NZME fined $100,000 on failed Stuff deal and chairman’s exit
NZME, publisher of the New Zealand Herald, has been fined $100,000 after accepting that it had breached the NZX’s continuous disclosure rules.
The penalties — in relation to two different issues — were imposed by the NZ Market’s Disciplinary Tribunal.
The breaches relate to last year’s failed attempt to buy competing publisher Stuff and the unexpected resignation of former chairman Peter Cullinane.
The company said it took its obligations and responsibilities around continuous disclosure “extremely seriously”. “At all times we strive to ensure the market is appropriately informed in a timely fashion.
“In both instances addressed in the censures, NZME followed its compliance processes and sought and acted on specialist external legal advice at the time the disclosures were made,” NZME said. “This is noted by the Tribunal in the censures as one of the relevant mitigating factors it took into consideration.” Cullinane resigned suddenly before last year’s annual shareholders’ meeting. He later told the Herald he felt it “appropriate to step down” because he had lost the support of Australian fundmanager shareholders. Cullinane was up for re-election as chairman.
NZX Regulation said: “Mr Cullinane’s resignation was material information for NZME because the resignation related to the chair and the circumstances of it were sudden and unexpected.”
It went on to say: “NZME’s failure to release information about a change in a director promptly and without delay also constituted a rule breach.
“Regarding Stuff, NZX Regulation concluded that NZME’s announcements on its failed Stuff purchase were “incomplete and therefore misleading”.
On May 11 at 9.31am, NZME released a market announcement confirming that it had made an offer to acquire Stuff from Nine, that an exclusivity period was in place between NZME and Nine for the purpose of progressing that offer and that NZME had that day written to the Government seeking “urgent legislation” to allow NZME to acquire the shares in Stuff by May 31, 2020.
At 10.52am, Nine responded to this market announcement in a release on the ASX, stating that Nine had notified NZME that it had “terminated further engagement with NZME”.
At 12.11pm, NZME released a market announcement stating its view was that it was “still in a binding exclusive negotiation period with Nine and does not accept that exclusivity has been validly terminated”.
The NZX Regulation ruling said the 9.31am market announcement gave the impression a proposal to acquire Stuff by NZME was well advanced.
The implication was that it was competition concerns that were the obstacle to a deal that could otherwise settle in the very near future.
“The announcement gave no sense that the deal was at risk of not proceeding because Nine had purported to terminate engagement with NZME and an alternative bid had come to light which did not face the competition problems.”
Following Nine’s ASX release at 10.52am and NZME’s second market announcement of the day at 12.11pm, the market was better informed.
“However, even at this point, the market was not made aware by either NZME or Nine of the important detail that Nine was in receipt of an alternative bid that did not require Commerce Commission clearance.” NZME was fined $80,000 on the Stuff disclosures, and, separately, fined $20,000 on Cullinane’s resignation.