The Panel advises that it has accepted undertakings from Magic Millions in relation to Magic Millions' application under section 657EA of the Corporations Act requesting a review of the decisions in the Brisbane Broncos Nos 1 and 2 proceedings. This follows protracted consultation with the parties in the contested takeover, and a further application to the Panel.
Magic Millions has undertaken to make offers to Broncos shareholders for all of their shares at a bid price of 18 cents.
The bid will be conditional on Magic Millions acquiring more than 45% of the shares in Broncos and having a greater voting power in Broncos shares than News Corporation and its associates at the close of Magic Millions' bid.
The proposed offer by Magic Millions is on sufficiently better terms for Broncos shareholders that the Panel considered it reasonable to allow it to be subject to the minimum acceptance condition. Magic Millions will need to gain acceptances for 75% of the outstanding (non Magic Millions and non News) shares to achieve 45% acceptance. The Panel will not require Magic Millions to proceed with its announced bid for 50% of Broncos shares at 16 cents, in addition to the increased bid.
The Panel granted Magic Millions a modification to section 652B of the Act allowing Magic Millions to withdraw its new bid if another person gains control over more than 50% of Broncos shares during the Magic Millions bid period. The Panel granted the modification after ASIC declined to do so on Thursday. In part, ASIC declined because the application for the modification related to ongoing Panel proceedings.
The purpose of the withdrawal modification is to allow Broncos shareholders who would prefer to receive 18 cents for 100% of their shares to accept the Magic Millions bid while still having an opportunity to accept the BB Sports bid announced on 22 January if it turns out to be successful. To ensure that opportunity is as long as possible, if BB achieves 50% the Panel has required Magic Millions to decide immediately whether it will withdraw its bid or waive all conditions and pay for all the shares it receives.
The Panel has required Magic Millions to set out clearly in its bidder's statement how Broncos shareholders can gain the benefits of that opportunity. It has also required Magic Millions immediately to write to all Broncos shareholders, make announcements to ASX and ASIC, and to advertise in national and local newspapers if it withdraws its bid.
The Panel believes that the protections it has built into the process for Broncos shareholders will allow the Broncos board to consider recommending to its shareholders that they accept the Magic Millions bid in the absence of a higher offer.
The Panel intends that Broncos shareholders will have at least one week in which to accept the BB Sports bid if Magic Millions withdraws its bid. If BB Sports' voting power in Broncos increases to more than 50% in the last week of BB Sports' offer, then BB Sports' offer is automatically extended for a further two weeks under section 624 of the Act. If BB Sports increases to more than 50% earlier in its bid the Panel's modification requires Magic Millions to advise Broncos shareholders immediately whether its bid is withdrawn, or is unconditional. This will allow Broncos shareholders at least a week to consider their further actions.
In order to allow Broncos shareholders to have both offers open before them for three weeks, the Panel has requested that the board of Broncos consent to shortening the period between Magic Millions giving its bidder's statement to Broncos and Magic Millions dispatching its offers. The period would be shortened from fourteen to seven days. The Panel understands that the board of Broncos is considering this request.
The Magic Millions bid will also be conditional on no prescribed occurrences occurring in relation to Broncos during the Magic Millions bid period.
The sitting Panel in this review application was Simon McKeon (sitting President), Ian Ramsay and Carol Buys.
The Panel will publish its reasons for this decision on its website in due course.
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