Australia: Lion Nathan lodges S.A. Supreme Court appeal to preserve pre-emptive rights
Lion Nathan Australia has lodged on September 8 a formal appeal to the Full Court of the Supreme Court of South Australia against the decision of his Honour Justice Perry on 2 September 2005 regarding attempts by Coopers Brewery (Coopers) to remove Lion Nathans pre-emptive rights granted by Coopers 10 years ago.
Under the third-tier rights granted to Lion Nathan, the company is entitled to purchase Coopers shares when shares are offered for sale but not acquired by any existing shareholders or by the Coopers superannuation fund.
Coopers initiated Court proceedings to enable it to remove Lion Nathans pre-emptive rights in March 2002.
Coopers chose to grant these pre-emptive rights to Lion Nathan in 1995 and we owe it to our shareholders to defend our position. We agreed to sell 19.9% of Coopers then owned by our company in exchange for these rights, so obviously it is disappointing that they should seek now to remove them, Lion Nathans Chief Executive Officer, Mr Rob Murray, said today.
Grounds for Appeal
Lion Nathan will argue firstly that Kirin holds no relevant interest over shares in Lion Nathan Australia, as claimed by Coopers.
Secondly, Lion Nathan will argue that the change of control provisions within the Coopers constitution apply only to existing members of Coopers. As Lion Nathan Australia has never been a member, there can be no change in control.
On the issue of relevant interest, Lion Nathan refutes Coopers assertions that the purchase of shares in Lion Nathan Limited by Kirin amounted to a Change in Control of Lion Nathan Australia, thereby entitling Coopers to hold a shareholder vote with a view to removing Lion Nathan Australias pre-emptive right.
Coopers argue that this Change in Control was brought about by Kirin acquiring a relevant interest in shares of Lion Nathan Australia, the owner of the Coopers pre-emptive rights. Coopers articles refer to a relevant interest as that term is defined in the Corporations Law - the definition in the Corporations Law refers to the power to vote or dispose of a share. Lion Nathan argues that Kirin holds no such rights over shares in Lion Nathan Australia.
Coopers argument relies on additional deeming provisions contained in the Corporations Law, which Lion Nathan argues are not part of the definition of relevant interest.
Rob Murray continued: We will continue to vigorously defend those rights with this appeal to the Full Court.
Should Coopers be successful after the appeal, Coopers then needs to pass a special resolution supported by at least 75% of Coopers shareholders for Lion Nathans rights to be affected.
Lion Nathans pre-emptive rights would appear to be the only avenue for Coopers shareholders to receive open market value for their shares and I am confident they will take this into consideration should it ever come to a vote, said Mr Murray.
Separate litigation
The Supreme Court appeal is separate to Lion Nathans litigation with Coopers regarding the share buy-back conducted by Coopers in 2003, currently progressing through the Federal Court.
Mr Murray said: Lion Nathan will continue to pursue our action to unwind the 2003 buyback with full vigour so that those shareholders disadvantaged at least have the opportunity to consider our proposed offer.
Lion $260 per share offer for Coopers shares
Mr Murray said Lion Nathan was proceeding with its formal Bidders Statement for the proposed $260 per share offer to all Coopers shareholders announced on 1 September.
With our takeover documents in their hands, the Coopers shareholders will have the opportunity to fully consider the Lion Nathan offer of $260 per share, he said.
The shareholders will then make their decisions and will have the final say on our offer.
Mr Murray said Lion Nathans $260 per share offer valuing Coopers at $362 million was a significant premium to the $45.01 shareholders were offered in the 2003 buyback.
Our offer also reinforces Lion Nathans already significant commitment to South Australia and provides a range of exciting opportunities to grow the Coopers business nationally as a part of the Lion Nathan national brand portfolio, he said.
We believe that any level of shareholding will prove a sound investment in a great South Australian company.
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