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The Australian Government Takeovers Panel has made a declaration and final orders in the Magnolia v The Agency saga.
In a statement from the Takeovers Panel, it said, “among other things, that proper assessment of Magnolia’s proposal has been, and continues to be, inhibited by a failure to indicate clearly which sources of funding are to be used to pay the considerations, that persons providing cash considerations were appropriately bound to do so or had otherwise accepted responsibility for statements regarding their intention to provide funding and were aware of their potential liability for loss or damage resulting from misstatements or omissions”.
A sitting panel of Anthony Jarvis, Rebecca Maslen-Stannage and John O’Sullivan (sitting president) considered the circumstances of Magnolia’s proposal as “unacceptable” having regard to the effect of the proposal on the control or potential control of The Agency, or the effect of the acquisition or proposed acquisition of The Agency by a person of a substantial interest in the company.
It also considered that, alternatively, the circumstances were unacceptable as outlined with regard to the purposes of Chapter 6 of the Corporations Act 2001 — as it relates to takeovers — or in the further alternative, because they give rise to, will or are likely to give rise to a contravention of a provision contained in Chapter 6.
The panel members did not consider it against the public interest to make such a declaration of being “unacceptable”.
It also considered that none of the matters raised in the application by Magnolia against The Agency amounted to unacceptable circumstances.
In the Takeovers Panel’s final orders, it restrained Magnolia from dispatching its Bidder’s Statement without the Panel’s consent.
Magnolia reacts
In response to the decision, Magnolia Capital said it had accepted the findings of the Takeovers Panel, but revealed it continues to have concerns about the solvency of The Agency Group.
Magnolia’s founder and CIO, Mitchell Atkins, considered the panel’s ruling and orders as “technical in nature”.
He said the declaration and orders “demonstrate that the Panel did not uphold the contention by AU1 that there was significant doubt as to Magnolia’s capacity to fund its announced bid”.
“As the Panel’s Declaration shows, the Panel’s concern related to the documentation of arrangements between Magnolia entities under common control and some ambiguity in the Bidder’s Statement arising from the order and placement of certain information in the document,” the founder stated.
No proof of funding had been lodged with the Takeovers Panel that otherwise would have satisfied such concerns.
Previously, Magnolia had stated it would not be moving forward with its Bidder’s Statement in its current form after a number of defeating conditions were triggered.
Despite acceptance of the Takeovers Panel’s decision, Mr Atkins expressed that, “at this stage, Magnolia still has a number of concerns about the solvency of The Agency and is awaiting the audited half-yearly financial accounts”.
REB has previously reported results from the unaudited half-yearly financial accounts that showcase record results for the company.
He flagged how Magnolia remains an interested and significant shareholder of The Agency Group and will continue to keep its options under active review.
“This might include a future control transaction, should the Federal Court return The Agency to the control of the directors later today,” he highlighted.
Mr Atkins said that in the meantime, “Magnolia and its advisers will continue to pursue the concerns raised in the Bidder’s Statement and trust that The Agency’s directors are working to resolve them”.
A future "change of control" transaction would prove tricky now, given that Peters Investments now holds approximately 32 per cent of The Agency.
A comprehensive recap of the events leading up to today’s Takeovers Panel decision can be found here.
A hearing is also taking place today in the Federal Court of Australia which will consider the appointment of administrators to The Agency Group, after an injunction hearing kept The Agency in the hands of directors last month.
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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