Irish Cont. Regulatory News (ICGC)

12 Oct 2007 12:27

Irish Takeover Panel12 October 2007 Irish Takeover Panel Announcement Irish Continental Group plc ("ICG") Moonduster Limited ("Moonduster") 1. This is notice of the giving of a censure under section 10(2) of the IrishTakeover Panel Act 1997 ("Act") of Moonduster, One Fifty One Capital Limited andDoyle Group Limited in respect of their conduct in relation to certain breachesof the Rules arising from an agreement entered into by Moonduster to purchaseICG Units. 2. On 1 October 2007 Moonduster announced that it had entered into an agreementon 21 September with Octavian Master Fund, L.P. and Octavian Special MasterFund, L.P. ("Octavian") to acquire 500,793 ICG Units ("Agreement"). Under theterms of the Agreement the consideration payable to Octavian comprised €25.20 incash together with an undertaking from Moonduster to pay to Octavian additionalconsideration. The additional consideration comprises the greater of (i) 100 per cent. of theexcess of the highest price per ICG Unit paid or offered to be paid byMoonduster over €25.20 within 18 months of the date of the Agreement and (ii) inthe event that Moonduster disposes of the ICG Units acquired from Octavian at aprice in excess of €25.20 per ICG unit within 18 months of the date of theAgreement, 60 per cent. of the excess over €25.20 per ICG Unit ("AdditionalConsideration") The Panel has considered whether the Agreement is in breach of Rule 16 andwhether certain other applicable Rules, including the relevant disclosure Rules,have been breached. The Panel has also conducted an enquiry under section 10(1)of the Act into the conduct of Moonduster, One Fifty One Capital Limited andDoyle Group Limited for the purposes of considering whether to administer any ofthe sanctions under section 10(2) of the Act. 3. The relevant General Principle and Rules are as follows: General Principle 1 / Rule 16 General Principle 1 states inter alia that all holders of the securities of anofferee of the same class must be afforded equivalent treatment. Rule 16, whichdeals with special arrangements with favourable terms, states that neither anofferor nor any person acting in concert with it may during an offer period makeany arrangement with any offeree shareholder which involves a dealing in, oracceptance of an offer for, or otherwise relates to, offeree shares, if therewould be attached to such arrangement a term favourable to such shareholderwhich is not being extended under the offer to all offeree shareholders. Note 1on Rule 16 states that an arrangement to deal with favourable terms attachedincludes any arrangement where there is a promise to make good to a vendor ofshares any excess of the price of any subsequent successful offer over the saleprice. Rule 7.1 The Rule requires an offeror to immediately make an appropriate announcement if,by reason of that offeror or any person acting in concert with it havingacquired offeree securities, the offeror becomes obliged under the Rules torevise its offer price. This announcement is required to include inter aliadetails of any arrangement to which Rule 8.7 applies (see below). Rule 8.7 If an arrangement to which Rule 8.7 applies exists with any offeror in relationto relevant securities, the offeror is required to disclose publicly, not laterthan 12.00 noon on the business day following the date of the transaction, thedetails of such arrangement and the parties thereto. An arrangement to whichRule 8.7 applies means any indemnity or option arrangement, and any agreement orunderstanding, formal or informal, of whatever nature between two or morepersons, relating to relevant securities which is or may be an inducement to oneor more of such persons to deal or refrain from dealing in such securities. Any disclosure by an offeror pursuant to Rule 8.1 is also required to disclosedetails of any arrangement to which Rule 8.7 applies. Rule 20.1(b) The Rule requires that any meetings during an offer period between inter aliathe offeror and offeree shareholders shall be attended by a representative ofthe financial adviser to the offeror. Following any such meetings the financialadviser is required to confirm in writing to the Panel, not later than 12.00noon on the business day following the date of such meetings, that no materialnew information was disclosed and no significant new opinion was expressed atsuch meetings. 4. On 11 October, the Panel ruled that the Agreement is in breach of Rule 16 asit involves an arrangement with favourable terms which could not be extended toall shareholders under any offer which Moonduster may make to ICG shareholders .Consequently, the Panel has given a direction pursuant to section 9(2)(a) of theAct to Moonduster prohibiting it from paying the Additional Consideration. ThePanel noted that Moonduster was advised against agreeing to the AdditionalConsideration arrangement and notwithstanding this advice, Moonduster executedthe Agreement. The Panel ruled that the Agreement was an arrangement to which Rule 8.7 applies.As details of the Agreement were not disclosed under Rule 8.7 by 12.00 noon on24 September, the Panel ruled that Rule 8.7 had been breached. On 24 September Moonduster made an announcement pursuant to Rule 7 in relationto inter alia the ICG Units acquired from Octavian. However, as thatannouncement did not disclose details of the Agreement, the Panel ruled thatRule 7.1 had been breached. The Rule 8.1 disclosure made by Moonduster on 25 September, disclosing interalia details of the ICG Units acquired from Octavian, did not contain therelevant details of the Agreement as required under Rule 8.6. As such, the Panelruled that Rule 8.1 was also breached. As the Panel did not receive any confirmatory letters pursuant to Rule 20.1(b)in connection with the discussions between Moonduster and Octavian in relationto the Agreement, the Panel ruled that there had also been a breach of Rule 20.1(b). The advisers to Moonduster have confirmed to the Panel that they onlybecame aware of the Agreement on the evening of 28 September following receiptof correspondence from a third party who had become aware that Moonduster mayhave entered into an agreement in breach of Rule 16. 5. Following the Panel's enquiry under section 10(1) of the Act Moonduster, OneFifty One Capital Limited and Doyle Group Limited were censured by the Panelunder section 10(2) of the Act for their conduct in relation to the matters setout in this announcement. 12 October 2007 This information is provided by RNS The company news service from the London Stock Exchange