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Optus Announces Takeover Offer for Uecomm Limited
INDEPENDENT DIRECTORS UNANIMOUSLY RECOMMEND
ACCEPTANCE OF OPTUS’ OFFER
SingTel Optus Pty Limited (“Optus”) today announced a takeover offer through its wholly owned subsidiary, Optus Networks Pty Limited (“Optus Networks”) to acquire all of the issued shares of Uecomm Limited (“Uecomm”) at a price of 40 cents cash per ordinary share (“Offer”). The Offer is subject to a number of conditions as set out in Appendix 1 “Offer Conditions”.
Optus Networks and Uecomm have agreed to co-operate in relation to the implementation of the Offer and have entered into an Implementation Agreement which governs such co-operation. The key terms of the Implementation Agreement are set out in Appendix 2.
Optus has informed Uecomm that it has entered into a pre-bid arrangement with Alinta Limited (“Alinta”), Uecomm’s major shareholder with ownership of 335 million Uecomm shares (approximately 66% of Uecomm’s issued capital), whereby it has secured options to acquire up to 20% of Uecomm’s shares outstanding of Uecomm’s shares outstanding. Optus has also informed Uecomm that Alinta has indicated that it intends to accept Optus’ offer for its remaining 46% shareholding at 32.5 cents per share, in the absence of a higher offer being announced.
The non-Alinta associated Directors of Uecomm (“Independent Directors”) unanimously recommend that shareholders accept the Optus Offer of 40 cents per share in respect of their shares in the absence of a superior proposal. The Independent Directors note that the Offer price of 40 cents per ordinary share represents a premium of:
- 15.9% to the Uecomm closing share price of 34.5 cents on 18 May 2004 which was the last full trading day before Uecomm shares were placed in a trading halt;
- 20.7% to the volume weighted average trading price of Uecomm’s shares over the week prior to 18 May 2004 of 33.1 cents; and
- 22.5% to the volume weighted average trading price of Uecomm’s shares over the month prior to 18 May 2004 of 32.7 cents.
For Uecomm’s minority shareholders, the Offer price of 40 cents per share is equivalent to:
- An enterprise value to EBITDA multiple of 12.9 times Uecomm’s reported EBITDA for the year ended 31 December 2003; and
- An enterprise value to EBITDA multiple of 8.7 times Uecomm’s publicly stated EBITDA target for the year ended 31 December 2004.
Uecomm’s Chairman, Peter Shore, said:
“The Independent Directors, management and our advisers have been reviewing Uecomm’s strategic options which maximise value and are in the best interests of all shareholders. Concurrently, Uecomm has been working cooperatively with Alinta to facilitate an exit for Alinta from its Uecomm shareholding and debt facility.”
“Uecomm’s Independent Directors believe that the Offer reflects the quality of the business that Uecomm staff have built over the past two years. Optus’ Offer delivers a substantial premium to Uecomm’s current and recently traded share price. It is the opinion of the Independent Directors that the Optus Offer represents good value for all shareholders.”
Paul O’Sullivan, the incoming Optus Chief Executive said:
“Uecomm is a strong growth company and is a natural complement to Optus’ existing businesses.”
“Uecomm’s network footprint in Sydney, Melbourne, Brisbane and the Gold Coast, its provision of high bandwidth data services, its focus on ethernet technology and its emphasis on serving the corporate mid-market will strengthen Optus’ offerings to corporate customers.”
“In the event we are successful in acquiring 100% of Uecomm, Optus intends to retain Uecomm as a stand-alone channel to focus on the business market and government organisations. Customers of both companies will benefit from the acquisition through greater focus and an improved range of services at competitive prices.”
Uecomm expects that the Bidder’s and Target’s Statements, including an Independent Experts Report and a formal recommendation from the Independent Directors, will be despatched to shareholders by early July. The Offer will be open for at least one month.
Uecomm is being advised on the offer by NM Rothschild & Sons (Australia) Limited and Freehills.
Appendix 1: Offer Conditions
Appendix 2: Key Implementation Agreement Terms
Appendix 1 – Offer Conditions
The Offer, and any contract resulting from the acceptance of the Offer, are subject to the following conditions:
(a) (Foreign investment approval) Before the end of the Offer Period:
(i) the Treasurer issues a notice under the FATA stating that the Commonwealth Government does not object to the transfer of the Uecomm Shares; or
(ii) the Treasurer is, by reason of lapse of time, not empowered to make an order under the FATA in relation to the transfer of the Uecomm Shares.
(b) (ACCC approval) Before the end of the Offer Period the Australian Competition and Consumer Commission advises that it has no objection to, or will not be taking any action in respect of, the acquisition by Optus of shares in Uecomm.
(c) (Minimum acceptance condition) Before the end of the Offer Period Optus and its associates have relevant interests in at least 65% of Uecomm Shares then on issue.
(d) (Material adverse effect) Between the date of the announcement of the bid and the end of the Offer Period no change, event or condition occurs, is announced, disclosed or otherwise becomes known to Optus (whether it becomes public or not) that has or is reasonably likely to have a material adverse effect on the business, financial or trading position or condition, or the assets, liabilities, profitability or prospects of Uecomm or the Uecomm group of companies taken as a whole since 31 December 2003 other than changes, events or conditions publicly announced or publicly disclosed by Uecomm prior to the date of the announcement.
(e) (No material acquisition or disposal) Except for any transaction or proposed expenditure publicly announced or publicly disclosed before the date of announcement of the bid, none of the following events occurs between the date of the announcement of the bid and the end of the Offer Period:
(i) Uecomm or a subsidiary of Uecomm acquires, agrees to or comes under an obligation to acquire, or makes any public announcement or public disclosure about the acquisition of any companies, businesses or assets (or any interests in any companies, businesses or assets) for an amount in aggregate in excess of $5 million; or
(ii) Uecomm or a subsidiary of Uecomm disposes, agrees to or comes under an obligation to dispose, or makes any public announcement or public disclosure about the disposal of any companies, businesses or assets (or any interests in any companies, businesses or assets) for an amount in aggregate in excess of $5 million.
(f) (No Prescribed Occurrences) None of the following events occurs (each a 'Prescribed Occurrence') between the date of the announcement of the bid and the end of the Offer Period:
(i) Uecomm converts all or any of its shares into a larger or smaller number of shares;
(ii) Uecomm or a subsidiary of Uecomm resolves to reduce its share capital in any way;
(iii) Uecomm or a subsidiary of Uecomm:
(A) enters into a buy-back agreement; or
(B) resolves to approve the terms of a buy-back agreement under section 257C(1) or 257D(1) of the Corporations Act 2001 (Cth);
(iv) Uecomm or a subsidiary of Uecomm issues shares, or grants an option over its shares, or agrees to make such an issue or grant such an option other than the issue of shares on the exercise of any options that are on issue as at the date of announcement of the announcement of the bid;
(v) Uecomm or a subsidiary of Uecomm issues, or agrees to issue, convertible notes;
(vi) Uecomm or a subsidiary of Uecomm charges, or agrees to charge, the whole, or a substantial part, of its business or property;
(vii) Uecomm or a subsidiary of Uecomm resolves to be wound up;
(viii) a liquidator or provisional liquidator of Uecomm or of a subsidiary of Uecomm is appointed;
(ix) a court makes an order for the winding up of Uecomm or of a subsidiary of Uecomm;
(x) an administrator of Uecomm, or of a subsidiary of Uecomm, is appointed under section 436A, 436B or 436C of the Corporations Act 2001 (Cth);
(xi) Uecomm or a subsidiary of Uecomm executes a deed of company arrangement; or
(g) (No untrue statements) Between the date of the announcement of the bid and the end of the Offer Period, Optus does not become aware of any statement that is untrue or fact that is required to be stated to make a statement not misleading in any document filed by or on behalf of Uecomm with ASX, and which has or is reasonably likely to have a material adverse effect on the business, financial or trading position or condition, or the assets, liabilities, profitability or prospects of Uecomm since 31 December 2003 other than changes, events or conditions publicly announced or publicly disclosed by Uecomm prior to the date of the announcement of the bid.
(h) (No regulatory action) Between the date of the announcement of the bid and the end of the Offer Period:
(i) there not being in effect any preliminary or final decision, order or decree issued by a public authority;
(ii) no action or investigation being announced, commenced or threatened by any public authority;
(iii) no application being made to any public authority (other than by Optus or any associate of Optus),
in consequence of or otherwise relating to the bid (other than a determination by ASIC or the Takeovers Panel in exercise of the powers and discretions conferred by the Corporations Act 2001 (Cth) or if the regulatory action results from action or inaction of Optus or its associates relating to the bid) which:
(iv) restrains or prohibits or otherwise materially adversely impacts upon the making of the bid or the completion of any transaction contemplated by the bidder's statement (including the acquisition of Uecomm Shares) or which threatens to do so; or
(v) seeks to require or approve the divestiture of any assets of any company within Uecomm group or the Optus group.
Each of the conditions in each paragraph and sub-paragraph above is a separate and independent condition.
The condition in paragraph 1(a) is a condition precedent to any contract resulting from the acceptance of the Offer coming into effect. The other conditions are conditions subsequent and do not prevent a contract resulting from acceptance of the Offer from coming into effect but any breach or non-fulfilment of them entitles Optus to rescind any contracts resulting from acceptance of the Offer.
Appendix 2 – Key Implementation Agreement Terms
Optus today entered into an agreement with Uecomm under which:
(a) Optus agrees to make an offer under a takeover bid at A$0.40 for each Uecomm share.
(b) Uecomm agrees to endeavour to ensure that the conditions to the bid are satisfied.
(c) Optus will bid at fair value for all options in Uecomm if Optus acquires more than 90% of all Uecomm shares under the bid
(d) Optus and Uecomm will prepare the formal takeover bid and response. Uecomm will use its best endeavours to ensure that its target statement includes:
(i) an unanimous recommendation by the Independent Directors to Uecomm shareholders to accept the offer in respect of all of their Uecomm shares subject to no superior proposal being announced; and
