Data and Commerce Limited – Conclusion of Panel Proceedings [19/05/2004] The Takeovers Panel

Wednesday, 19 May 2004

DATA & COMMERCE LIMITED: CONCLUSION OF PANEL PROCEEDINGS

The Panel advises that it has concluded the proceeding (the Proceeding) arising from the application made by Radio Australia Pty Ltd and its associate Andros Nominees Pty Ltd (collectively, Radio Australia) on 30 April 2004 (the Application) in relation to the affairs of Data & Commerce Limited (DCL). The Panel concluded the Proceeding without making a declaration of unacceptable circumstances or any order following the lodgement and dispatch of a second supplementary prospectus dated 17 May 2004 (the Second Supplementary Prospectus) by DCL.

Background

Rights Offer and Underwriting

On 14 April 2004, DCL lodged with ASIC a prospectus (the Prospectus) for an underwritten non-renounceable rights issue of 147,646,147 ordinary shares in DCL at an issue price of 4 cents per share (the Rights Offer). The Rights Offer was made on the basis of 1 share for every 1 share held as at 23 April 2004 to raise approximately $5.9 million to retire debt and provide the company with working capital.

The directors of DCL stated in the Prospectus that they, and entities associated with them, would take up their rights under the Rights Offer, covering approximately 19% of the new shares to be issued under the Rights Offer.

DCL had entered into an underwriting agreement (the Underwriting Agreement) with Rentamobile Pty Ltd (Rentamobile) to underwrite the remainder of the issue, subject to certain terms and conditions. The underwritten shares (being 119,843,526 shares) represented approximately 81% of the Rights Offer (the Underwriting).

On 15 April, DCL lodged a supplementary prospectus with ASIC (the Supplementary Prospectus). The Supplementary Prospectus disclosed that Rentamobile did not currently hold any shares in DCL, and that if none of the shareholders other than the directors and associates took up their entitlements under the Rights Offer and Rentamobile took up all of the underwritten shares as required under the Underwriting Agreement, Rentamobile would obtain approximately 40.56% of DCL.

Application

On 30 April, Radio Australia applied to the Panel for a declaration of unacceptable circumstances and final orders in relation to the affairs of DCL, particularly the Underwriting arrangements to the Rights Offer. Details of the Application and the orders sought by Radio Australia are set out in the Panel’s media release TP04/33.

The Panel’s decision

In assessing whether or not the Rights Offer and the Underwriting constituted unacceptable circumstances, the Panel referred to the general criterion set out in InvestorInfo for proper reliance on the exception in item 10 of section 611, that the structure, process and disclosure of the Rights Offer should be such as to make participation genuinely accessible to the shareholders in general, having regard to the company’s position and the requirements of Chapter 6D. The Panel also had regard to the particular factors listed in paragraph 38 of the InvestorInfo reasons, as relevant to DCL’s position and prospectus.

While the Proceeding was underway, DCL agreed to issue the Second Supplementary Prospectus to resolve the issues raised in the Application and to extend the closing time of the Rights Offer from 11 May until 18 May (this was later further extended to 27 May). The Second Supplementary Statement described the level of applications received by DCL from shareholders under the Rights Offer and offered shareholders proportionate participation in the underwriting shortfall. It also provided additional information about Rentamobile and its possible shareholding after the issue, depending on various assumed levels of shortfall. The Panel also asked DCL to include in the Second Supplementary Prospectus recent information about its financial performance.

The Second Supplementary Prospectus was dispatched to shareholders on 18 May, nine days before the extended closing date of the Rights Offer.
Given that the Second Supplementary Prospectus dealt with the issues raised by the Application which would have lent any support to a declaration of unacceptable circumstances, the Panel concluded the Proceeding on the basis that it was not necessary or appropriate to make a declaration and that no order was required.

The sitting Panel comprised Andrew Knox (sitting President), Michael Ashforth and Simon Withers.

George Durbridge
Director, Takeovers Panel
Level 47, 80 Collins Street
Melbourne, VIC 3000
Ph: +61 3 9655 3553
george.durbridge@takeovers.gov.au