Some are also calling for the resignation of independent Contact directors Phil Pryke, Tim Saunders and John Milne, who recommended the controversial merger before the release of the report, prepared by investment bank First NZ Capital.
The independent directors were widely criticised for their decision to back the merger without waiting for the appraisal report. Now, by scrapping the merger proposal, Contact and Origin have also kept its contents confidential.
Various New Zealand media have reported analysts, including several institutional Contact shareholders, criticising the merger process.
Shareholders Association advocacy director Ross Dillon has said independent directors were there to protect the interests of minority shareholders and that releasing the appraisal report would go a long way to explaining the so-called benefits of the merger to create Australasia’s largest integrated energy company.
Dillon said shareholders had a right to see the report and his association would consider a resolution for Contact's annual meeting later this year demanding its release.
Simon Botherway, the principal of minority shareholder Brook Asset Management, said Pryke should have put the full case for the merger, including the appraisal report, before minority shareholders.
He said a key factor behind the merger proposal was Origin's need for cash to finance its own growth.
It owns a 50% stake in and operates the $NZ980m Kupe gas field development project.
Botherway also said Origin wanted to have an extra 2000MW of generation capacity in Australia, with state governments in Queensland and Victoria privatising state electricity assets.
Contact had less debt and stronger cash flow than did Origin, which Origin could have drawn on to expand its own business if the balance sheets of the two companies had been merged. But with the merger off, Origin's need for cash remained.
He said one option for Origin was to sell its 51.4% stake in Contact and use the money raised to expand its activities, but such a move was unlikely.
Alternatively, Contact could pay bigger dividends and make capital repayments, which would benefit Origin, as well as the minority shareholders, according to Botherway.
A third option was to make another merger proposal – one that would be more acceptable to Contact minorities and took on board any criticisms in the independent appraisal report.
Tyndall Investment Management's Rickey Ward said this was the second occasion that Contact’s independent directors had supported a takeover bid that subsequently failed because of inadequate minority support.
They also supported the 2001 bid by Contact's former majority owner, United States Edison Mission Energy. EME subsequently sold out to Origin when it failed to win the support of the minorities.
But Origin chief executive Grant King, who also chairs Contact, has said that because of the way the merger deal was structured, Origin's board had to know if the Contact board supported the deal before it was disclosed and a formal independent appraisal was published.
Meanwhile, Pryke has said he received advice from merchant bankers Cameron & Co on the merger and that he did not need to wait for First NZ Capital's independent appraisal.
