controlled by Hamish and Jonathan McHardy and/or Alan Thompson, exceed 20% of the voting rights in Kerifresh. The Panel considers that Lawrence Fletcher, by making an offer to purchase up to 335,000 Kerifresh shares, may not have complied, may not be complying, and may intend not to comply with the fundamental rule of the Code.
The Panel made interim restraining orders under section 32(2) of the Takeovers Act 1993 restraining Jonathan McHardy and Lawrence Fletcher from:
- exercising the voting rights attached to any of the shares they hold or control in Kerifresh; and
- acquiring or disposing of any voting securities in Kerifresh.
The Panel also made interim restraining orders under section 32(2) of the Takeovers Act 1993 restraining Kerifresh from registering any transfers of shares in Kerifresh to or from Jonathan McHardy and Lawrence Fletcher.
These restraining orders are due to expire at the close of 9 November 2007.The full details of the Panel's restraining orders are published on the Panel's website.
The Panel will hold a meeting for the purposes of determining whether to exercise its powers under section 32 of the Takeovers Act 1993. The meeting will be held at 8.00 a.m. on Wednesday 7 November 2007 at Hyatt Regency, Auckland, Cnr Waterloo Quadrant and Princes Street, Auckland. The meeting will be a private meeting.
Attention is drawn to section 31V of the Takeovers Act 1993.
