A 1999 lawsuit against New Zealand’s Southern Petroleum that was later inherited by Shell as part of a takeover has finally been resolved in Shell’s favor. The claim, filed by a group of investors that alleged that their shares in gas and oil subsidiary Southern Petroleum were undervalued during a 1995 takeover by Fletcher Challenge Energy, was dismissed by the High Court at Auckland.
According to The Dominion Post, the lawsuit technically alleged insider trading under the Securities Markets Act 1988 because it “rested on a claim that Fletcher Energy’s James Patek, a director of both Petrocorp and Southern, knew that the potential size of the Mangahewa prospect, in which the two companies operated a joint venture, was greater than the Southern minorities were told when they accepted the bid.” The article states that because of a quirk in New Zealand’s insider trading law, the public issuer Southern was required to fund the litigation, with Shell inheriting Southern’s expenses which have now run in excess of $10 million.
A Shell spokeswoman was quoted as saying that “[w]e are delighted with the outcome and obviously all the claims have been dismissed. The case has been in the court system for nearly 10 years and cost [Shell] in excess of 10 digits.”
Read the Dominion Post article
