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28 September 2004
The Takeovers Panel today considered the unforeseen implications arising from an exemption granted to Prime Infrastructure Networks (New Zealand) Limited in respect of its proposed offer for Powerco Limited.
Part of the exemption allows Prime Infrastructure Networks to offer certain overseas shareholders cash only instead of the cash and scrip offered to all other shareholders.
The exemption is consistent with other exemptions granted pursuant to the Panel's policy regarding scrip offers and overseas shareholders. It recognises that because of the costs of complying with overseas securities law requirements it is not always practicable to make a scrip offer on the same terms to all shareholders. This type of exemption is typically granted where the number of overseas shareholders is minimal. Overseas shareholders held 0.3194% of Powerco shares at the time of the exemption.
Since the exemption was granted on 9 September 2004, its provisions have been exploited by a number of market participants with addresses in Australia acquiring Powerco shares. As a result the number of shareholders who can obtain the benefit of the exemption far exceeds the number originally advised to the Panel. Because the offer contains a cap on the amount of cash to be made available in aggregate to all shareholders accepting the offer, such acquisitions may reduce the cash consideration available to remaining shareholders.
In future, the Panel will structure exemptions of this type to prevent their exploitation.