HUNGRY Jack Cowin has now taken his grievances over the recommended takeover of Julia Ross recruitment group, Ross Human Directions (RHD), by Peoplebank to the Takeovers Panel, seeking a declaration of unacceptable circumstances.
Peoplebank, which is owned by the Malaysian-based private equity group Navis Capital, is offering 61.5c cash by way of a scheme of arrangement and has entered into a scheme implementation agreement (SIA) with RHD.
Cowin's lawyer, Atanaskovic Hartnell, last week wrote to RHD setting out his objections. He believes the offer undervalues the company and the SIA contains provisions that make it tantamount to a lockout, which would not only discourage any third party from putting forward a rival bid but make it difficult for minority holders to resist being compulsorily acquired.
The onus on the RHD directors to unanimously recommend approval of the scheme does not provide an exception in the event the independent expert considers the Peoplebank offer is not fair and reasonable or in the best interests of the shareholders.
The votes of the directors are important because Julia Ross, the managing director, owns 42 per cent of the capital.
Similarly, the provision that RHD pay a break fee of $500,000 if any director changes his or her recommendation is not made subject to the independent expert concluding that the offer is in the best interests of the shareholders.
The panel said yesterday that Cowin's Corom submitted the board had no reasonable basis for claiming the Peoplebank offer represented compelling value. (Cowin has an independent valuation from KPMG Corporate Finance suggesting the price for control should be at least 80c a share), that the lockup and break fee provisions are unacceptable and also alleged breaches of section 606 of the Corporations Act (obtaining a relevant interest of more than 20 per cent without first making a takeover offer).
Corom is seeking final orders including that the break fee provision be cancelled and amendments made to address the fiduciary outs.
Corom also wants RHD to be given 60 days to freely solicit and respond to expressions of interest for the acquisition of RHD.
It may be that Cowin has designs of some sort on RHD. Corom owns 11.5 of RHD, and it may be significant that 2 per cent of that holding was picked up through on-market purchases after the merger proposal was announced at the offer price of 61.5c a share.
RHD Price at posting:
63.0¢ Sentiment: None Disclosure: Held
