In Takeovers Panel Media Release 106 (the Media Release) dated 27 October 2003, the Panel announced that it had made a declaration of unacceptable circumstances (the Declaration) in the BreakFree 04 proceedings in relation to an announcement (the Announcement) by S8 Limited (S8) on 8 October that it would not proceed to make offers under its scrip takeover bid (the Scrip Proposal) for BreakFree Limited (BreakFree) which was announced on 11 July 2003. The resolution of the question of what orders should be made in BreakFree 04 was left to be determined in light of the resolution of the BreakFree 03 proceedings.
The Panel has now received, and reviewed, submissions from the parties concerning the resolution of the outstanding issues in BreakFree 03 and the question of what orders should be made in BreakFree 04.
The relationship between the proceedings
The Panel is of the view that its decisions concerning the BreakFree 03 and outstanding aspects of the BreakFree 04 proceedings are closely related. Consequently, this media release discusses the Panel’s resolution of both proceedings.
The BreakFree 03 proceedings
The BreakFree 03 proceedings concerned the adequacy of the disclosure contained in the bidder’s statement for the Scrip Proposal (the Scrip Bidder’s Statement). The first Scrip Bidder’s Statement was provided to ASIC, BreakFree and the Australian Stock Exchange (ASX) on 19 August, and a consolidated amended statement was provided on 2 September. Although copies of the Scrip Bidder’s Statement are available on the ASX website, the Panel understands that it has not been sent to BreakFree shareholders.
Both BreakFree and ASIC submitted to the Panel that there were material deficiencies in the Scrip Bidder’s Statement which meant that it could be misleading, and therefore should not be dispatched to BreakFree shareholders without correction. In previous media releases, the Panel has advised the market that, principally because of S8’s decision to proceed with a cash bid instead, it has not received complete submissions from all of the parties in relation to a single version of the Scrip Bidder’s Statement (although the Panel has received various submissions from S8, BreakFree and ASIC over the course of the proceedings).
The Panel has decided to conclude the BreakFree 03 proceedings at this time (without finalizing the submission process) because:
- the issues outstanding in those proceedings have been overtaken by the events the subject of the BreakFree 04 proceedings. In particular, the Announcement stated that S8 would not be proceeding to make offers under the Scrip Proposal, but would instead proceed with a cash takeover bid. S8 has confirmed to the Panel that this remains its intention; and
- as offers will not be made under the Scrip Proposal, no useful purpose within the Panel’s jurisdiction would be served by continuing the proceedings.
As the process of receiving evidence and submissions in BreakFree 03 was suspended before completion, the Panel does not express any concluded views on the issues raised by BreakFree and ASIC. However, the Panel is of the view that those issues would have warranted further consideration by the Panel had it not been for the S8’s decision not to proceed with the Scrip Proposal.
As no declaration of unacceptable circumstances was made by the Panel in the BreakFree 03 proceedings, no orders (including any orders for costs) were made in those proceedings.
The BreakFree 04 proceedings
The Panel has decided not to order S8 to dispatch the Scrip Bidder’s Statement. For various reasons (including the unresolved allegations made by BreakFree and ASIC in the BreakFree 03 proceedings, and the fact that the most recent version of the Scrip Bidder’s Statement is now more than 6 weeks old) the Panel does not believe that it could ensure the reliability and accuracy of any document that it could order S8 to dispatch in relation to the Scrip Proposal.
The Panel decided that no cost orders should be made in the BreakFree 04 proceedings.
The BreakFree 03 and BreakFree 04 Panels
The sitting Panel in each of the BreakFree 03 and BreakFree 04 proceedings was Kathleen Farrell (sitting President), Peter Cameron (deputy President) and Meredith Hellicar.
The Panel will post its full reasons for this decision on its website when they have been settled.
Director, Takeovers Panel
Level 47 Nauru House
80 Collins Street, Melbourne VIC 3000,
Ph: +61 3 9655 3553