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Tex Edwards files High Court action over 2degrees stake

Company founder says he was denied the same terms as other shareholders in a 2011 rights issue.

Chris Keall
Thu, 04 Oct 2012

Simon "Tex" Edwards has filed a High Court action against 2degrees in relation to his shareholding in the company he founded.

The move was confirmed by Carter and Partners partner Brent O'Callahan yesterday afternoon.

Mr O'Callahan also confirmed industry speculation was correct that the case centres on another shareholder (the Hautaki Trust) being offered special terms to participate in a rights issue; terms that were not extended to other shareholders, including Mr Edwards' KLR (a family trust of which he is the sole beneficiary).

Specifically, a $2.6 million company loan offered to Hautaki Trust (the iwi shareholder that brought government-subsidised spectrum to 2degrees). The trust was also given an extended deadline for its (ultimately unsuccessful) effort to raise $20 million to stop its stake being diluted as new shares were issued. The same terms were not extended to Mr Edwards.

As Seattle-based Trilogy has built its stake by acquiring parcels from other holders, and participated in new rights issues, Hautaki and Mr Edwards have seen their stakes halved.

Mr O'Callahan did not yet have a bead on whether there would be an expedited hearing. 

A full trial might not take place until 2014, he told NBR ONLINE.

Earlier yesterday, Mr Edwards won a round in his protracted employment dispute with 2degrees, where he is still legally employed on full pay, but on gardening leave.

The ERA ordered his salary should be restored from $200,000 to $350,000, back-dated to March 2007 with 5% interest (that is, close to $1 million in arrears). The ERA also said Mr Edwards had the right to have share options blocked since 2007 restored.

Mr Edwards' lawyer in the action, Kensington Swan's Anthony Drake, told NBR the share option payment, still being calculated, could run to seven figures.

In a third action, the Employment Court will hear a case over 2degrees' attempt to dismiss Mr Edwards, which was approved by the ERA, but over-turned by the court. The case is expected to be heard next year.

2degrees shareholdings (February 2012 Companies Office filing)

  • Trilology International Partners (US): 58%
  • Tesbrit (Holland): 28%
  • Hautaki Trust (iwi): 10%
  • NZ Comms Trustee (employee shares): 2.5%
  • KLR (Tex Edwards' family investment vehicle): 1%2degrees declined comment.
Chris Keall
Thu, 04 Oct 2012
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Tex Edwards files High Court action over 2degrees stake