AUSTRALIA: Australia Takeovers Panel finds breach of takeovers threshold by Jelsh Holdings Pty Ltd

Tuesday August 20 2013

The Australian Takeovers Panel has made a declaration of unacceptable circumstances and final orders in relation to the affairs of Coppermoly Limited.

Circumstances of the case

The decision concerns a 1 for 4 non-renounceable entitlement offer at a price of $0.045 per share to raise up to approximately $1.95 million, fully underwritten by Jelsh Holdings Pty Ltd.

After entering into the underwriting arrangement, a related entity of Jelsh entered into an agreement to acquire 16,290,333 Coppermoly shares. As a result of this acquisition, and additional on-market acquisitions, Jelsh’s voting power in Coppermoly increased to 12.06%.

The entitlement offer closed on 30 July 2013. Based on the participation of shareholders and Jelsh’s obligations as underwriter, Jelsh’s voting power in Coppermoly will increase to approximately 26.76%.

The Panel`s decision

The Panel considered that the acquisition of shares by a related entity of Jelsh, after Jelsh became the underwriter to Coppermoly’s proposed entitlement offer, put Jelsh in a position where it would be likely to increase its voting power in Coppermoly to more than 20%. The Panel held that all reasonable steps to minimise the potential control impact of the entitlement offer on Coppermoly were not taken, and that there were material deficiencies in Coppermoly’s disclosure, including in relation to the identity of Jelsh and its intentions for Coppermoly and the changed intentions of directors in respect of taking up their entitlements.

The Panel`s final orders

The Panel made the following orders:

• Coppermoly and Jelsh must comply with their obligations under the underwriting arrangement
• Jelsh may not rely on any right it may have to terminate the underwriting arrangement as a consequence of the application to the Panel, the declaration or the orders
• Jelsh is obliged to divest shares it receives as underwriter of the entitlement offer so that shareholders who were originally entitled to participate in the entitlement offer are offered as many shares as is necessary for them to take up what was their full original entitlement in the entitlement offer, and shares in excess of their entitlement
• Jelsh and its associates are restricted from voting any shares held in excess of 20% voting power (subject to such voting rights being restored at a rate of 3% every 6 months), and participating in any future rights issue in respect of shares subject to the voting restriction above, and
• the letter of offer to shareholders in respect of shares to be divested by Jelsh be in a form approved by the Panel.

Click on the above link for the Takeovers Panel declaration.