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Opus minorities asked to give up say over capital

NZ Shareholders Association is unhappy today's vote today will see minority investors give away their rights.

Wed, 11 Jul 2018

Minority shareholders of NZX-listed engineering consultancy Opus International Consultants will this morning vote on whether to give up having a say on capital the company may pump into a Middle East joint venture with a Malaysian associate.

The Wellington-based firm wants to set up a JV with Opus International (M) Bhd (OIMB), part of the Malaysian group that also owns 60 percent of Opus International Consultants and is ultimately controlled by Khazanah Nasional Bhd.

While the Middle East is seen as a logical target market, the NZ Shareholders Association is unhappy that the actual vote today would see minority investors give away their rights to have a say on the local firm's contributions to the JV in perpetuity.

That is because resolution 4 on the AGM meeting agenda says: "The approval of Opus' shareholders to further develop the joint venture is being sought so that Opus will not need to seek further shareholder approval under Listing Rule 9.2 as the joint venture grows."

The listing rules restrict an NZX company from entering into a material transaction with a related party without shareholder approval. A material transaction would be, for example, lending money or incurring obligations in excess of 10 percent of the firm's average market capitalisation.

"When there are proposals that we see as eroding appropriate governance standards, we will always be concerned," NZSA chairman John Hawkins says. He is hoping Opus will make a late change to "ensure minorities were not locked into an arrangement that effectively disenfranchised them forever".

The NZSA had been unsuccessful in addressing the issue with Opus and had referred the matter to the NZX and Financial Markets Authority, he says.

The annual meeting is being held in Christchurch at 10.30am today. Opus commissioned an independent report on the plan, as required by listing rules, and Richard Longman and David Bridgman of PwC found it fair to minorities.

But Mr Hawkins says that report is "totally inadequate" because it fails to address the potential impact of removing the listing rule.

The venture will need seed funding of $150,000 from each partner, and will target consultancy and project management work in Saudi Arabia, Qatar, the United Arab Emirates, Bahrain, Kuwait and any other countries the Opus companies agree on.

The joint venture's board will have two directors from Opus and three, including the chairman, from OIMB.

Opus's independent directors, chairman Kerry McDonald, Keith Watson, Fraser Whineray and Alan Isaac, support the resolution.

Opus' shares fell 2.2 percent to $1.78 yesterday.


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Opus minorities asked to give up say over capital