For personal use only
This is an IMPORTANT
document and requires your
immediate attention
FIFTH SUPPLEMENTARY
TARGET’S STATEMENT
This Fifth Supplementary Target’s Statement has been issued in response to the off-market takeover bid
made by Ferrovial Services Australia Pty Ltd ACN 609 542 556 (an indirectly wholly owned subsidiary
of Ferrovial, S.A.) for all the ordinary shares in Broadspectrum Limited.
Your Broadspectrum Directors
unanimously recommend that you
ACCEPT
THE OFFER
TO ACCEPT FERROVIAL’S
OFFER
SEE APPENDIX 1 OF THIS
DOCUMENT
If you are in any doubt about how to
deal with this document, you should
seek independent financial, legal,
taxation or other professional advice
before making a decision as to
whether or not to accept the Offer.
Financial Advisor
Legal Advisor
For personal use only
Broadspectrum
This document is a supplementary target’s statement under section 644 of the Corporations Act
2001 (Cth). It is the fifth supplementary target’s statement (Fifth Supplementary Target’s Statement)
issued by Broadspectrum Limited ABN 69 000 484 417 (Broadspectrum) in relation to the off market
takeover bid for all the ordinary shares in Broadspectrum by Ferrovial Services Australia Pty Ltd ACN
609 542 556 (Ferrovial). This Fifth Supplementary Target’s Statement supplements, and should be
read together with, Broadspectrum’s supplementary target’s statement dated 28 April 2016 (Fourth
Supplementary Target’s Statement), Broadspectrum’s supplementary target’s statement dated 27
April 2016 (Third Supplementary Target’s Statement), Broadspectrum’s supplementary target’s
statement dated 8 April 2016 (Second Supplementary Target’s Statement), Broadspectrum’s
supplementary target’s statement dated 8 February 2016 (Supplementary Target’s Statement) and
Broadspectrum’s target’s statement dated 21 January 2016 (Target’s Statement).
This Fifth Supplementary Target’s Statement prevails to the extent of any inconsistency with the
Fourth Supplementary Target’s Statement, Third Supplementary Target’s Statement, Second
Supplementary Target’s Statement, Supplementary Target’s Statement or the Target’s Statement.
A copy of this Fifth Supplementary Target’s Statement has been lodged with ASIC. Neither ASIC nor
any of its officers take any responsibility for its contents.
Unless the context otherwise requires, terms defined in the Target’s Statement have the same
meaning as in this Fifth Supplementary Target’s Statement.
The Board of Broadspectrum recommends that you ACCEPT the Offer promptly
Fifth Supplementary Target’s Statement
This Fifth Supplementary Target’s Statement provides an update on certain material
information relevant to Broadspectrum Shareholders in their consideration of the Offer.
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Offer now unconditional – Ferrovial has received
acceptances in excess of 50%
Ferrovial has stated in its Ninth Supplementary Bidder’s Statement dated 2 May
2016 that its Offer is now unconditional and that it had received more than 50%
acceptances into the Offer.
This means that Ferrovial will acquire the Broadspectrum Shares from those
shareholders who have either accepted the Offer or accepted into the Institutional
Acceptance Facility (“IAF”). Ferrovial will also acquire the Broadspectrum Shares of
all further acceptances validly received before the close of the Offer Period. The
Offer is currently scheduled to close at 7pm (AEST) on Friday, 13 May 2016 (see
below for further details regarding the extension).
Broadspectrum Limited ABN 69 000 484 417
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Directors’ recommendation to ACCEPT
As at the date of this Fifth Supplementary Target’s Statement, Ferrovial has advised
that total acceptances into the Offer (either directly or by way of the IAF) are
72.17%. Ferrovial therefore will acquire a majority holding in Broadspectrum,
regardless of further acceptances. As Ferrovial’s voting power in Broadspectrum
(including acceptance instructions held under the IAF) increased to more than 50%
within the last 7 days of the Offer Period, the Offer Period is automatically extended
pursuant to section 624(2) of the Act (as modified by ASIC Class Order 13/521) so
that the Offer remains open for acceptance until 7.00pm (AEST) on 13 May 2016
(unless further extended in accordance with the Corporations Act).
The Board of Broadspectrum strongly recommends that you ACCEPT the Offer
promptly so that your acceptance is received before the end of the Offer Period.
Please refer to Appendix 1 for details on how to accept the Offer.
2
Directors’ recommendation to ACCEPT
Your Directors recommend you ACCEPT the Offer as soon as possible.
In addition to the reasons outlined in the Fourth Supplementary Target’s Statement
(and repeated below), the Offer is now unconditional and Ferrovial will acquire a
majority and controlling stake in Broadspectrum, having received 72.17%
acceptances.
Accordingly, Broadspectrum Shareholders who do not accept the Offer will
become minority shareholders in Broadspectrum unless Ferrovial proceeds with
compulsory acquisition (assuming it becomes entitled to do so).
Risks of Being a Minority Shareholder
The Board considers the implications of remaining a minority shareholder in
Broadspectrum to be additional incentives to ACCEPT the Offer. These include:
•
Ferrovial will be in a position to cast the majority of votes at a general meeting
of Broadspectrum. This will enable it to control the composition of the Board
and senior management, determine Broadspectrum’s dividend policy and
control the strategic direction of the businesses of Broadspectrum and its
subsidiaries. This is particularly relevant in respect of Ferrovial’s intentions
around Broadspectrum’s provision of services at the regional processing
centres in Nauru and Manus Province which could adversely impact
Broadspectrum’s earnings going forward
•
Liquidity of Broadspectrum Shares may be lower than at present, and there is
a risk that Broadspectrum could be fully or partially removed from certain
S&P/ASX market indices due to lack of free float and/or liquidity
•
There may be limited institutional support for Broadspectrum Shares
•
There may be fewer analysts providing coverage for Broadspectrum Shares
•
If Ferrovial acquires at least 75% of the Broadspectrum Shares it may be able
to pass a special resolution of Broadspectrum. This may enable Ferrovial to,
among other things, change Broadspectrum’s constitution, and
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•
Directors’ recommendation to ACCEPT
Ferrovial has made a number of statements regarding its intentions on
acquiring 50.01% or more but less than 90% of all Broadspectrum Shares,
including:
•
it intends to encourage the Broadspectrum Board to continue not making
dividend payments in favour of retaining cash, and
•
it intends to seek to have Broadspectrum removed from the official list of
ASX. If Broadspectrum is delisted, it may result in Broadspectrum
Shareholders who do not accept the Offer, holding shares in an unlisted
company for which there may not be a liquid market. Please see section
6.5 of the Target’s Statement dated 21 January 2016 (under the heading
“ASX Delisting”) for important information regarding the process and
requirements for any such delisting request.
Reasons to ACCEPT the Offer
Your Directors also note the following reasons for their recommendation:
•
The developments with respect to Manus Province raise uncertainties which
are unlikely to be resolved within the Offer Period
•
The Board has noted that there is sufficient doubt that it would not be prudent
to maintain its previous statement of the outlook for the Company’s FY2017
Underlying EBITDA being in excess of $300 million
•
Ferrovial has stated in its view that Broadspectrum’s provision of services at the
regional processing centres in Nauru and Manus Province will not form part of
its services offering in the future. If Broadspectrum no longer provides services
to the regional processing centres in Nauru and Manus Province this could
have an adverse impact on Broadspectrum’s earnings post the expiry of the
existing contract with the DIBP
•
The opportunity for shareholders to receive the certainty of $1.50 per share in
cash in the face of these uncertainties may be attractive
•
Ferrovial’s Revised Offer represents a 43% premium to the closing
Broadspectrum Share price on 27 April 2016 and a 76% premium to the closing
Broadspectrum Share price of $0.85 1 on the trading date immediately prior to
the announcement of Ferrovial’s Offer on 7 December 2015
•
Broadspectrum expects to incur transaction costs of $15 - $20 million and
further costs in relation to the vesting of existing Broadspectrum Performance
Awards and the issue of new cash awards under the new cash incentive
scheme set out in Section 3. This economic cost will be borne by all
Broadspectrum Shareholders in proportion to their shareholdings, and
•
If the Offer lapses, the Broadspectrum share price is likely to fall.
All of the Directors have either accepted or will accept the Revised Offer in respect
of their Broadspectrum shareholdings.
Accelerated ten business day payment terms
1
Broadspectrum’s closing share price on 4 December 2015.
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3
Employee incentives
As the Offer has become unconditional, the Bidder has stated 2 that it will send
payment of the consideration due under contracts formed on acceptance of the
Offers within ten business days of the later of the Offers becoming unconditional and
valid acceptances being received in accordance with the terms of the Offer.
Implications if the Bidder acquires 90% or more of Broadspectrum Shares
The Bidder has stated in section 3.3 of the Bidder’s Statement that if it acquires
relevant interests in 90% or more of the Broadspectrum Shares, it will seek to
compulsorily acquire the remaining Broadspectrum Shares and:
3
•
Arrange for Broadspectrum to be removed from the official list of ASX
•
Replace the Broadspectrum Board with Ferrovial nominees (although Bidder
may, in its discretion, seek to retain one or more of the existing
Broadspectrum Directors)
•
May seek to compulsorily acquire the Broadspectrum Performance Awards
which have not been exercised and that have not lapsed, or alternatively
pursue other arrangements in relation to those Broadspectrum Performance
Awards
•
Maintain Broadspectrum’s key management and the current levels of
employment in its operations and not make material changes to the levels of
employment in Broadspectrum’s corporate head office, other than where
appropriate to reflect the fact that Broadspectrum would cease to be a
listed company, and
•
Conduct a broad-based general review of Broadspectrum’s corporate
structure, assets, businesses, personnel and operations.
Employee incentives
In its Eighth Supplementary Bidder's Statement dated 6 April 2016, Ferrovial noted
that a further 29,470,902 Broadspectrum Shares could potentially be issued as a
result of the vesting of all Broadspectrum Performance Awards.
The Board has exercised its discretion under the incentive plan rules to vest a
portion of the Broadspectrum Performance Awards on issue subject to
Broadspectrum receiving the requisite waivers under the ASX listing rules.
The portion of the Broadspectrum Performance Awards which have been deemed
to vest varies depending on the relevant tranche having regard to the likelihood of
vesting and the duration to the vesting date. The Broadspectrum Performance
Awards that vest will be cash settled at A$1.50 per Broadspectrum Performance
Award. No new Broadspectrum Shares will be issued as a result of any such vesting.
The portion of Broadspectrum Performance Awards that have not vested will lapse.
2
Ferrovial’s Eighth Supplementary Bidder’s Statement dated 6 April 2016
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For personal use only
Performance Award Tranche
2013 Long-term Incentives
Number of
existing awards
Employee incentives
% Vesting upon
Change of Control
Number to vest upon
Change of Control
6,424,100
0%
0
442,162
75%
331,622
2014 Medium Term Incentives
4,019,207
0%
0
2014 Long-term Incentives
2,466,061
55%
1,356,334
2015 Deferred Short-term Incentives
/ MD&CEO 2015 Medium Term
Incentives
2,974,756
75%
2,231,067
2015 Medium Term Incentives
8,448,753
55%
4,646,814
2015 Long-term Incentives
4,259,210
55%
2,342,566
Total
29,034,249
37%
10,908,403
2014 Deferred Short-term Incentives
/ MD&CEO 2014 Medium Term
Incentives
In addition to the table above, it has been determined to vest 75% of the FY16
Short-term Incentives. The payment of the FY16 Short-term Incentives is
incorporated in the FY16 EBITDA guidance of $280 million to $300 million provided
to the market.
Broadspectrum will also introduce a new cash incentive scheme under which
certain ongoing employees of Broadspectrum would become entitled to receive
awards that, if vested, will entitle the holder to A$1.50 per award, subject to the
holders remaining employed as at 30 September 2016 or being classified as good
leavers under the relevant rules governing the new cash incentive scheme. The
Board believes that incentivising staff during the transition period is a key part of the
Company’s retention strategy.
The maximum amount payable by Broadspectrum for the vesting of existing
Broadspectrum Performance Awards and the issue of new cash awards under the
new cash incentive scheme (subject to the satisfaction of the retention hurdle
described above) will not be greater than the amount that would have been
payable by Broadspectrum if all the existing Broadspectrum Performance Awards
and short term incentives vested in full (with the Broadspectrum Performance
Awards vesting at A$1.50 per Broadspectrum Performance Award).
Graeme Hunt, the Managing Director & CEO, who was excluded from voting on
matters relevant to the exercise of the Board’s discretion in relation to employee
incentives, holds Broadspectrum Performance Awards and short term incentives as
has been previously disclosed. Mr Hunt’s existing Broadspectrum Performance
Awards and short term incentives will be dealt with as detailed above. In addition,
Mr Hunt will also be eligible to receive new cash awards under the new cash
incentive scheme as detailed above. Broadspectrum will apply for the applicable
waivers under the ASX listing rules to facilitate this.
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4
Broadspectrum’s operations in Nauru and Manus Province
Broadspectrum’s operations in Nauru and Manus Province
Ferrovial stated in its Ninth Supplementary Bidder’s Statement dated 2 May 2016
that Broadspectrum’s provision of services at the regional processing centres in
Nauru and Manus Province were not a core part of its acquisition rationale and
valuation, and is not a strategic activity in Ferrovial’s portfolio. Ferrovial has stated
that in its view these activities will not form part of its services offering in the future.
Under the terms of its existing agreement with the DIBP, Broadspectrum remains
contracted to provide facilities maintenance and welfare services at both Nauru
and Manus Province until 28 February 2017 and any subsequent extensions to the
existing contract.
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Offer Period
The Offer Period has been automatically extended on account of Ferrovial having
received more than 50% acceptances within the last 7 days of the Offer Period.
The Offer will close on 13 May at 7.00pm (Sydney time), unless further extended in
accordance with the Corporations Act.
6
Authorisation
Signed for and on behalf of Broadspectrum following a resolution of the Directors of
Broadspectrum:
Diane Smith-Gander
Chairman, Broadspectrum Limited
Date: 3 May 2016
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Authorisation
For personal use only
Appendix 1 – How to accept the Revised Offer
The manner in which Broadspectrum Shareholders accept the Revised Offer will depend on
whether your Broadspectrum Shares are in an Issuer Sponsored Holding or in a CHESS
Holding.
1. Issuer Sponsored Holdings (identifiable by a securityholder reference number beginning
with ‘I’)
a. Complete and sign the acceptance form enclosed with the Replacement Bidder’s
Statement dated 23 December 2015 in accordance with the instructions on it, and
b. Return the acceptance form together with all other documents required by the
instructions on it so that they are received before the end of the Offer Period at one
of the addresses indicated on the acceptance form.
2. CHESS Holdings (identifiable by a holder identification number beginning with ‘X’)
a. Instruct your Controlling Participant, in accordance with the sponsorship agreement
between you and the Controlling Participant, to initiate acceptance of the Revised
Offer in accordance with Rule 14.14 of the ASX Settlement Operating Rules, so as to
be effective before the end of the Offer Period, or
b. Complete, sign and return the acceptance form enclosed with the Replacement
Bidder’s Statement dated 23 December 2015, in accordance with the instructions on
the acceptance form, together with all other documents required by those
instructions so that they are received before the end of the Offer Period at the
address on the acceptance form. This will authorise Ferrovial to initiate, or
alternatively to instruct your Controlling Participant to initiate, acceptance of the
Revised Offer on your behalf in accordance with Rule 14.14 of the ASX Settlement
Operating Rules before the end of the Offer Period. You must ensure that the
acceptance form (and the other required documents), are received in sufficient
time for Ferrovial to give instructions to your Controlling Participant, and for your
Controlling Participant to carry out those instructions, before the end of the Offer
Period.
However, if you are the Controlling Participant in respect of your Broadspectrum
Shares, to accept the Revised Offer you must yourself initiate acceptance of the
Revised Offer in accordance with Rule 14.14 of the ASX Settlement Operating Rules
before the end of the Offer Period.
Controlling Participant has the meaning given in the ASX Settlement Operating
Rules, and is usually a person, such as a broker, with whom you have a sponsorship
agreement (within the meaning of the ASX Settlement Operating Rules).
Please refer to the Replacement Bidder’s Statement dated 23 December 2015 and the
Ninth Supplementary Bidder’s Statement dated 2 May 2016 for further information on how to
accept the Revised Offer.
A Shareholder Information Line has been established to address any specific queries in
relation to the Offer. The phone number for the Shareholder Information Line is 1300 361 735
(for calls from within Australia) and +61 1300 361 735 (for calls made from outside Australia).
Updates in relation to the Offer will also be posted on Broadspectrum’s website
(www.broadspectrum.com).
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