Utilities Industry News SampleJun 18, 2002 21:45:44
DVT HOLDINGS: Reveals Merger Plans With USC
AUSTRALIA (SunStream News) -- The Boards of Utility Services Corporation Limited (USC) and DVT Holdings Limited (DVT) have announced plans to merge the two companies. Features of the merged company would include: * A cohesive strategy in technology solutions for the utilities market and e-business; * A strong management team; * Budgeted annual turnover in excess of $150 million; * Strong profitability; * Cash and convertible notes in excess of $40 million; * No bank debt; * Expected dividends of at least 4 cents per share per annum (post reconstruction); * Approximately 125 million shares on issue (post reconstruction); * Market capitalization of over $80 million based on current pricing. The boards of USC and DVT expect a re-rating of the merged entities based on increased scale, underlying earnings per share, asset backing and yield. HOW THE MERGER WILL BE EFFECTED USC shareholders will be offered 18.6 DVT shares in exchange for each USC share. This translates to 67-72 cents for each USC share based on recent DVT share prices. THE BOARD'S INTENTIONS FOLLOWING THE MERGER As soon as practicable following the merger, DVT intends to hold a general meeting (which may be the Annual General Meeting) and put to that meeting certain resolutions for consideration by shareholders to: * Approve the reconstruction of capital to consolidate the shares and options on a 1 for 18.6 basis; * Reconstruct the retained earnings to eliminate accumulated losses; * Change the name of the company to USC Limited or such other name as the Board may decide; * Ratify a final fully franked dividend of 2 cents per reconstructed share. The Board also intends to introduce a buyback or otherwise deal with unmarketable shares, and consider a wider buyback program. In addition, it is intended that an annual dividend policy will be put in place on similar terms to that currently in place for USC. This is anticipated to be at least 4 cents per annum per share (post reconstruction). WHAT THE MERGER PROPOSAL IS DEPENDENT UPON * Approval of DVT shareholders to the proposed merger; * 90% of USC shareholders accepting the offer; Full conditions of the proposed share offer are set out in Attachment B. PROCESS AND TIMING The merger will be implemented by way of an off-market takeover bid as governed by Chapter 6 of the Corporations Act. DVT will prepare a tons] Offer and a Bidder's Statement within the next few weeks for lodgment with USC, the Australian Securities and Investments Commission, and the Australian Stock Exchange. Following the DVT shareholders' meeting, the Bidders Statement will be dispatched to USC shareholders for consideration. The USC Board will prepare a Target's Statement containing its recommendation to USC shareholders. USC option holders will be offered options in DVT on terms equivalent to their USC options in replacement of these options. These offers will be conditional upon the successful completion of the proposed merger. The takeover documentation will contain all necessary information to allow USC shareholders to consider the merits of the Offer, and will be made available publicly within the next few weeks. The formal offer process affects USC shareholders and, accordingly, the Offer and associated documentation will be sent to USC shareholders, but will not be dispatched to DVT shareholders. DVT shareholders need not take any action in regard to the formal offer process. In view of the DVT shareholder approval condition, a notice of meeting incorporating the required resolutions will be forwarded to DVT shareholders shortly, and it is anticipated the DVT shareholder meeting will be held on or about 19 July. The meeting date will be after the Bidders Statement is lodged with USC, the Australian Securities and Investments Commission, and the Australian Stock Exchange, and before the takeover offer period commences. Should the necessary DVT Shareholders' approval with respect to the transaction not be forthcoming, the transaction will not proceed. In such an event, the parties have agreed that DVT will meet USC's costs in the matter to a maximum of $300,000. Similarly, should offer condition (b) attached, not be satisfied or waived by DVT the parties have agreed that USC will meet DVT's costs in the matter to a maximum of $300,000. In the meantime shareholders are advised to DO NOTHING with their shares in relation to the proposed merger and await documentation as contemplated in this announcement. Utility Services Corporation (USC) is listed on the Australian Stock Exchange with market capitalization in excess of $60 million and cash reserves and convertible notes of $30 million. USC currently has budgeted turnover of approximately $10 million per month from its existing businesses (including associated entities). Attachment B DVT OFFER CONDITIONS The Offer is subject to these conditions: (a) During, or at the end of, the Offer period DVT becomes entitled to proceed to compulsory acquisition of all USC's issued shares; (b) No person having, or being entitled to have as a result of any change in control event in respect of any USC Group company, any right to: (i) Terminate or alter any contractual relations between any person and any USC Group company; or (ii) Require the sale of any shares in a USC Group company; or such right is unconditionally waived in favor of the relevant USC Group company and DVT. (c) DVT shareholders at general meeting approving the merger. (d) No announcement of another superior bid or similar transaction (or intention to do so) between the date of this announcement and the expiration of the Offer period. This includes: i) no off market takeover offer or on-market takeover for USC's shares ii) no transaction to acquire or merge with USC (whether by way of joint venture, dual listed structure or otherwise); (e) None of the events set out in subsections 652C(l) or (2) of the Corporations Act 2001 occurs in relation to USC during the period commencing at the date of this announcement and ending at the expiration of the Offer period; (f) Without the prior written consent of DVT during the period commencing at the date of this announcement and ending at the expiration of the Offer period, USC does not other than in the ordinary course of business; i) acquire or agree to acquire a substantial business, asset, or undertaking, or is subjected to a substantial new liability; ii) dispose of or agree to dispose of a substantial business, asset or undertaking; iii) enter into any substantial contract in relation to the operation or maintenance of its assets; (g) After the date of this announcement, USC or a subsidiary of USC does not declare, pay or distribute any dividend, bonus or other share of its profits or assets other than a dividend, bonus or other distribution previously publicly announced; (h) After the date of this announcement, no material adverse change occurs to, or is threatened or announced in relation to the structure, business, financial or trading position or condition, assets or liabilities, profitability, or prospects of USC or any of its subsidiaries; (i) No government or governmental, semi-government or judicial entity or authority or regulatory authority takes any action which restrains or prohibits the Offer or the acquisition of shares by DVT commences or threatens to commence proceedings to do so or seeks to require the divestiture by DVT of shares or assets of USC or any of its subsidiaries.(TROUBLED COMPANY REPORTER - ASIA PACIFIC, Vol. No. 5, Issue No. 119, June 18, 2002)
ss/bal
Source: M&A Reporter - Asia Pacific
Publication Date: 2002-06-19
NWS: TNM
COY: USC.AX DAVTF.PK
IND: UTI
GEO: u-at
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