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The Australian Government Takeovers Panel has made interim orders with respect to The Agency and the “takeover bid” by Magnolia Equities.
A media release from the Takeovers Panel has revealed it ordered The Agency to defer the consideration of a number of resolutions contained in The Agency’s notice of annual general meeting (AGM) “in order to maintain the status quo”.
REB first revealed Magnolia’s “off-market all scrip takeover bid” for The Agency back in early December.
This “proposal to make an unsolicited, conditional offer” was subsequently slammed by The Agency Group in an announcement to the ASX, where the company stated that “the board of The Agency does not consider that the proposal provides shareholders with enough information to even be considered a credible ‘proposal’ or constitute a legitimate alternative to the proposed issue of $5 million in convertible notes to Peters Investments Pty Ltd”.
The Agency then took its affairs to the Takeovers Panel in mid-December.
This AGM meeting, set to take place on 23 December 2020, was intended to seek shareholder approval for the sale proposal from Peters Investments Pty Ltd.
This AGM can now take place no earlier than Wednesday, 30 December 2020.
According to the Takeovers Panel director, Allan Bulman, independent expert reports as prepared by Nexia Perth Corporate Finance Pty Ltd relating to the Peters Proposal Resolutions have now been reviewed by a third party that was appointed by Magnolia.
The orders from the panel, among other things, permit a vote on the Peters Proposal Resolutions to proceed on or after 30 December 2020 provided The Agency makes a response from Nexia to the comments of the third party available to its shareholders three days prior.
The media release from the Takeovers Panel also provided a summary of the Nexia report review from the Magnolia-appointed third party.
REB has reproduced several of the “comments” — as noted by the panel — below:
- Nexia do not clearly identify the valuation date, do not rely on “…economic market and other conditions prevailing at the date of this report” as referred to by Nexia in the reports and do not define the standard of value.
- Nexia do not compare The Agency’s current share price to the exercise price of the options. The maximum exercise price under the Peters Proposal of $0.027 per share is 46 per cent lower than The Agency’s share price on 9 December 2020 of $0.05 per share and materially dilutive.
- Real estate businesses are often valued on a sum of parts basis rather than valuing the business as a whole… This does not appear to be considered by Nexia.
The third party also argued Nexia had not correctly estimated expected earnings, had made omissions and errors with regard to the capitalisation of earnings valuation, queried the “moderate level of liquidity” and omitted information around alternative funding.
It also offered up a list of “key items” Nexia should have used when assessing “the reasonableness of the Peters Proposal”.
The interim orders from the Takeovers Panel will remain in effect for the next two months, unless further orders are made by the panel, or a decision by shareholders as to the Peters Proposal is made.
More to come.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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