Ann: Change in substantial holding, page-15

Hi Giz

You raise some important points. You quote, appropriately, from ASIC’s Regulatory Guide 10. Re “full beneficial interest”, ASIC points out that this does not have a statutory definition, and comments on this in paras 10.97 to 10.102. I think- in the circumstances- that it would be wise to assume that the bidder does meet the case law meaning of “full beneficial interest”. There’s no suggestion for example that the bidder has entered into equity swaps with other holders, and ASIC says that the mere existence of a mortgage over the bidder’s shares (e.g. if the bidder had granted a mortgage over its PGH shares to obtain bid finance) would not commercially invalidate a “full beneficial interest”.

I had wondered if the expert report provided by Kroll (as updated) would or could be used by the bidder as the expert report for CA required under s 667A. However, ASICs commentary in paras 10.161 to 10.178 strongly suggests that ASIC itself will nominate which expert should provide such a report. It’s also likely that Kroll would be excluded from the role, as having a conflict of interest. Of course Kroll said that the 84c final bid was ‘fair but not reasonable”. It will be very interesting to see whether a new expert differs from that, and provides a valuation range up or down from Kroll. If Bennamon keeps extending its bid, this will become a crucial appointment.