CSP01/032
The Corporations and Securities Panel today stopped Reliable Power Inc's (Reliable) off market cash takeover offer for the ordinary shares in Pinnacle VRB Limited (Pinnacle) (the Bid).
On 4 April 2001, the Panel declared that circumstances in relation to Reliable's Bid were unacceptable on the basis that Reliable's lack of sufficient funding arrangements detracted from an efficient, competitive and informed market in shares in Pinnacle, and had the effect that Pinnacle shareholders did not have enough information to enable them to assess the merits of Reliable's offer. On the same day, the Panel made interim orders restraining Reliable from dealing with any Pinnacle shares for which it received acceptances under the Bid, and repeated earlier requests that Reliable promptly produce evidence that it has sufficient funding arrangements in place. The Panel made these interim orders on the basis that the bid would be stopped if such evidence was not forthcoming.
The Panel considers that, in accordance with the principle that acquisitions of control over the voting shares in a listed company take place in an efficient, competitive and informed market, a bidder should have sufficient funding arrangements in place to ensure that the consideration offered under the bid can be provided.
The Panel has invited Reliable several times to provide evidence that it has sufficient funding arrangements in place and has allowed Reliable more than adequate time to do so. While the Panel acknowledges that Reliable has produced some evidence of funding arrangements for the Bid, the Panel has concluded that Reliable has not demonstrated to the Panel's satisfaction that, through its financier, New West Capital LLC, Reliable has sufficient funds in place for the purpose of funding the Bid.
For funding arrangements to be adequate, the bidder must have access to funds sufficient to pay for acceptances for its bid, whether directly or through persons who have those funds to pay for acceptances. Reliable was able to demonstrate that New West had committed to provide funds to pay for acceptances but, after several extensions of time, not that New West had access to sufficient funds for that purpose.
The Panel has therefore made orders:
- Cancelling all offers made to shareholders of Pinnacle and all contracts made with Pinnacle shareholders under the Bid;
- Requiring Reliable to notify the ASX and Pinnacle shareholders that the offers and contracts made under the Bid have been cancelled and to return all acceptances received in respect of the Bid; and
- Prohibiting Reliable from acquiring a further interest in Pinnacle shares as a result of offers made or acceptances received under the Bid.
George Durbridge
Counsel, Corporations and Securities Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3553
george.durbridge@takeovers.gov.au
