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Monday, June 17, 2024

Takeovers Panel Declares Unacceptable Circumstances for SCA Shareholdings

The Australian Government Takeovers Panel has made a declaration of unacceptable circumstances in relation to an application dated 24 October 2023 by Keybridge Capital Limited in relation to the affairs of Southern Cross Media Group Limited (Southern Cross).

As at market close on 19 June 2023, Allan Gray Australia Pty Limited (Allan Gray) had voting power in 21.71% of Southern Cross. At this time, Allan Gray also had voting power in 20.04% of ARN Media Limited (ARN).

After market close on 19 June 2023, ARN acquired 14.8% (in aggregate) of Southern Cross shares from Allan Gray and other Southern Cross shareholders (ARN Acquisition). As a result of the ARN Acquisition, Allan Gray’s voting power in Southern Cross increased from 21.71% to 31.24% by operation of the deeming provision in s608(3)(a), resulting in 6.83% of Southern Cross shares having been acquired by ARN in contravention of s606 of the Corporations Act (allowing for Allan Gray’s creep capacity).

Allan Gray subsequently acquired a further 0.08% of Southern Cross shares in contravention of s606.

A consortium comprising ARN and Anchorage Capital Partners Pty Limited subsequently submitted a non-binding indicative offer to acquire 100% of Southern Cross via a scheme of arrangement.

ARN and Allan Gray both submitted that the contraventions were inadvertent. Notwithstanding this, the Panel considered that the circumstances were unacceptable:

1. because they constituted or gave rise to contraventions of s606 and the substantial holder provisions in s671B and/or

2. in relation to the contravention of s606 arising from the ARN Acquisition only, having regard to the effect that the Panel is satisfied the circumstances have had, are having, will have or are likely to have on: (a) the control, or potential control, of Southern Cross or

(b) the acquisition, or proposed acquisition, by a person of a substantial interest in Southern Cross.

The Panel had regard to the matters in s657A(3) and did not consider it against the public interest to make the declaration.

Submissions in relation to orders are due by 5.00pm (Melbourne time) on Wednesday, 29 November 2023.

The sitting Panel is Michael Borsky KC (sitting President), Sylvia Falzon and Marina Kelman.

The Panel will publish its reasons for the decision in due course on its website

Visit https://www.takeovers.gov.au.

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