The Panel has concluded the proceeding held as a result of the application (the Application) made by Novus Petroleum Limited (NVS) on 6 January 2004 following acceptance by the Panel of undertakings to the Panel provided by Medco Energi (Australia) Pty Ltd (Medco), which has made an off-market cash takeover bid for shares in NVS (the Bid).
As noted in Panel Media Release TP 04/01, the Application alleged that unacceptable circumstances had arisen from Medco not disclosing in its bidder’s statement its capacity or arrangements to refinance debt owed by Novus which would become repayable on a change of control, from Medco not announcing whether it would declare the Bid free from the current condition relating to the level of make whole payments which may arise on that change of control (the Fee Condition) in light of the apparent likelihood that the Fee Condition would be triggered and from the inclusion of a brief summary of the report concerning Novus prepared for PT Medco Energi International Tbk (Medco's holding company) (MEI) by Madani Securities, a summary of which (the Summary Madani Report), in Indonesian, accompanied MEI's circular to its shareholders concerning a resolution to be voted on at a general meeting of MEI relating to the approval of the Bid.
Medco has undertaken:
- in relation to the Summary Madani Report, to issue a supplementary bidder's statement, no later than 23 January 2004:
- offering to provide a hard copy of the short form of the Summary Madani Report in English translation to each NVS shareholder who requests it; and
- including appropriate cautions (which must also accompany each copy of the Summary Madani Report provided) about the origin and nature of the report, which the Panel will settle with Medco; and
- in relation to the refinancing of such of NVS’ debt as must be repaid (together with interest, make whole payments etc), to issue a supplementary bidder's statement concerning that debt promptly after it is provided with details of the amounts which must be paid and the terms of payment, including:
- any details of its new financing arrangements which would be material to a continuing shareholder in NVS, including indications of interest rates, term, security and penal clauses on repayment; and
- if the terms of the refinancing are such that the net effect on NVS of the make whole payment and the refinancing is materially less than the 11 cents/share mentioned in Medco’s announcement of 24 December 2003, that fact.
The timing of this supplementary bidder’s statement will depend on when NVS provides the necessary information, and the Panel accepts Medco’s estimate that it may not be issued until the end of January.
The Panel has indicated to NVS that its target's statement should disclose sufficient details of all its debt which may become payable on a change of control and the timing and other terms of payment. The Panel considers this information to be material to shareholders in deciding whether to accept the Bid and that it would be unreasonable to require Medco to arrange the funding of repayment of such debt on the basis of their assumptions about their terms where those terms are not completely standardised.
In light of the information available to the market and the Panel to date, the Panel considered that the fact that Medco has not announced a decision whether it will declare the Bid free from the Fee Condition has not yet given rise to unacceptable circumstances and is unlikely to do so. It notes that, offers having been dispatched by Medco, there are no special circumstances (like those considered by the Panel in BreakFree 04 and BreakFree 04R) which suggest a reason to disturb the statutory timetable for announcement of decisions concerning conditions set out in sections 630 and 650F of the Corporations Act (which requires that to be done at least seven days before the end of the bid period).
Director, Takeovers Panel
Level 47 Nauru House, 80 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3553