Previous issues:

Securing a cornerstone investor can help to secure the success of an equity raising by a deleveraging listed entity. The process has been made easier by ASIC's new class order expanding relief available in relation to equity raisings but, as always, at the intersection of Australia's takeover and equity raising rules, there are a number of regulatory issues that need to be considered.

Legislative changes in NSW mean that stamp duty may be imposed on some acquisitions of listed entities and the previous 'land rich' requirement no longer applies for new public acquisitions.

If we ever needed reminding that section 611 item 14 of the Corporations Act (the exemption for acquisitions of downstream interests as a result of acquisitions of interests in certain listed entities) is deceptively simple, the Takeover Panel's reasons in Cape Lambert MinSec Pty Ltd [2009] ATP 12 issued on 3 July 2009 are a reminder of the complexities of downstream acquisitions.

Recently ASX exercised its discretion under ASX Listing Rule 10.1.5 to require one of Australia's oldest companies and largest beef producers, Australian Agricultural Company Limited, to obtain the approval of its shareholders to a transaction from which one of its substantial shareholders would indirectly benefit. Listing Rule 10.1.5 gives ASX discretion to prevent avoidance of the ASX rules regulating transactions with persons of influence.  It is interesting to note the circumstances prompting ASX to exercise the discretion.

Like many OECD countries, Australia maintains a foreign investment screening system.  The objective of this system is to ensure that investments in Australia align with Australia's national interest.  A recent surge in interest from Chinese investors in the Australian resources sector, including several high profile investment proposals, has shone a spotlight on the manner in which the Australian authorities approach investments from China in general and from Chinese state-owned enterprises in particular.

The recent decision of the Takeovers Panel in Bisalloy Steel Group Limited is a reminder of the Panel's willingness to examine the effect that rights issues may have on the control, or potential control, of a company and to intervene if an underwriter (or sub-underwriter) may end up with more than 20% of the company. Following the Bisalloy decision, if there is a possibility that there may be a material shortfall, the directors need to consider whether the proposed rights issue could be subject to a successful challenge and the issuer or the underwriter or both may, as a precaution, consider requiring that the issuer obtain shareholder approval for any increase in the underwriter's level of ownership arising from the underwriting arrangements.

The Takeovers Panel decided in Gloucester Coal Limited that a scrip bidder in a reverse takeover should include in the deal structure an effective fiduciary out.  Failing to do so may be an unacceptable lock-up. The bidder's directors need to be free to cancel the deal if a superior proposal becomes available.

Thorough disclosure of funding is a fundamental tenet of Australian takeovers regulation.  Or is it?  The Takeover Panel's decision in GoldLink IncomePlus Limited 03 reveals a worrying possibility as far as target boards and shareholders are concerned.

Demergers normally need shareholder approval to confirm a capital reduction, a scheme of arrangement, or both.  But sometimes they do not.  The July 2008 in-specie distribution by Toll Holdings of its shareholding of approximately 63% in Virgin Blue is an interesting example where shareholder approval was not needed.

The Treasurer has announced that the Foreign Acquisitions and Takeovers Act will be amended to ensure alternative structures, including those involving convertible notes, are brought clearly within the coverage of the Act. The text of the amendments is yet to be released, but the Government intends to back date the new rules to 12 February 2009.

So you, or your client, wants to take over a listed company.  Do you acquire a pre-bid stake?  What is the best way to go about it? What are the alternatives? Minter Ellison has prepared a concise table summarising pre-bid structures to guide your decision making.

A standstill provision in a confidentiality agreement may on its face prohibit a party from making a takeover bid for the disclosing entity. A standstill could therefore impede competition for control. Recently in International All Sports Limited, the Takeovers Panel upheld a standstill which prohibited the making of an initial unsolicited takeover bid. It is not yet clear when a standstill would be unacceptable because of its anti-competitive effect.

The increase in distressed asset sales accompanying the global financial downturn has seen a resurgence of 'failing firm arguments' justifying mergers that would otherwise raise the ire of the ACCC.  While financial distress is a relevant consideration, parties cannot assume the ACCC will approve a merger because the vendor, target or purchaser could face receivership or liquidation in absence of the merger.