legal opinion regarding to of kah

Elements of the legal position regarding a takeover of KAH and the implications for EXT shareholders have been discussed before on this forum. For anybody who wants to understand the process please see below - this is the lawyers opinion of the EXT position with the imminent re-bid.

The second part of the article....."The key point here is that, even if the downstream acquisitions exception technically applies, reliance on it can still carry the risk of intervention by ASIC and/or a declaration of unacceptable circumstances by the Takeovers Panel.


CGNPC-URC?s proposed bid for Kalahari
On 7 March 2011, CGNPC-URC and Kalahari made a joint announcement regarding a possible recommended cash takeover of Kalahari by CGNPC-URC.
CGNPC-URC is a state owned enterprise in the People?s Republic of China. Kalahari is listed on the Alternative Investment Market of the London Stock Exchange and on the Namibian Stock Exchange. Kalahari?s key asset is its 43% holding in Extract Resources Limited, a company listed on ASX and the Namibian and Toronto exchanges.
Neither of the exchanges on which Kalahari is listed has been approved by ASIC for the purposes of the downstream acquisitions exception. Accordingly, the acquisition of an interest in 43% of Extract that would result from the takeover of Kalahari would, in the absence of ASIC relief, breach the takeover prohibition.
CGNPC-URC sought ASIC relief from the takeover prohibition and Extract made submissions to ASIC regarding a potential downstream bid for Extract by CGNPC-URC. ASIC was not, however, required to make a decision on the matter as the deal was another victim of the Japanese earthquake and tsunami. CGNPC-URC withdrew its proposed bid for Kalahari following these tragic events after being unable to persuade the UK Takeover Panel to allow it to make the bid at a price below the 290 pence per Kalahari share specified in the joint announcement.

From 10 August 2011, CGNPC-URC will be able to bid for Kalahari at below the price specified in the joint announcement. If it decides to do so, it can be expected that ASIC will require it to make a downstream bid for Extract under which Extract shareholders are offered cash consideration for their shares of equivalent value to that offered to Kalahari shareholders.
In this regard, it is likely that ASIC would attempt to require this even if Kalahari were listed on an approved financial market. This is because ASIC would likely consider that Kalahari?s 43% stake in Extract would deliver CGNPC-URC effective control of Extract. Moreover, that stake represents the vast majority of Kalahari?s assets. The key point here is that, even if the downstream acquisitions exception technically applies, reliance on it can still carry the risk of intervention by ASIC and/or a declaration of unacceptable circumstances by the Takeovers Panel.
Source: Gilbert & Tobin Lawyers