The BreakFree 04 application
The Takeovers Panel advises that it has received an application from BreakFree Limited (BreakFree) pursuant to section 657A of the Corporations Act 2001 (Cth) (the Act) for a declaration of unacceptable circumstances. The application relates to an announcement (the Announcement) on 8 October by S8 Limited (S8) that it would not proceed with its announced scrip takeover bid (the Scrip Bid) for BreakFree, but would make an all cash off market takeover bid for BreakFree
The effect of the Announcement was that S8 would not be proceeding to make offers to BreakFree shareholders under its previously announced Scrip Bid. S8 indicated that it was:
entitled to withdraw its scrip bid as a consequence of BreakFree's statement on 12 September 2003 that shareholders holding a majority of [the BreakFree] shares would not accept the scrip bid.
BreakFree alleges that the Announcement was unlawful. It makes this allegation on the basis that if S8 does not proceed with the Scrip Bid it will breach section 631(1) of the Corporations Act (the Act).
Section 631(1) requires a person to make offers for securities under a publicly announced takeover bid within 2 months after the proposal is made. The terms and conditions of the bid must be the same as, or not substantially less favourable than, those in the public proposal. BreakFree alleges that S8 is not entitled to rely on section 670F of the Act as a defence to any potential breach of section 631(1) of the Act.
The President of the Panel has appointed the Panel from the previous BreakFree proceedings (being Kathleen Farrell (Sitting President), Peter Cameron (Sitting Deputy President) and Meredith Hellicar) as the sitting Panel to consider the BreakFree 04 application.
The Panel has not yet decided whether to conduct proceedings in relation to the application, or sought the views of the parties affected by it. Consequently the Panel has not yet formed any views in relation to the application.
In light of the Announcement, S8 requested the Panel in the BreakFree 03 proceedings to terminate those proceedings on the basis that they relate to the Scrip Bid, which S8 has purported to withdraw.
The BreakFree 03 Panel subsequently advised the parties on 8 October that the submissions and rebuttals in those proceedings were no longer required to be provided by the parties on 9 and 10 October respectively (which was the time by which the Panel had originally requested them to be provided - see Takeovers Panel media release TP03/096). The Panel noted that it was still considering the implications of the Announcement on the BreakFree 03 proceedings.
BreakFree has since made submissions in response to further correspondence from the BreakFree 03 Panel in which it has requested that the Panel make no decision whether to continue the BreakFree 03 proceedings until the BreakFree 04 proceedings have been resolved.
The BreakFree 03 Panel is still considering these submissions from S8 and BreakFree, and has not yet made any final decision in relation to the BreakFree 03 proceedings.
Director, Takeovers Panel
Level 47 Nauru House,
80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3553 Fax: +61 3 9655 3511