The DominionPost today reports that the Wellington-based panel is recommending a change to let shareholders facing compulsory acquisition of their shares choose which form of payment they receive.

In Brisbane-based Prime's offer, Powerco shareholders were offered 100% cash, 100% Prime debt securities, or a 62.5% cash-37.5% securities mix; with a flood of Powerco shares to overseas registered addresses once the panel granted Prime an exemption allowing it to make cash-only offers to foreign security-holders.

The independent Grant Samuel report on Prime’s offer said the market value of the NZ$1 Sparcs was likely to be 89-95 cents, though this was “very uncertain".

Powerco’s independent directors later transferred their addresses to overseas locations to get cash only and recommended other shareholders do likewise to avoid the “Sparcs” (subordinated prime adjusting reset convertible securities).

The panel said it seemed unfair those who did not accept Prime's offer, but later had shares compulsorily acquired, had to accept debt securities. This was "likely to have had quite a coercive effect in the Powerco takeover, as it would in any similar takeover."

It said the sentiment of takeover rule 56 was clear -if no default payment was specified, shareholders having their shares compulsorily acquired were to get the alternative with the greatest cash component. But offerors could stipulate the least popular alternative form of payment as the default option.

A remedy was to give shareholders having their shares compulsorily acquired the opportunity to choose what form of payment they wanted from the alternatives.

The panel had not done direct public consultation on the recommendations contained in its report but believed they would have widespread public and expert support.