In a recent decision by the Takeovers Panel in Dampier Gold Limited [2014] ATP 10, the Panel made a declaration of unacceptable circumstances on the basis that the bidder’s statement contained material information deficiencies and failed to disclose all the information required by s.636 of the Corporations Act 2001 (Cth) (Corporations Act).

A prospectus for continuously quoted scrip need only disclose the effect of the offer on the issuer, together with any information not disclosed previously in reliance on the continuous disclosure carve- outs. These requirements effectively take the place of the usual prospectus requirements of providing information regarding assets and liabilities, financial position and performance, profits and losses and prospects.

The Panel made the declaration against the bidder’s statement for Ord River Resources Limited (Ord). The Panel determined that further disclosures in relation to the following were required regarding:

  • Ord’s future commitments and funding, particularly over the following 6 months, during which it needed to pay AU$2 million under the JV and under a proposed conditional placement;
  • the terms of the JV;
  • Ord’s intentions, particularly with respect to its rights under, or seeking to amend, the JV (or if none, clear and prominent disclosure to that effect);
  • appropriate information regarding the bid premium (including a 30 or 60 day volume weighted average price (VWAP) as a comparison to the 90 day VWAP given); and
  • given that Ord could acquire 7% of the main asset of Dampier under the JV rather than by making a bid and if the bid was successful an accepting Dampier shareholder would hold shares in a company which still had the JV as its main asset but with a significantly different risk and investment profile, the Panel agreed with ASIC that the bidder’s statement should have contained some disclosure similar to that which would be found  in a disclosure document prepared in accordance with the content requirements of section 710(1) of the Corporations Act.

Ultimately Ord obtained ASIC’s consent to withdraw its bid and therefore no declaration was necessary. If you have any further queries regarding takeovers or control transactions.