NB CA is not automatically “triggered”: it is a power available...

NB CA is not automatically “triggered”: it is a power available to a 90% holder, but he doesn’t have to use it.

The answeris YES, although the most common use of Compulsory Acquisition power following [orduring] takeover bid is CORPORATIONS ACT 2001 - SECT 661A, as discussed in several previous posts.

However, SECT 664A Thresholdfor general compulsory acquisition power gives another avenueto RG.

“Time limit on exercisingcompulsory acquisition power SECT 664AA”

The90% holder …..maycompulsorily acquire securities under section 664Aonly if the holder lodges thecompulsory acquisition notice forthe acquisition with ASICunder paragraph 664C(2)(a)within the period of 6 months after the 90% holderbecomes the 90% holder inrelation to that class.

The s 664A method is discussed in ASIC’s Regulatory Guide 10 especially in Part C of it. NB in particular:

RG 10.94 Because general compulsory acquisition applies whether or not a takeover bid has beenmade, the procedure to be followed includes additional protections for minorityshareholders:

(a) the 90%holder must have a ‘full beneficial interest’ rather than a relevant interestto meet the 90% threshold (s664A);

(b) the 90%holder must offer a cash sum (s664B);

(c) the 90%holder must provide an independent expert report addressing whether theconsideration is fair value with its compulsory acquisition notice and (to theextent not covered by the expert report) include disclosure of any otherinformation material to deciding whether to object to the acquisition(s664C(1)); and

(d) ifholders of 10% or more of the securities covered by the notice object to thecompulsory acquisition, the 90% holder must apply to the court for approval ofthe acquisition, and bear the cost of court proceedings, if it wishes toproceed with the compulsory acquisition (s664F).

RG 10.95 Further,in contrast to post-bid compulsory acquisition, if court proceedings arecommenced, theonus is on the 90% holder to establish that their offer represents fair value:s664F(3).

Also note that the power in s664A can only be exercised once the holder has reached 90%. RG is not allowed to buy any shares for six months from 7 June, and his only practical ability is then to buy under the creep rule (i.e. up to 3%). So RG would not be able to use 664A until any shares that he bought under creep took him over 90%. Until his next 3Y we don’t know exactly what he owns, but he is short by somewhere between 1.14% and 2.08%- and so would have to buy between 4m and 7m to hit 90% (which assumes that that many shares are for sale). Only then could he use 664A, but if he wants to use that he must exercise that right within 6 months of hitting 90%. Although CA using s664A appears easier for RG than making a second bid and using CA power under s661A, there are several hurdles that he would have to overcome, as explained in the ASIC guide.

So yes there is another way RG can do CA, but either way he can’t even start CA until he reaches 90%, and he can’t buy any shares for 6 months.

I urge people to be patient- RG can’t do anything for six months so there is plenty of time to reflect on all this stuff.

Not advice DYOR