Wednesday 9 August 2006 06 – LAWFUEL – Press Release Service – The Australian Securities and Investments Commission (ASIC) has forced the withdrawal of a takeover bid proposed to be made by Australian Share Purchasing Company Pty Ltd (ASPC), a company controlled by Mr David Tweed. ASPC announced to the Australian Stock Exchange (ASX) and lodged a purported takeover bid for Clime Capital Limited (Clime) with ASIC on 1 August 2006. ASIC raised serious objections to the way the bid was structured and made it clear that it would take legal action to prevent a bid by ASPC proceeding in that form. ASPC announced today that it did not intend to proceed with the takeover bid. ASIC’s main concerns were that: • the purported takeover bid was really a selective capital reduction in disguise, designed to get around special voting rules applying to capital reductions; • the bidder wanted to use Clime’s money, rather than its own, to pay for the bid; • the amount offered to shareholders was not a fixed amount and so Clime shareholders could not be sure what they were being offered; • the bid had an illegal ‘maximum acceptance condition’ in it (ie where the amount payable would be lower if more than a specified percentage of Clime shareholders had accepted); • the bidder was seeking to buy voting rights for less than half the current market price of the shares to which they attached and get voting control over acceptance shares prior to the offer becoming unconditional. As a result, the bidder might have got control of Clime regardless of whether it actually acquired any Clime shares under the bid; • because of the structure of the bid, the bidder might not have been able to pay accepting shareholders within the statutory time limits; • the takeover bid was confusing and misleading in certain respects; and • Clime shareholders who did not accept might have been substantially disadvantaged. ASIC will strongly resist any takeover bid in this form. ASIC’s Deputy Chairman, Mr Jeremy Cooper said, ‘This bid had so many problems, we simply wanted it stopped. The concerns we had went to the bid’s very structure and were not just matters of detail. We likened the bid to a virus that we did not want let loose on our markets’. Background to the purported takeover bid Clime is a listed investment company (ie a company listed on the ASX that invests substantially in other listed securities). Prior to the announcement of the bid, Clime’s shares were trading at a discount to the per share net tangible asset (NTA) value of Clime. Page 1 of 2
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Mr Tweed and his associates have a substantial holding in Clime and have, on several occasions, requisitioned extraordinary general meetings of Clime, including an unsuccessful attempt to get an associate of Mr Tweed elected to the board. The purported takeover bid appeared to be designed to provide Mr Tweed with an opportunity to exit his holding at a price equivalent to the underlying NTA by liquidating Clime’s investment portfolio and distributing it by way of a reduction of capital. Structure of the purported takeover bid Although some aspects of the proposed bid were unclear, our understanding is that it had the following key features. The offer under the proposed bid involved two tiers of consideration: • a cash amount equal to the Standard NTA (as determined by Clime under ASX Listing Rule 4.12) if the bidder received acceptances of less than 12,130,949 Clime shares. Acceptances of less than this amount would have given the bidder less than a 50% interest in Clime’s shares; and • 45 cents cash if the bidder received acceptances of equal to or greater than 12,130,949 Clime shares. The bidder would also then attempt to procure a capital reduction by Clime to enable a distribution of cash equal to Liquidated NTA less 45 cents to all shareholders, regardless of whether or not they had accepted the bid. A copy of the bidder’s statement is available from the ASX announcements platform. For further information contact: Jeremy Cooper Deputy Chairman Telephone: 03 9280 3310 Danielle Huck ASIC Media Unit Telephone: 03 9280 3407 Mobile: 0417 540 769
