AMP Shopping Centre Trust 02 – Review Panel Declines to Vary Orders in Reveiw of AMP Shopping Centre Trust Decision [26/05/2003] The Takeovers Panel

Monday, 26 May 2003

REVIEW PANEL DECLINES TO VARY ORDERS IN REVIEW OF AMP SHOPPING CENTRE TRUST DECISION

The Panel advises that the AMP Centro 02 Review Panel has declined to vary the orders made by the AMP Centro 01 Panel in relation to the affairs of the AMP Shopping Centre Trust (ART).

On 13 May 2003, the AMP Centro 01 Panel made a declaration of unacceptable circumstances in relation to the affairs of ART. The AMP Centro 01 Panel also made an order (A1 Order) that AMP Life Limited (AMP Life), and other Co-Owners in shopping centres with ART, not exercise certain aspects of Pre-Emptive Rights which (if they exist) would allow ART's interests to be bought out of five major Shopping Centres solely because AMP Henderson Global Investors Ltd (AMPH) is removed as Responsible Entity of ART following a successful takeover bid for ART (Change of Responsible Entity).

ART is a listed managed investment scheme which has investment interests in a number of shopping centres. CPT Manager Limited (as responsible entity for Centro Property Trust) (Centro) announced a takeover bid for ART on 18 March 2003.

The AMP Centro 01 Panel accepted Centros's submissions that the commercial effects of aspects of the Pre-Emptive Rights, if they exist, are such that they would effectively deter any takeover bid for ART by any person who wasn't acceptable to the AMP group. The AMP Centro 01 Panel also found that the effect of the Pre-Emptive Rights had not been adequately disclosed to the unitholders of ART or the market, and that the unitholders had not consented to the Pre-Emptive Rights, especially given their effects following the introduction of the Managed Investments Act (MIA) regime.

The AMP Centro 01 Panel decided that this has impaired the efficient, competitive and informed market for control of ART units.

On 15 May 2003, AMP Life sought a review of the decision of the AMP Centro 01 Panel to make the A1 Order. AMP Life did not seek review of the decision to make the declaration of unacceptable circumstances, only the orders made by the AMP Centro 01 Panel.

AMP Centro 02 Review Panel Decision

AMP Life's review application centered on three issues, whether:

a) the Panel was constitutionally prevented from making the A1 Order because the order acquired AMP Life's property (the Pre-Emptive Rights) on unjust terms;

b) the AMP Centro 01 Panel lacked the power to make the A1 Order if it interfered with a third party's property rights; and

c) the A1 Order unfairly prejudiced AMP Life and the other Co-Owners.

AMP Life failed to make its case to the Panel that:

a) there was a clear cut limitation under the Constitution of the Commonwealth of Australia that would prevent the Panel from making the A1 Order (in the absence of a clear cut limitation, the Panel considers that the High Court is the appropriate place for AMP Life to take any constitutional issues for determination); or

b) the Panel lacked the power to make the A1 Order where it considered that those orders were necessary and appropriate to protect the interests of ART unitholders; or

c) the A1 Order unfairly prejudiced AMP Life or other Co-Owners.

Orders - No Unfair Prejudice

The Panel does not consider that the AMP Centro 01 Panel made any error in determining that the A1 Order would not unfairly prejudice any person given:

a) any activation of the Pre-Emptive Rights on a Change of Responsible Entity would be a windfall benefit to the Co-Owners, to the detriment of ART unitholders. That benefit :

i) appears not to have been known of, or intended by, the Co-Owners in 1997;

ii) does not appear to be a benefit that the Co-Owners and the ART unitholders bargained for in 1997;

iii) appears to have been an unintended side effect of the MIA; and

iv) was not clearly disclosed to, or consented to by, the ART unitholders.

To deprive the Co-Owners of this windfall and return it to the ART unitholders would not be unfair;

b) the participation by AMP Life in:

i) the initial prospectus for ART in 1997 which lacked adequate disclosure (in that it did not make clear the effect of a change of trustee on the Pre-Emptive Rights). In saying this, the Panel considers that the ART 1997 prospectus was, effectively, the float by AMP Life of a portion of its shopping centre assets. On that basis, the Panel does not believe that AMP Life, or alternatively its investment manager, was not in a position to have significant influence on the content of the 1997 prospectus;

ii) the entry into the deeds of confirmation of the Co-Owners Agreements in 1999 (which should have given AMP Life cause to consider how transition to the MIA might have affected the operation of the Co-Owners Agreements and whether disclosure to, or consent by, ART unitholders by AMPH was needed if AMP Life was going to rely on the changed operation of the Co-Owners Agreements in the future); and

iii) the absence of subsequent disclosure or consent for the change in the operation of the Pre-Emptive Rights resulting from the introduction of the MIA regime (despite the various points in time which the AMP Centro 01 Panel considered as being potential prompts for AMP Life or AMPH to consider disclosure to ART unitholders of the changed operation); and

c) AMP Life had the opportunity to disclose, or to cause ART to disclose, or to take action to protect the Pre-Emptive Rights, which would have been sensible and prudent behaviour, if AMP Life had seriously considered the Pre-Emptive Rights were worth the amount of prejudice it is now alleging losing them would cause. AMP Life's lack of doing this suggests strongly that it was not aware of the potential for the Pre-Emptive Rights to be activated, or did not consider that the Pre-Emptive Rights would be activated, in the event of a Change of Responsible Entity, or did not value such benefits enough to seek to protect them; and

d) the fact that revoking the A1 Order would cause the prejudice to fall on the unitholders in ART who have not contributed it, rather than AMP Life which either contributed to it, or failed to take any steps to prevent it.

In making the statements it has above, the Panel does not imply that AMP Life (not being a disclosing entity) had any statutory obligation under the continuous disclosure provisions of the Act, or the ASX Listing Rules, in relation to the ART unitholders. However, if AMP Life wishes to rely on, and exploit, the Pre-Emptive Rights in the way they operate under the MIA regime, the Panel considers that AMP Life had the opportunity to ensure that adequate disclosure was made, well before now, of the way it now contends that they operate, whether by persuading AMPH to do so as Responsible Entity for ART, or by doing so itself. Similarly, if AMP Life now wants to rely on or exploit the Pre-Emptive Rights as it contends they operate under the MIA regime, it would have been prudent to have persuaded ART to seek the approval of ART unitholders at the time of the transition from the MIA regime.

The Panel notes that its legislation expressly requires it to consider whether its orders would unfairly prejudice a person. Mere prejudice is not something which would stop the Panel making orders to protect the interests of ART unitholders. For AMP Life to persuade the Panel to vary the A1 Order it would have had to have shown that it was unfair to restrain AMP Life's ability to prevent a Change of Responsible Entity in ART. AMP Life failed to do so. For the reasons outlined above the Panel was not satisfied that the A1 Order would be unfairly prejudicial to AMP Life.

The President of the Panel appointed Michael Tilley, Karen Wood and Denis Byrne to constitute the Panel for the AMP Centro 02 Review application.

The Panel's reasons for its decision will be posted on the Panel's website when they are settled.

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