2 Jul 2001
Infratil announces that the Arbitrator, Mr David Williams QC, has determined that the "fair and reasonable price" for the 26,581,934 million shares in NGC that Infratil required be bought back by NGC is $1.68 per share, rather than the $1.30 per share nominated by NGC. This represents the payment of an additional $10,101,135.
Infratil has already received payment of $34,556,514.20 for the 26,581,934 shares. Interest and costs will be the subject of a separate award.
Infratil became entitled to require that NGC buy back its shares in NGC under the Companies Act minority buy-out regime after Infratil objected to NGC's purchase of a controlling stake in TransAlta New Zealand. Infratil voted its then 6.7% shareholding against the acquisition because it considered that NGC was paying significantly too much for TransAlta. The shareholder vote was easily passed because The Australian Gas Light Company (AGL) held 72% of the shares. AGL was strongly supportive of the acquisition.
Mr Kevin O'Connor, chairman of Infratil said: "Infratil is pleased with this outcome. Receiving $1.68 per share fully justifies the commercial decision of Infratil to enforce the minority buy-out regime and to take the price setting to arbitration. Infratil allocated significant resources from within Morrison & Co and other experts to pursue this matter for the benefit of its shareholders."
"Infratil was not able to stop the acquisition but, through enforcing the minority buy-out regime, it has been able to protect its shareholders from most of the adverse value consequences. On 30 March 2000, when Infratil enforced the regime, NGC's share price was $1.32 per share. Infratil is now close to the economic position that it was in immediately before the TransAlta announcement on 17 January 2000."
He also said: "Infratil is the first shareholder to enforce the minority buy-out regime against a listed company. The process took 15 months and, perhaps because of its novelty and the value at stake, an inordinate amount of time, effort and expense. We now have an Award that contains a wealth of material that might be useful to any shareholder who is considering enforcing the regime or to any listed company that must respond. While the Award is confidential to Infratil and NGC, Infratil will discuss with NGC whether a partial or full copy, or a summary, will be made available. Infratil believes this would be for the benefit of New Zealand's capital markets."
As noted in its recent released Annual Report, Infratil believed that the sharp decline in NGC's share price from $1.81 per share on 14 January 2000 (the business day before the market had any knowledge of the TransAlta acquisition) to $1.29 on 21 March 2000 (when shareholders approved the acquisition) was largely due to the overpayment for TransAlta. Also as noted, Infratil received definitive legal advice that it was entitled to receive a buy-out price that valued the shares pre-the effects of the TransAlta acquisition.
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