TP03/020
The Panel advises that it has decided the remaining outstanding application (the Application) by Glencore International AG (Glencore) in relation to the affairs of Anaconda Nickel Limited (ANL).
The Panel has decided not to make any declaration of unacceptable circumstances in relation to the offer (the Rights Offer) by MatlinPatterson Global Opportunities Partners LP (MP Global) to acquire rights (Rights) in ANL. MP Global is free to pursue its offer as currently structured. The Panel made this decision after Glencore declined to give the Panel an undertaking to make an offer for all of the shares in Anaconda on issue after the Rights Offer. The Panel had advised Glencore that if it did give an undertaking to make such an offer, the Panel would only allow the MP Global offer to proceed if MP Global undertook to make an offer for all of the shares issued on exercise of the Anaconda rights (New Shares).
The Application was for a declaration of unacceptable circumstances in relation to the structure of the Rights Offer by MP Global. The Rights are being issued by ANL under a 14 for 1 renounceable rights issue (the Rights Issue) that is being fully underwritten by Glencore.
The Annexure to this Media Release sets out the details of the Application.
Decision
The Panel has decided that, in light of Glencore's decision (as described below) not to accept the Panel's offer to protect itself from the discriminatory aspects of the Rights Offer, it is not in the public interest to make a declaration of unacceptable circumstances in relation to the Rights Offer.
On that basis, the Panel considers that MP Global is free to proceed with the Rights Offer and its Share Offer as currently structured. MP Global has provided certain undertakings to the Panel in relation to the Rights Offer.
The undertakings given by MP Global are set out below.
Competing principles
The Panel considered that two competing principles of takeovers policy were relevant to determining whether to grant the relief sought by Glencore in the Application.
The first principle (the No Discrimination Principle) was that discriminatory bids are unacceptable. The Panel has, in its decision in relation to the Anaconda 02 to 05 applications, set out its views in relation to the discriminatory nature of the MP Global bid as currently structured. The Rights Offer (when considered in light of the Share Offer and Rights Issue) is still structured in such a way that would allow MP Global to decide, selectively, the number of new shares (New Shares) in ANL (being shares issued under the Rights Issue) it would acquire and the number of New Shares that it could require Glencore to subscribe for as underwriter. MP Global could therefore still discriminate against Glencore under the Rights Offer in the same manner discussed under the heading `Discriminatory Acquisition' in the Panel's Media Release 15 in relation to the Anaconda 02 to 05 applications. However, as set out below, the Panel considers that the unacceptability of this discrimination has passed, given Glencore has declined the Panel's offer to protect itself from this discrimination.
The second principle (the Market Principle) that the Panel considered in this application was that under Chapter 6 of the Corporations Act (the Act) the Panel is charged with ensuring that the acquisition of control of voting shares takes place in an efficient, competitive and informed market. The Panel did not believe that it would uphold this principle if it merely determined to declare that the Rights Offer constituted unacceptable circumstances and thereby deprived ANL shareholders of the only available offer to acquire their rights and shares in ANL.
The Panel considers the Rights Offer and Share Offer are a potentially attractive alternative outcome for Anaconda shareholders compared to the alternative of merely deciding whether or not to subscribe for New Shares or allow their Rights to flow through to Glencore as underwriter.
Opportunity for Glencore to protect itself
The Rights Offer was only discriminatory in its application to Glencore as underwriter, but not to Glencore as shareholder, or to any other Anaconda shareholders.
To address the Panel's concerns in relation to the Market Principle, the Panel invited Glencore to undertake to the Panel to make a takeover bid (the Glencore Bid) for all of the shares in ANL (the Shares), being both shares currently on issue (the Current Shares) and the New Shares. The Panel invited Glencore to make a bid that:
(a) offered holders of Shares a minimum of $0.06 per Share, regardless of whether the Shares are Current Shares or New Shares;
(b) was conditional only on:
(i) no person other than Glencore acquiring more than 50.1% of the voting power in ANL on a fully diluted basis; and
(ii) approval of the Glencore Bid being obtained from the Australian Foreign Investment Review Board (subject to Glencore taking all reasonable steps to obtain that approval).
The Panel advised Glencore that if it gave this undertaking to the Panel the Panel would decide that the MP Global offers, as currently structured, should not be allowed to proceed unless MP Global undertook to make an offer for the New Shares, as well as its Share Offer for the Current Shares.
Balance between the Market Principle and the No Discrimination Principle
The announcement of such a bid by Glencore would have created an opportunity for shareholders to realise a value for their investment in ANL, and thereby promote the Market Principle.
The Panel was of the view that an appropriate balance could have been created between the Market Principle and the No Discrimination Principle if:
(a) Glencore had undertaken to make the Glencore Bid; and
(b) The Panel had advised MP Global that if it wished to proceed with the Share Offer and Rights Offer, it must also make a takeover bid for all of the New Shares. This requirement would have cured the discriminatory nature of the Rights Offer, because Glencore would have had an opportunity to sell all of its Shares (including those obtained as underwriter of the Rights Issue) to MP Global.
The Panel considered that it was not unreasonable for Glencore to assume the additional risk associated with making the Glencore Bid in order to protect itself from the discriminatory nature of the Rights Offer. Glencore is currently the underwriter of the Rights Issue, and is already at risk, following completion of the Rights Issue, of holding as much as 95.58% of the issued shares of Anaconda.
Refusal by Glencore to protect itself
However, Glencore advised the Panel that it would not provide an undertaking to make the takeover bid suggested by the Panel.
By Glencore declining to make the Glencore Bid, the Panel was of the view that Glencore had declined to protect itself from any discrimination against it under the Rights Offer in its capacity as underwriter. Under the proposal which the Panel invited Glencore to consider, Glencore had the opportunity to ensure that MP Global would have to offer for any shares Glencore had been obliged to take up as underwrite, by MP Global being required to offer for all Anaconda shares (new and existing). That would have eliminated the discriminatory nature of the MP Global offers.
Consequently, the Panel considered that there was no longer any basis for making a declaration of unacceptable circumstances in relation to the MP Global Rights Offer. The Panel considers that the MP Global Rights Offer will not now prevent the acquisition of control of voting shares in ANL taking place in an efficient, competitive and informed market.
MP Global Undertakings
Therefore, the Panel has decided to decline the Application, accepting the undertakings of MP Global to:
(a) exercise, if it is legally entitled under section 606 of the Act to do so, all of the Rights that it acquires up to a maximum of 65% of the total Anaconda shares on issue immediately following the completion of the Rights Issue; and
(b) ensure that the Rights Offer complies, as far as practicable, with the conditions set out in the relief instrument granted by the Australian Securities & Investments Commission to MP Global on 29 January 2003.
The undertakings that MP Global has given to the Panel will ensure that the Rights Offer proceeds in the manner intended by the ASIC relief i.e. in accordance with the principles of Chapter 6 of the Act.
Precedent value
The Panel is concerned to emphasise that its decision in relation to the Application is specifically related to the unusual facts of the Application, the Rights Issue, and the MP Global offers, including the timing, and heavy dilution of existing shareholdings, associated with the Rights Issue.
MP Global announcement
MG made an announcement last night in relation to the status of certain defeating conditions attaching to the Share Offer and Rights Offer (the Independent Expert Condition and the ASIC Relief Condition). The Panel considers that the announcement achieves the intent of the Panel's interim order i.e. that it removes from MP Global the discretion of whether or not to rely on the two conditions which have been triggered. Instead, the issue which will decide whether the MP Global offers succeed is only the choices of the Anaconda shareholders. The Anaconda 08 Panel considers that the basis on which MP Global has announced that the two conditions will be waived is not unreasonable.
Reasons
The Panel will publish its reasons for its decision on its website in due course.
Nigel Morris,
Director, Takeovers Panel
Level 47 Nauru House,
80 Collins Street,
Melbourne VIC 3000
Ph: +61 3 9655 3501
Annexure
The Application from Glencore was for a declaration of unacceptable circumstances in relation to the structure of the Rights Offer by MP Global (through a subsidiary) to Rights.
MP Global has announced that it is proceeding with its Rights Offer and its offer to acquire the shares in ANL. The announcement was made after the Anaconda 02 - 05 Panel made its decision to revoke ASIC relief that had been granted to MP Global in relation to the Rights Offer.
Glencore submitted that it was unacceptable for MP Global not to confirm that:
(a) it would extend its offer for ANL shares to include all shares issued under the ANL Rights Issue; and
(b) if the Rights Offer conditions are satisfied or waived, MP Global would exercise all of the Rights it acquires or receives sufficient to maintain its percentage voting power in ANL at the level it holds at the close of the Rights Offer.
Glencore sought consequential orders in relation to its application.
