Ann: ADN: Bidder's Statement, page-23

The following are relevant extracts from the ADN bidders statement .. I would encourage all MEP holders to read it in full but I am focusing on the 'scrip for scrip roll-over relief' and what it means for Australian resident MEP holders who are sitting on a capital gain.. I am not a tax advisor but having done share trading tax returns and preparing complex spreadsheets regarding cost base, capital gain/loss, discount, etc etc for 10 years, I have the relevant experience to comment on it.. I have highlighted key points in and commented as such with my comments highlighted in green

Furthermore, I am disclosing that I am in full approval of this T/O and it's parameters but I am questioning the conditions that scrip for scrip roll over relief are subject to

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Scrip for scrip capital gains tax roll-over relief

Scrip for scrip capital gains tax roll-over relief will not be available to Minotaur
Shareholders if, following the acquisition of Minotaur Shares as a result of the Offer,
Andromeda ends up owning less than 80% of the Minotaur Shares. Note that
Andromeda is unable to give tax advice and you should consult your tax adviser as
to the availability of capital gains tax roll-over relief.

12.2 Australian resident shareholders

(a) CGT Event on the disposal of Minotaur Shares to Andromeda

The disposal of Minotaur Shares pursuant to acceptance of the Offer will constitute a
CGT event. The CGT implications of disposing the Minotaur Shares will depend on a
number of factors, including:

• the status of the Minotaur Shareholder (that is, whether the Minotaur Shareholder
is an individual, trust, superannuation fund or company);

• the length of time the Minotaur Shareholder has held the Minotaur Shares; and

• whether or not the Minotaur Shareholder is entitled to scrip-for-scrip roll-over relief.

so the key objective for MEP shareholders, who are sitting on gains, should be to obtain the entitlement to scrip for scrip rollover relief.


The CGT event will happen at the earlier time of acceptance of the Offer or when the
Minotaur Shares are disposed of under the Offer. For completeness, if a Minotaur
Shareholder does not dispose of their Minotaur Shares under the Offer and their
Minotaur Shares are compulsory acquired in accordance with Part 6A.1 of the
Corporations Act, those Minotaur Shareholders will also be treated as having disposed
of their Minotaur Shares for CGT purposes. In that case, the date of disposal for CGT
purposes will be the date when Andromeda becomes the owner of the Minotaur
Shares.

This is where it gets messy.. To accept the offer, prior to the date at which we become aware of the % that ADN have successfully aquired, could potentially risk being exposed to a CGT event without rollover relief in the event that ADN do not achieve 80% and therefore do not proceed with compulsory aquisition of the remaining MEP shares

The MEP board need to do more than promise that 15% of shareholders will accept . They need to do a whole lot more. Whilst I approve of the offer, I will not be formally accepting the offer until it has been confirmed that ADN have aquired 80% of MEP shares or that at least 80% of MEP shareholders have pledged to formally accept the offer

(d) Roll-over relief

Scrip-for-scrip roll-over relief enables a shareholder to choose to disregard a capital
gain that the shareholder would have made from exchanging shares in one
company for shares in another company (for example, as part of a takeover or
merger), but only to the extent that the shareholder receives replacement shares.
Note that any subsequent disposal of Andromeda Shares issued under the Offer will
be a separate CGT event.

Whether scrip-for-scrip roll-over relief is available in a particular case will depend on
whether the relevant arrangement satisfies certain requirements and whether the
particular shareholder satisfies certain requirements. Specifically, roll-over relief will
only be available if Andromeda (together with members of Andromeda’s whollyowned group)
obtain a holding of at least 80% of the voting shares in Minotaur as a
result of the Offer. Whether the 80% threshold is met can only be determined at a
later date, noting that it is Andromeda’s intention to acquire in excess of 90% of all
Minotaur shares (refer to Key conditions to the Offer) unless this condition is waived
(see section 13.5)

This is the greatest risk IMHO.. 'can only be determined at a later date' .. is not good enough for me. I want to be 100% certain that the 80% threshold will be met otherwise why would I formally accept the offer and therefore trigger my own CGT event without knowing I have roll over relief ?

A Minotaur Shareholder may, to the extent that Andromeda Shares are received in
consideration for the disposal of its Minotaur Shares to Andromeda, be entitled to
scrip-for-scrip roll-over relief if the following conditions are satisfied:

• Andromeda acquires the Minotaur Shares in consequence of a single
'arrangement';

• the Minotaur Shareholder would otherwise make a capital gain on the disposal of
its Minotaur Shares to Andromeda;

• Andromeda and members of Andromeda’s wholly-owned group become the
owners of at least 80% of Minotaur Shares as a result of the Offer;

• the Minotaur Shareholder chooses to obtain the roll-over; and

• the arrangement must be or be part of or include a takeover bid (within the
meaning of the Corporations Act) that is not carried out in contravention of the
provisions mentioned in paragraphs 612(a) to (g) of that Act.

A Minotaur Shareholder does not need to document its choice to claim the
scrip-for-scrip roll-over relief for Australian tax purposes, other than to complete its
income tax return in a manner that is consistent with that choice.

In other words, this is the most desirable outcome, whereby holders, such as myself, who intend to hold ADN shares after aquisition, have absolutely nothing to report to the ATO in terms of CGT. The only activity that I want to be recognised as a reportable CGT event would be in the event that I disposed of my ADN shares 'after' aquisiton.. not as a result of exchanging my MEP for 1.15 ADN

Where a Minotaur Shareholder does not qualify for scrip-for-scrip roll-over relief or
chooses not to apply the scrip-for-scrip roll-over relief to a capital gain, the treatment
outlined in section 12.2(a)-(c) applies.

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There will be more to follow no doubt

GLTAH and of course DYOR this is not taxation or investment advice