* CKI and Envestra want deal to proceed
* Dispute may lead to lengthy legal tussle
* Continues Envestra's bumpy year
(Recasts to include comments from CKI)
By Byron Kaye
SYDNEY, June 20 Hong Kong tycoon Li Ka-shing's
Cheung Kong Group (CKI) and an Australian pipeline
company it plans to buy revealed on Friday they are in a bitter
dispute over dividend payments, casting a cloud over the $2.2
CKI and takeover target Envestra Ltd said
separately they still want the takeover to proceed. But the
dispute over the timing of Envestra's last dividend could lead
to lengthy legal wrangling before the Australian takeover
regulator and sour sentiment between the parties.
In a statement to the Australian Securities Exchange,
Envestra said it now wants to declare a final dividend for the
fiscal year ending June 30 on July 11, not Aug. 21 as agreed
last month with Li's Cheung Kong Group (CKI). CKI
"objects" to the change in the dividend payment date, Envestra
Envestra wants to bring forward the dividend to encourage
investors to support the takeover and said it may take the
dispute to a financial regulator for resolution. Envestra
Managing Director Ian Little told Reuters the dispute won't kill
CKI's offer, but said that "directors (of Envestra) can withdraw
their recommendation at any time".
If CKI doesn't withdraw its objection, Envestra expects "an
application will need to be made to the Takeovers Panel to
resolve the matter", the Envestra statement said.
CKI said it objects only to Envestra's "accelerated
timetable" for the dividend payment and that it will not
withdraw its objection.
"(CKI) does not understand why private discussions
concerning this matter were released to the market by the
Envestra board, nor the basis on which the matter has any
relevance to the Takeovers Panel," CKI said.
The cash purchase would be the latest in a string of deals
by CKI to expand into regions offering higher growth and returns
than its Hong Kong base. In April, CKI lost out in a bid for
Port of Newcastle which went to Chinese government-backed
interests for A$1.75 billion ($1.64 billion).
The development continues an eventful year for Envestra and
its shareholders. For two months the company recommended
shareholders accept a slightly lower scrip offer from Australian
rival and one-third Envestra stakeholder Australian Pipeline Ltd
That offer was blocked by CKI interests, which own 17
percent of Envestra.
Then on May 9, CKI submitted its higher cash offer and on
May 30 the Envestra board changed its stance and said it
supported the CKI bid instead.
An Australian Pipeline spokesman declined comment on Friday.
Envestra shares closed 0.74 percent higher at A$1.36 in a
weaker overall market.
($1 = 1.0639 Australian dollars)
(Editing by Kenneth Maxwell and Matt Driskill)