Nth BH confident against Brierley

Press, 3 February 1986, Page 30

Nth BH confident against Brierley

NZPA-AAP Melbourne The managing director of North Broken Hill Holdings, Ltd, Mr Mark Bethwaite, is confident that Mr Ron Brierley, chairman of Industrial Equity, Ltd, will not gain control of North BHP "at or in any way close to his current offer price.”

lEL has offered North BH shareholders 250 c a share in a sAust4soM partial bid for 40 per cent of the giant mining company.

Mr Bethwaite said the only development on the bid had been an “extraordinary” letter from Mr Brierley on January 29 which indicated a “sudden change of heart” in distribution of formal offer documents. “We can only assume that Mr Brierley is getting the same sort of feedback we’ve been getting — and that is no-one likes what he is offering.” North had canvassed shareholders and found the majority favoured a higher price, he said. A change in shareholder opinion would need a “very substantial” revisioin of the initial offer price. Mr Bethwaite would not quantify the increase needed to sway shareholders and repeated the board’s “total opposition” to the lEL offer. He said Institutional shareholders had indicated they were satisfied with the existing structure of North BH operations.

North BH had visited its top 10 shareholders in Melbourne and its top 10

in Sydney and none had supported the lEL offer, or its proposal to break up North. “Almost to a man there was total opposition to that proposal,” Mr Bethwaite said. “None of the institutions believe the offer price is adequate.”

But he conceded all shareholders would like to see North post a better earnings performance. Mr; Bethwaite said a national poll of non-instltu-tional shareholders commissioned by Roy Morgan Research Centre highlighted that more than 90 per cent were aware of the lEL offer and North’s rejection of it. Fewer than 1 per cent of shareholders Intended to accept the offer and 93 per cent who held a view on the bid wanted to see North’s existing structure retained.

There was a "complete lack of any attraction” by private or institutional shareholders to the concept of the company’s being broken up or asset stripped.

lEL holds about 17.7 per cent of North BH’s Issued capital and wants to lift its stake to 178.21 M shares or about 40.3 per cent of capital.

Mr Bethwaite said substantial savings were made through the operation of a merged, small corporate office despite contrary reports from lEL. Annual savings had amounted to $4.5M a year including Interest savings of S3M to finance North and insurance savings of SIM a year.

Contrary to lEL claims, if North , was demerged annual corporate operating costs of S6M a year would be duplicated, not eliminated.

Mr Bethwaite accused lEL of making “erroneous statements” about North, stemming from the suitor’s “vast

Ignorance" of North’s operations and its investments. The "mis-statements” included claims North had incurred substantial deficits in last two years, despite its reported 532.1 M profit in 1983- and $25.3M profit in 1984Mr Brierley had also made "rather odd” statements concerning the vesting of a parcel of 6.5 M North shares with the National Companies and Securities Commission. The beneficial ownership of the parcel, valued about S6SM, is subject to a reserved judgment in the Victorian Supreme Court. Mr Bethwaite said IELs reasons for its delay In lodging a Part A document had introduced an element of “uncertainty and confusion" In the minds of North shareholders and the sharemarket