Phosphate Resources Limited – Panel Publishes Reasons in Relation to Phosphate [03/04/2003] The Takeovers Panel

Thursday, 03 April 2003

PANEL PUBLISHES REASONS IN RELATION TO PHOSPHATE

The Takeovers Panel advises that it has published the reasons for its decision not to make a decision of unacceptable circumstances in response to the application from two shareholders in Phosphate Resources Limited (PRL) (an unlisted public company).

The shareholders sought a declaration of unacceptable circumstances and interim and final orders in relation to a buy-back of 25% of the shares, and a proposed one-for-three rights issue, by PRL to be underwritten by Asset Backed Holdings Limited (ABK), which is the largest single shareholder in PRL.

The shareholders submitted that as a result of the buy-back ABK's percentage holding in PRL has increased to 26.7%, and as a result of underwriting the rights issue ABK might have increased its holding to a maximum of 39.6%, both without the payment of a takeover premium.

In order to satisfy the Panel's concerns, PRL undertook to the Panel that, for the next 12 months, it will not:

(a) proceed with a rights issue that could lead to ABK obtaining an increase in its shareholding above that which it would have been entitled to acquire under item 9 of section 611 (the 3% creep provision); or

(b) proceed with an underwriting of any rights issue by ABK,

without, in each case, shareholder approval by ordinary resolution ignoring any votes cast by ABK and its associates, and ABK's directors and their associates.

PRL also undertook that if it proceeds with a rights issue, PRL shareholders will be provided with adequate information for the purposes of a shareholder meeting to approve an acquisition of shares.

PRL withdrew its Offer Information Statement dated 6 December 2002 regarding the proposed rights issue.

The Panel was constituted by Marie McDonald, Chris Photakis, and Andrew Knox.

The Panel's reasons are available on its website at: http://www.takeovers.gov.au.

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