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Patrick Corporation has scored a victory in the Victorian
Supreme Court against Toll Holdings that could lead to their rail
joint venture, Pacific National, being unwound.
The legal proceedings are part of Patrick's campaign to
undermine Toll's $4.6 billion takeover bid for the company.
The court yesterday gave Patrick approval to put, for a second
time, a resolution to the PNL board that would allow an
investigation of a dispute between the two PNL partners.
The board is due to meet today.
If the board again rejects the resolution, Patrick is expected
to press ahead with a dispute notice under the deadlock procedures
of PNL's shareholders agreement.
The dispute, which pre-dates Toll's bid for Patrick, centres on
a deal under which Toll provides services to PNL in north
Patrick says Toll benefits from the deal, which would create a
$510 million revenue shortfall for PNL over 20 years.
Patrick also claims the arrangements were negotiated by PNL
executives who were still on the Toll payroll and receiving
incentives from Toll.
Toll has denied the allegations, saying the dispute is of no
material significance and involves less than $20 million. It says
the sum is too small to meet the conditions needed to trigger the
Toll also maintains that Patrick's move is unreasonable because
it circumvents an agreed review procedure, and that the
investigation proposed in the resolution would be controlled by
However, if the board rejects the resolution again today,
Patrick is likely to move to have an arbitrator appointed to decide
whether the dispute is material and reasonable.
The chief executives of Toll and Patrick, respectively Paul
Little and Chris Corrigan, also have a month in which they can try
to resolve the dispute.
If the arbitrator decides there is a major dispute, a sales
facilitator would be appointed to divide and sell PNL's assets to
the shareholders. Such a process is likely to take some time.
The Australian Competition and Consumer Commission is expected
to make a preliminary decision on Toll's takeover bid on November
Shares in Patrick fell 16c to $6.73 yesterday and shares in Toll
fell 22c to $13.68.
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