Aurora is prepared to conditionally increase its Bid Value Amount to $0.82 per share and would support a material special dividend being paid by 8EC.
Aurora Funds Management Limited (Aurora), as responsible entity of the Aurora Dividend Income Trust (ARSN 151 947 732) (ADIT or Fund), notes the ‘Sale and Distribution of Company’s Assets’ ASX announcement made by 8IP Emerging Companies Limited (8EC or Company) on 16 May 2019.
Aurora lodged a copy of its Bidder’s Statement with ASIC, 8EC and ASX on 17 May 2019 relating to its takeover bid for 8EC shares (Bid) and is still considering the impact of 8EC’s recent Sale and Distribution announcement on the Bid. In the meantime, Aurora notes that 8EC has sufficient reserves1 and cash2 to immediately declare, and pay, a special dividend of $0.20 under the Corporations Act. As such, Aurora is prepared to commit not to rely on the conditions of the Bid to the extent necessary to allow 8EC to immediately distribute, as a special dividend, $0.20 per share during the Bid period.
Further, if 8EC immediately declares such a special dividend, Aurora would be prepared to increase the Bid Value Amount under its scrip bid from $0.75 per share to $0.82 per share (less the amount of any dividend payment, pursuant to section 11.7(c) of the Bidder’s Statement), with the NTA floor moving by a corresponding amount.3
Aurora believes that this would provide a materially improved outcome for all 8EC shareholders whilst also being consistent with the agenda promoted by 8EC’s directors.
In Aurora’s view, this proposal if adopted by 8EC would be superior to 8EC’s proposal as it would provide shareholders with: 1. immediate access to over 20% of their share of the Company’s assets; and 2. a simple mechanism for each shareholder to realise the rest of their investment when they want to by accepting into a fund that provides off-market redemptions at NTA4 on request.
1 8EC advised that it has a profit reserve (from which it can pay dividends) of $9,241,181 as at 31 December 2018 according to the half yearly financial statements lodged on 21 February 2019 which would be sufficient to pay a dividend of at least $0.20 per share 2 8EC advised that it had cash and cash equivalents of $0.48 per share at 30 April 2019 per its ASX Announcement on 16 May 2019. 3 That is, Aurora’s NTA condition in section 11.8(a) would require 8EC to have NTA of $0.82 per 8EC Share. If 8EC were to declare $0.20 special dividend (or any other amount) its Minimum NTA condition would also be decreased by a corresponding amount. 4 On the basis that Aurora gains a relevant interest of at least 50%.