WAM Active (ASX: WAA) has announced a new takeover offer to acquire investment group Keybridge Capital (ASX: KBC) after the Australian Securities and Investment Commission (ASIC) granted it the relief it needed to move forward with its bid.
The company today released a replacement bidder’s statement which proposes an unconditional cash offer of $0.069 per share to acquire Keybridge.
The statement follows the company’s announcement earlier on Monday that it had been granted relief by ASIC to proceed with its takeover offer.
The listed investment company, one of six managed by Australia-focused fund manager Wilson Asset Management, previously made a move for Keybridge in January with an off-market bid to acquire its shares for $0.065 each.
However, the process has been rocky with the Takeovers Panel declaring the bid closed in March and Keybridge launching legal proceedings against WAM in early June, alleging the firm improperly transferred Keybridge shares into its own name.
Meanwhile, Keybridge has its sights set on an even smaller target, launching a bid for fellow investment fund RNY Property Trust (ASX: RNY).
WAM’s takeover offer
WAM’s offer is unconditional and extends to Keybridge shares issued on conversion of convertible redeemable promissory notes (CRPNs) before the end of the offer period.
The offer price of $0.069 cash per Keybridge share represents a premium of about 29% to Keybridge’s unaudited after-tax net tangible asset (NTA) backing as at 29 February 2020 of $0.054, the last NTA disclosed by Keybridge prior to the bidder’s statement.
WAM noted that Keybridge has been rocked by the subsequent stock market turmoil arising out of the COVID-19 pandemic, which could result in a material decline in its NTA.
The company said its offer also took into account Keybridge’s “continued erosion” of shareholder value, “excessive” operating expenses, significant corporate governance issues particularly relating to its non-disclosure of a proposed acquisition, lack of liquidity and its controversial board composition.
Keybridge has not yet responded to the bid but today advised the market it has offered CRPN noteholders the right to extend their notes by 12 months (to 31 July 2021) and an extension of time to elect to convert to ordinary equity.
ASIC grants relief to proceed with bid
Earlier today, WAM said it had been granted the in-principle relief to proceed with its Keybridge takeover offer and would be lodging its replacement bidder’s statement with ASIC.
The relief related to orders made during the recent Takeover Panel proceedings and modified terms that ensure processed holders are able to exercise their reversal rights in accordance with the orders.
The technical relief also allowed WAM to make minor amendments to the offer terms for the purpose of clarifying that the offer is made in respect to all Keybridge shares, and to reflect the ability for processed holders to accept into the offer.
This follows ASIC’s grant of conditional relief in late June from the requirement for a bidder to make offers within two months of announcing a takeover proposal.
The relief would have allowed WAM to make offers until 7 July but an ASIC Class Order [CO 13/528] prohibited the firm from doing so by this date. The class order had also prevented WAM from making an announcement to explain the relief by the required 1 July deadline.
Keybridge takes WAM to court over ‘improper’ share transfers
A Takeovers Panel decision in April declared WAM’s bid closed on 3 March and Keybridge claims all takeover contracts and acceptances in relation to the offer then became void and no transfers should have been registered.
At the start of June, the company commenced court proceedings against WAM, alleging the firm improperly transferred 16 million Keybridge shares from 96 shareholders into its own name in March.
Keybridge wanted the processed shares to be vested with ASIC for sale and that WAM pay Keybridge’s costs associated with the matter.
But WAM scoffed the lawsuit, claiming Keybridge has “already failed on two previous attempts to obtain orders of this kind” with the Takeovers Panel twice refusing to make the orders Keybridge was again requesting for the third time.
Meanwhile, Keybridge director Antony Catalano made an off-market offer to buy back the shares from the 96 affected shareholders at $0.07 per share. If Mr Catalano is successful at acquiring every such share available, his shareholding in Keybridge would increase to 22%.
In a counter statement, WAM accused Mr Catalano of making an “opportune attempt to purchase a limited number of shares” in Keybridge as the firm signalled a proposed $5 million investment in Australian Community Media (ACM) – a deal that has allegedly taken Keybridge almost 12 months to disclose.
WAM’s prior takeover offer of $0.065 per Keybridge share followed two unsuccessful bids in 2019, with the firm offering $0.075 and $0.069 per share but then withdrawing its offers after Keybridge triggered defeating conditions.
Keybridge targets even smaller fish
Meanwhile, Keybridge has made an all scrip takeover bid for RNY Property Trust, which is currently suspended from trading on the ASX.
RNY invests in the United States commercial office market and holds a 75% interest in five office properties in the New York Tri-State area.
Keybridge has offered 0.16 of its shares for each RNY unit on issue, reflecting a 220% premium to the real estate investment trust’s last market trade in late March 2019.
In response to the bid, RNY said in early July it would await Keybridge’s bidder’s statement before providing any comments in relation to the offer.
Aurora Funds Management, the responsible entity for a “variety of substantial unitholders in RNY” confirmed with Keybridge as part of the bid that it would not do anything that causes third parties to be in contravention of applicable laws or regulations.
Aurora’s Dividend Income Trust (ADIT) had been targeting Keybridge, offering an improved all cash takeover offer of $0.07 per share in March.
At the time, ADIT said it would enter into a funding agreement with HHY Fund (ASX: HHY), which would ensure the cash requirements of the bid be satisfied.
However, ADIT closed its offer in April after only receiving acceptances of 21.2% of Keybridge shares.
In late June, ADIT announced that Bentley Capital, which accepted the offer, had its acceptance reversed by the Takeovers Panel.