Panel Publishes Reasons for Allowing Reliable's Bid to Proceed [22/05/2001] The Takeovers Panel

Tuesday 22 May 2001

Panel Publishes Reasons for Allowing Reliable's Bid to Proceed

The Review Panel in relation to Pinnacle No. 6 advises that it has published its reasons for upholding the declaration of unacceptable circumstances made by the sitting Panel in Pinnacle VRB Limited No. 4 (Pinnacle No. 4), but now allowing Reliable Power Inc (Reliable) to proceed with its off market takeover offer for the ordinary shares in Pinnacle VRB Limited (Pinnacle) (the Bid). The Panel received an application for the review of the decision of the sitting Panel in Pinnacle No. 4 on 10 April 2001.

On 30 April 2001, Reliable provided the Review Panel with fresh evidence of Reliable's funding arrangements with New West Capital LLC and US Global LLC, and their financial capacity. Following this, on 1 May 2001, the Review Panel decided that it was satisfied with the evidence provided by Reliable in relation to its funding arrangements for the purpose of paying the consideration offered under its Bid.

However, the Review Panel also decided to affirm the declaration of unacceptable circumstances made by the Pinnacle No. 4 Panel on the basis that, prior to bringing the application for review, Reliable had not shown that it had adequate funding arrangements in place. In this regard, the Review Panel took the same policy view as the Pinnacle No. 4 Panel. In order to ensure that the acquisition of control over the voting shares in a listed company takes place in an efficient competitive and informed market, bidders need to have adequate funding arrangements in place to ensure that they are able to pay the consideration offered under a bid.

Reliable has now provided further disclosure in relation to its funding arrangements to Pinnacle shareholders in the form of a supplementary bidder's statement, which was reviewed by the Panel before being dispatched to shareholders. Following its review of the supplementary bidder's statement, on 4 May 2001, the Review Panel revoked the orders made by the sitting Panel in Pinnacle No. 4, and allowed Reliable's Bid to proceed.

The reasons for the Panel's decision in this matter are available at the Panel's website at http://www.takeovers.gov.au/Decisions/decisions.htm .

The Panel for this matter was Karen Wood, Brett Heading and Alice McCleary.

Nigel Morris
Director, Corporations and Securities Panel
Level 47 Nauru House, 80 Collins Street, Melbourne VIC 3000
Ph: +61 3 9655 3501
nigel.morris@takeovers.gov.au