The Panel has concluded the proceeding (the Proceeding) arising from the application (the Application) made by the Australian Securities and Investments Commission (ASIC) on 10 December 2003 alleging unacceptable circumstances in relation to the off market scrip takeover bid of Citigold Corporation Limited (CTO) for all of the issued ordinary shares in Great Mines Limited (GML) (Bid). The Proceeding concluded following acceptance by the Panel of undertakings provided by CTO.
ASIC alleged that unacceptable circumstances arose from deficiencies in CTO's bidder's statement, specifically:
- GML shareholders and directors had not received enough information to enable them to assess the merits of the CTO Bid; and
- the bidder's statement contained misinformation because it contained valuations of CTO and GML which it alleged did not comply with relevant standards and had been prepared for another purpose, namely to assist CTO shareholders to decide whether to approve the Bid at a general meeting; and
- the bidder's statement contained references to ASIC's "acceptance" of a valuation and to an endorsement by a mining engineer, without their consent.
The Panel has decided, under section 201A of the Australian Securities and Investments Commission Act 2001 to accept the following undertakings in writing from CTO:
- CTO will send all shareholders in GML a letter, in a form approved by the Panel, advising shareholders that:
- they should disregard the experts reports supplied by CTO in it bidder's statement of 22 October 2003 and its supplementary bidder's statement of 3 December 2003 (TWA Reports) and instead rely on the independent experts report provided by GML in its supplementary target statement of 17 December 2003 (REC Report);
- if they have accepted the offer under the Bid, they will have until a specified date to withdraw their acceptance (such date to be 21 days from the date of dispatch of the letter); and
- the time for acceptances of the offer will remain open until the time to withdraw acceptances has expired.
- CTO will give effect to the statements made in the letter to GML shareholders, specifically with respect to withdrawal of acceptances and the time for acceptance of the offers under the Bid.
On 9 January 2004, CTO sent a letter to GML shareholders pursuant to these undertakings which provides GML shareholders until 30 January 2004 to accept the Bid if they have not done so already or to withdraw their acceptance.
In accordance with the Panel’s recommendation, the letter indicated that GML shareholders should disregard the TWA
Reports as they were prepared for the benefit of CTO shareholders to assist them in their decision whether to approve the Bid under the related party transaction provisions of the Corporations Act and not to assist GML shareholders in their decision of whether to accept the Bid. It indicated that GML shareholders should instead rely on the REC Report which was specifically prepared to advise GML shareholders whether they should accept the Bid.
The Panel has not made any findings with respect to the concerns of ASIC because GML has provided its shareholders with the REC Report and CTO has advised GML shareholders to rely on the REC Report rather than the TWA Reports. ASIC submitted that the TWA Reports were deficient in material respects. If GML had not provided the REC Report, the Panel would have made further investigations. Had the Panel found that the issues raised by ASIC were in fact well-founded, it may have made an order that CTO issue a replacement Bidder's Statement and/or an order that all acceptances be cancelled.
The Panel notes that this matter demonstrates that people involved in takeovers should be careful when using in takeover documents other reports or documents which were prepared for some other purpose. In some circumstances, it may be appropriate to disclose in takeover documents the existence of those other reports or documents and to summarise their content or reproduce them. Where this is done, however, the issuer of the takeover document should make abundantly and unambiguously clear the purpose for which the other report or document was prepared and any consequential limitations on the use of the other report or document, or the summary of it, by the addressees of the takeover document.
The Panel also notes that where a bidder includes an expert's report in its bidder's statement this may increase the onus on the target to provide its shareholders with a report to ensure that they are appropriately informed.
The Proceeding also concerned the obtaining of all appropriate consents of experts to the inclusion in takeover documents of statements quoting, or said to be based on, statements by those experts. The Panel considers that not only should these consents be obtained, but also that it is imperative that the issuers of those takeover documents comply with the requirements of the Corporations Act concerning the publication in those documents of the existence and currency of those consents.
Director, Takeovers Panel
Level 47 Nauru House, 80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3553