Application by Magic Millions for Review of Panel's Decision in Brisbane Broncos Nos 1 and 2 [29/01/2002] The Takeovers Panel

Tuesday, 29 January 2002

APPLICATION BY MAGIC MILLIONS FOR REVIEW OF PANEL'S DECISION IN BRISBANE BRONCOS NOS 1 AND 2

The Panel advises that it is currently continuing discussions with parties in relation to the application from Magic Millions under section 657EA of the Corporations Act requesting a review of the decisions in the Brisbane Broncos Nos 1 and 2 proceedings.

The Review Panel currently believes it will be able to make an announcement on the result of those discussions to the market after the close of trading tomorrow.

The sitting Panel in this review application is Simon McKeon (sitting President), Ian Ramsay and Carol Buys.

Nigel Morris
Director
Takeovers Panel
Ph: +61 3 9655 3501
nigel.morris@takeovers.gov.au

Background

On 29 November 2001, Magic Millions announced to ASX that it would make a takeover bid at 16 cents per share for 50% of each shareholder's holding in Broncos. It said that the bid would be conditional as to prescribed occurrences, but that it would not be conditional as to acceptances. It nonetheless described Magic Millions' intention as being to secure a better return for all shareholders.

Magic Millions is 50% owned by Ognis Pty Limited (a company controlled by Mr John Singleton). Ognis and Mr Singleton have a relevant interest in 15.66% of Broncos shares. A subsidiary of The News Corporation Limited has a relevant interest in 44.5% of Broncos shares and for a number of years the News group has held 40% or more of the Broncos and many of the directors of Broncos have been associated with the News group.

On 14 December BB Sports announced that it would bid for all of the shares in Broncos at 17 cents, subject to prescribed occurrences and a condition (Cross Condition) to the effect that neither ASIC nor Panel action nor any other event should permit Magic Millions to withdraw its bid or to make it other than in accordance with the timing requirements of the Corporations Act (as they stood at the time of the announcement). BB is a wholly-owned subsidiary of The News Corporation Limited.

BB indicated that, if at the close of its own bid it was unable to proceed to compulsory acquisition, it would consider accepting the Magic Millions bid for any shares it had in excess of a bare majority. On 14 December, BB lodged a bidder's statement with ASIC and served a copy on Broncos.

On 17 December, Magic Millions announced that its bid for Broncos would not proceed, because BB had announced its bid for Broncos. It stated that, since the BB bid was at a higher price than Magic Millions' bid, BB had announced that it did not intend to accept the Magic Millions bid and News's relevant interest in Broncos shares was now 44.91%, it was unlikely that Magic Millions could achieve its primary objective of securing control of Broncos. Not having posted offers pursuant to its announcement, Magic Millions did not withdraw them.

On 3 January 2002, the Broncos 01 and 02 Panel decided that the BB bid was required to proceed, but with an alteration to a condition. The Panel decided that Magic Millions was under an obligation under section 631 of the Act to continue with its bid by 29 January, and its failure to do so by that time may give rise to unacceptable circumstances and to liability in damages. The Broncos 01 and 02 Panel decided, however, not to make orders requiring Magic Millions to proceed.

The Broncos 01 and 02 Panel accepted an undertaking from BB to modify the provisions of the Cross Condition to reduce the risk that it would be a self defeating condition.

On 10 January 2002, Magic Millions applied for review of the Broncos 01 and 02 decisions.