Statement of reasons
This notice applies to acts or omissions occurring on or after 22 January 2010 and expires on 31 March 2015.
The Takeovers Panel (the Panel) has granted exemptions for Campania Holding Inc (Campania), Tangent International Limited (Tangent), Kent Ashley Anson (Mr Anson), Nicola Gail Cummack (Ms Cummack), Kerry David Gordon (Mr Gordon), Gregory Ross Hogan (Mr Hogan), Archibald Geoffrey Loudon (Mr Loudon), David Alister John Manhire (Mr Manhire), the trustees of the Jaine Options Trust (the Jaine trustees), and the trustees of the Ryan Family Trust (the Ryan trustees) (together, the option holders) from rule 7(d) of the Takeovers Code (the Code) and for L&M Energy Limited (LME) from rule 16(b) of the Code in respect of potential future increases in option holders' control of voting rights in LME resulting from the exercise of share options already held by those persons (existing options) and share options to be issued to those persons (consideration options).
LME intends to merge with L&M Coal Seam Gas Limited (LMCSG). The merger involves the current shareholders of LMCSG (Campania, Tangent, and Mr Loudon (together, the investors)) transferring their LMCSG shares to LME in consideration for LME allotting shares to the investors and consideration options to Mr Anson, Ms Cummack, Mr Gordon, Mr Hogan, Mr Manhire, the Jaine trustees, and the Ryan trustees (together, the consideration option recipients). The investors and some of the consideration option recipients also hold existing options.
All of the investors and consideration option recipients may be associates of the other investors and consideration option recipients. The investors have, and are likely to continue to have, control of voting rights in LME in excess of 20%. Accordingly, any allotment of shares on the exercise of existing options or consideration options will trigger the fundamental rule of the Code. Shareholder approval under rule 7(d) will therefore be sought for the allotment of shares on the exercise of those options. Rule 7(d) requires the notice of meeting to contain the information specified by rule 16(b). However, the exact numbers and percentages will not be known at the time the notice of meeting is prepared because this depends on when, and how many, options are ultimately exercised by the option holders. Accordingly, the Panel has granted an exemption that allows disclosure of potential maxima instead of exact numbers and percentages.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions because—
the details required by rule 16(b) cannot be specified in the notice of meeting because it is uncertain when, and how many, shares will be allotted to the option holders on the exercise of their options:
all non-associated shareholders will have an opportunity to vote on the potential allotment of shares to the option holders:
if the non-associated shareholders approve the potential maximum allotment of shares to the option holders, then, by implication, the shareholders also approve the allotment of a lesser number of shares to the option holders.