Statement of reasons
This notice applies to acts or omissions occurring on or after 8 January 2010 and expires on 31 March 2013.
Cynotech Holdings Limited (Cynotech Holdings) is a code company under the Takeovers Code (the Code). Cynotech Securities Group Limited (CSGL) has given notice of its intention to make a full takeover offer for all of the equity securities of Cynotech Holdings (the offer).
Exemption from rule 6(1) of Code
Cynotech Holdings has the following 3 classes of equity securities on issue:
Only the ordinary shares carry voting rights under the Code. The convertible preference shares are convertible by the holder to ordinary shares (on a 1-for-1 basis) on giving 30 days' written notice to Cynotech Holdings. Each warrant gives the right to subscribe for an ordinary share at a price of 30 cents per share, that right being exercisable on 27 June 2010 or 27 June 2011.
The Takeovers Panel (the Panel) has exempted CSGL from compliance with rule 6(1) of the Code in relation to the conversion, after the offer becomes unconditional, of convertible preference shares and warrants (together, the convertible securities) it acquires under the offer.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemption from rule 6(1) of the Code for the following reasons:
Exemption from rule 35 of Code
Cynotech Securities Limited, Glenn Matthew Hawkins, Laurel Anne Hawkins, Newmarket Securities Limited, and Sonja Anne Hawkins (the specified security holders) each hold equity securities in Cynotech Holdings. It is possible that the specified security holders may be acting jointly or in concert with CSGL for the purposes of the offer. Rule 35 of the Code prevents them from accepting the offer.
Rule 35 of the Code is intended to prevent an offeror, or persons acting jointly or in concert with an offeror, from selling shares in the target company other than to a competing bidder. However, rule 35 of the Code also prevents persons who are acting jointly or in concert with an offeror from accepting the offer made by that offeror in respect of any securities that they hold in the target company.
The Panel has granted an exemption from rule 35 of the Code to enable each of the specified security holders to accept the offer.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemption from rule 35 of the Code for the following reasons: