Review Panel Requires Bigshop Placement to be Put to Shareholders

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The Panel today advised the directors of Ltd that a proposed issue to Macquarie Bank Limited of 6.667 million shares in Bigshop should go to Bigshop shareholders for approval. The decision was in response to an application by Fast Scout Limited to the Panel for review of the Panel's decision of 27 September 2001, when the Panel decided (in its Bigshop 01 decision) not to make a declaration of unacceptable circumstances in relation to the proposed issue.

After reviewing the matter and taking into account new information, the Review Panel has decided to make orders, on the basis that implementation of the proposed issue, without shareholder approval, would constitute unacceptable circumstances.

The Review Panel considered that it was reasonably open to Fast Scout to assert that it could achieve its stated objective of "effective control" of Bigshop, under its partial takeover bid for Bigshop, if it acquired at least 25%. The Review Panel also accepted Fast Scout's assertion that the proposed placement to Macquarie and arrangements to add up to three directors, would be likely to lead to the defeat of the bid, and therefore unreasonably reduce the prospect of it achieving effective control of Bigshop under its bid. In those circumstances, if the proposed placement and other arrangements were implemented without shareholder approval, the shareholders would be denied the opportunity to consider the bid.

Therefore, the Review Panel considered that the proposal, in the absence of a commitment to put it to Bigshop shareholders for approval, was "frustrating conduct". It considers this is consistent with the principles in the Pinnacle 8 decision.

Additionally, the Review Panel advises that Fast Scout has offered to make undertakings to the Panel materially improving its bid, on certain conditions. A shareholders' meeting has been convened for 26 October 2001, to consider motions by Fast Scout to remove and replace the existing board. Fast Scout has offered to undertake, provided no shares or options are issued to Macquarie without its agreement, that: if the motions to remove the directors are defeated, it will seek ASIC's consent to withdraw its offers; but if the motions are carried, it will declare its bid to be free of all conditions except the 25% minimum acceptance condition, the prescribed occurrences condition, and conditions relating to minimum cash holdings and liabilities and material changes to assets and financial position; and it will also increase the bid consideration from 7.8 cents to 9 cents per share.

Fast Scout has also offered to undertake, subject to ASIC providing any necessary relief, to vary the proportion of each shareholder's shares to which its partial offer applies from 51% to 65%, provided no shares or options are issued to Macquarie without its agreement, and that no waiver is granted by ASX of Listing Rule 9.17, under which substantial parcels of Bigshop shares are currently held in escrow.

The Panel regards the offering of these undertakings as material new information which should be disclosed to the Bigshop shareholders, and has decided that the undertakings should be accepted. It is desirable in the interests of the Bigshop shareholders that all relevant matters should be placed before them, so that they can choose between remaining with the existing directors and proceeding with the placement to Macquarie (if it remains available), on one hand, and replacing the board and (if they wish) accepting Fast Scout's revised partial bid, on the other hand.

The Review Panel will order Bigshop to postpone the meeting scheduled for 26 October (to replace the existing board) until after the meeting which is currently scheduled to be held on 2 November (to ratify the making of a partial bid). The Review Panel will also order Bigshop to dispatch further information to shareholders. The Review Panel considers that the postponement, and the further information will give shareholders adequate time and information to consider all relevant matters. Bigshop has advised the Review Panel that it may be necessary, yet, to postpone the 2 November meeting to a new date. However, the Review Panel has advised Bigshop that both meetings must be held before 16 November 2001.

The making of Fast Scout's bid has already been the subject of a significant period of unexplained delay, and the implementation of the Panel's orders will involve inevitably some further delay but it enables shareholders to make a clear decision between the two alternatives. However, the Panel considered that neither Bigshop nor Macquarie had provided any clear commercial imperative for immediate implementation of the transaction without shareholder approval, particularly as the placement was announced on 28 August 2001. Bigshop has had it within its power at least from then to take the proposal to shareholders for approval.

The Panel intends to make orders designed to ensure that Fast Scout proceeds with its revised bid quickly and does not unreasonably extend it, if the shareholders vote to replace the existing board of Bigshop.

The review Panel comprised Justice R P Austin (sitting President), Simon Mordant (sitting deputy President) and Karen Wood.

The reasons will be published on the Panel's website at .

Nigel Morris
Director, Takeovers Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3501