The Takeovers Panel advises that it today made its decision on the application made on 10 July by the Roslyndale Syndicate (Roslyndale), seeking a declaration of unacceptable circumstances and certain orders in relation to the takeover bid by TVG Consolidation Holdings SPRL (TVG) for all of the shares in PowerTel Limited (PowerTel). The application was dealt with as follows.
Roslyndale submitted that TVG's takeover bid should be subject to approval by a resolution of non-associated shareholders (or subject to a non-waiveable 50.1% minimum acceptance condition) because, in Roslyndale's view, the bid price is so low that the bid will be attractive only to WilTel Communications Group (WilTel), PowerTel's largest shareholder.
The sitting Panel declined to conduct proceedings on this limb of the application, which it regarded as unfounded. Shareholder approval is not required for an acquisition of shares under a takeover bid, particularly where no contravention of the takeovers code and no manipulation of the market or comparable unusual circumstances was alleged or established.
Roslyndale requested an order that TVG should disclose in a supplementary bidder's statement certain forecast information concerning PowerTel, which it believed had been provided to TVG, and was material information which should be disclosed to shareholders, but which had not been included in TVG's bidder's statement.
The Panel found that spreadsheets containing revenue budgets prepared by PowerTel management had been made available to TVG, Roslyndale, the major shareholders and the independent expert who provided reports in relation to the TVG bid and the Roslyndale proposal recently voted on at a general meeting of PowerTel. It decided that the contents of the spreadsheets are not in a form suitable for publication, but that the prospective financial information in them is material to a decision whether to accept the TVG bid or continue as a shareholder in PowerTel and that shareholders have not been provided with comparable information.
The Panel invited PowerTel to provide its shareholders with information comparable with the spreadsheets but better suited to publication, in the form of a reasoned discussion of the company's prospects, based on the latest information available to the Board. The information would not necessarily include quantitative forecasts, but should be presented in the context of an updated discussion of the choice now facing PowerTel shareholders, whether to accept the TVG bid or retain their shares.
PowerTel undertook to issue a supplementary target's statement updating the Board's recommendation concerning the TVG bid and containing a suitable discussion of the company's financial and other prospects. TVG has agreed to extend its bid so that it closes two weeks after the issue of PowerTel's supplementary target's statement, although that time period may need to be adjusted. The Panel has accepted those undertakings.
Roslyndale also noted that TVG proposed to cause PowerTel to conduct a rights issue and to underwrite the rights issue, should its bid be successful. Under the Listing Rules, the rights issue will need the approval of shareholders not associated with TVG. Roslyndale submitted that the statements in TVG's bidder's statement concerning the inter-relation of the bid and the rights issue were confusing, and that offerees might be misled into thinking that the rights issue was sure to proceed, if the bid succeeded. It submitted that the bid should be conditional on approval being obtained for the rights issue, that the bidder's statement should be clarified, or both.
The Panel rejected this submission. It has reviewed the references to the rights issue in the bidder's statement and does not regard them as misleading or confusing in the context of the bidder's statement. The proposal to make the bid conditional on approval of the rights issue has no basis in policy and appears to be unworkable.
On the basis of the undertakings mentioned above, the Panel dismissed Roslyndale's application.
The sitting Panel comprised Alison Lansley, Carol Buys and Chris Photakis.
Director, Takeovers Panel
Level 47 Nauru House,
80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3553