Takeovers Panel Calls for Independent Expert Proposals (Tegel Group Holdings Limited)
Published 11 October 2018
The Takeovers Panel is seeking expressions of interest from relevant persons who wish to be considered for appointment as an independent expert to determine the fair and reasonable value of performance rights in Tegel Group Holdings Limited (Tegel) for the purpose of the compulsory acquisition provisions under the Takeovers Code.
On 28 May 2018, Bounty Holdings New Zealand Limited (Bounty) made a full takeover offer for all of the fully paid ordinary shares that Bounty did not already hold (Shares), and all of the performance rights granted under the equity settled share based incentive plan for senior managers and eligible employees in May 2016 (the FY2017 Performance Rights) and in July 2017 (the FY2018 Performance Rights) (each a separate class of equity security and together, the Performance Rights), in Tegel (the Offer).
On 24 September 2018, as a result of acceptances of the Offer and the Offer being declared unconditional in all respects, Bounty became the holder or controller of 90% or more of the voting rights in Tegel. Bounty gave notice on 27 September 2018 that it became the "dominant owner" of Tegel for the purposes of the compulsory acquisition provisions of the Takeovers Code.
On 1 October 2018, Bounty gave notice to remaining shareholders that it was exercising its compulsory acquisition rights under Part 7 of the Takeovers Code, to acquire the outstanding equity securities in Tegel. Bounty specified the acquisition price of:
(a) $1.23 per Share;
(b) $0.043 per FY2017 Performance Right; and
(c) $0.26 per FY2018 Performance Right.
Bounty has since received written objections to the share acquisition price from holders of the Performance Rights, who together hold 60.76% of the FY2017 Performance Rights, and 62.41% of the FY2018 Performance Rights (as at 11 October 2018).
The Panel is therefore required, under rule 57 of the Code, to appoint an independent expert to determine the value of the Performance Rights in Tegel which will be acquired by Bounty.
Rule 57(4) of the Code requires the independent expert to calculate the fair and reasonable value of the Tegel Performance Rights being compulsorily acquired by:
(a) first assessing the value of all the equity securities in the class of equity securities of which the equity security forms part; and
(b) then allocating that value pro rata among all the securities of that class.
The amount determined by the independent expert will be the amount that Bounty will pay to all outstanding holders of Performance Rights. If it is higher than the acquisition price, all outstanding holders will get a "top-up". If the amount is less, outstanding holders can be required to return the difference to Bounty.
The independent expert must make its determination of the fair and reasonable value of Tegel’s Performance Rights within 28 days after being appointed. The costs of the expert determination must be paid by Bounty, the dominant owner.
If you wish to be considered for appointment as the independent expert under rule 57 in respect of the compulsory acquisition of the Performance Rights in Tegel, the Panel invites you to submit a proposal. Your proposal letter should provide the Panel with the following information:
(a) your qualifications, expertise and relevant experience;
(b) the names of the individuals who would prepare the determination and copies of their current curricula vitae;
(c) confirmation that the determination would be completed within 28 days of appointment;
(d) a statement that you have no conflict of interest that could affect your ability to provide an unbiased determination;
(e) disclosure of all past and present relationships with Tegel, Bounty, the directors and management of Tegel, and holders of Performance Rights (the Panel is able to provide names of the holders of Performance Rights on request for this purpose);
(f) confirmation that you have sufficient professional liability insurance for the purposes of appointment as independent expert;
(g) the level and basis of fees you would charge in respect of the determination; and
(h) your proposed terms of engagement. Please note that the Panel is not able to provide any indemnification which might be customary. However, under the Code, Bounty must meet the appointee’s costs. The Panel considers any amount payable under an indemnity to be part of the costs that Bounty must pay.
Applications must be sent by 5.00pm, Thursday, 18 October 2018 via email to:
Linda Delli Cicchi
D: +644 815 8454 | M: +64 21 2200880
The Panel intends to make an appointment as soon as possible.
Andrew Hudson, Chief Executive
D: +644 815 8452 | M: +64 21 815401