Panel Publishes Reasons in Relation to Ballarat Goldfields

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The Panel advises that it has published the reasons for its decision on 13 May 2002 to make a declaration of unacceptable circumstances in relation to a break fee that Ballarat Goldfields NL (BGF) agreed to pay to Rexadis Pty Ltd (Rexadis). The Panel ordered that BGF not pay the break fee, and that Rexadis not acquire the shares which are the subject of the break fee, nor any other benefit in substitution for the break fee.

The Panel also postponed the meetings at which shareholders of BGF are to vote on the competing proposals from Rexadis, RFC Corporate Finance Ltd and Republic Gold Ltd for seven days to 4 June, 2002. The Panel considered BGF shareholders would now need additional time to consider the three competing alternatives without the pressure of the break fee. At the request of BGF, the Panel made a supplementary order permitting the board of directors to make any adjustments to the arrangements for those meetings which the directors think necessary or appropriate because of the postponement.

The break fee was to be paid by issuing to Rexadis shares in BGF equal to 14.9% by number of the BGF fully paid shares on issue as at the day the break fee shares are allotted, less the number of shares issued to Rexadis by BGF as a placement on 2 April 2002.

The Panel considered that, although the Directors of BGF may have considered the break fee was necessary to secure the Rexadis proposal at that time, given its size and the fact that it was payable in scrip, the break fee was likely to have a coercive effect on the decision of BGF shareholders when they considered the three alternative proposals for the future of BGF.

The sitting Panel in this matter was Chris Photakis (sitting President), Michael Burgess and Meredith Hellicar.

The reasons are available on the Panel's website.

Nigel Morris
Takeovers Panel
Ph: +61 3 9655 3501