Kresta supplier admits substantial stake

A major supplier to blind maker Kresta Holdings, whose vote could determine who controls the company, has admitted failing to lodge substantial shareholder notices with the company for the past 11 years.

Taiwan-based Si Chuan Cheou confirmed yesterday that he held as much as 9.19 per cent of the stock for more than a year.

In his letter to Kresta, Mr Cheou did not mention up to another 4 per cent of the company which sources close to the group believe is held by his associates.

"I apologise for the inadvertent failure to provide these notices to the company at an earlier date, however I was unfamiliar with the Australian legal requirements at the relevant time and have prepared the required forms as soon as I became aware of such a requirement," Mr Cheou wrote.

Mr Cheou appears not to be the only major Kresta shareholder stricken with this problem. Fund manager Hunter Hall also failed to disclose the purchase of more than 4.26 million shares, or almost 3 per cent of the company, for two months. Its purchase, most of which occurred on October 6 (disclosed December 16, after it moved against Mr Trahar), coincided with a major sell down by Mr Cheou of 3 million shares which he only revealed yesterday.

Hunter Hall said the late notice was an administrative oversight. It had been buying since July when it had around 12 per cent.

Another seller around that time was former CEO Tass Zorbas who had just over 5.8 million shares when he steopped down in July. His company, Reardon Holdings, was not listed as a top 20 shareholder at September 22 in the the most recent annual report,

The notices accompanying Mr Cheou's letter show he emerged with 9.1 million shares or 6.45 per cent of Kresta on or about January 7 2000. He ceased to be a substantial shareholder in November 2003 when he sold 3 million shares.

In February last year he re-emerged as a substantial shareholder with more than 9 per cent but sold down 3 million shares on October 6 to 7.05 per cent.

Kresta is embroiled in a fierce battle for control between former chairman Ian Trahar and Hunter Hall, both of which hold just under 20 per cent.

The fight started as a boardroom brawl but escalated to a full takeover when Mr Trahar launched a bid for the company after Hunter Hall called for a meeting to remove him.

Mr Cheou's holding has been recognised for some time and was detailed in annual reports. Sources close to the company believe that other smaller stakeholders listed among the company's top 20 investors are associates of Mr Cheou.

Perpetual is the other major stakeholder in the business with almost 6 per cent.

Apart from the removal of Mr Trahar who stepped down as chair when he committed to his $46.9 million bid, Hunter Hall is also seeking to the scalp of Peter Hatfull, a director who was successfully nominated to the position by the fund manager in July 2009.

In a letter to investors yesterday, Mr Hatfull questioned why Hunter Hall had turned on him, citing the fund manager's concerns about the performance of the company when its sought his appointment in 2009.

Last year, Mr Zorbas's retirement was followed by significant inventory write downs.