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JUPITERS LIMITED
ABN 78 010 741 045
Level 9, Niecon Tower
17 Victoria Avenue
PO Box 1400
Broadbeach QLD 4218
Australia
Telephone 07 5584 8900
Facsimile 07 5538 6315
12 June 2003
JUPITERS AND TABCORP FINALISE MERGER TERMS
The Boards of Jupiters Limited ("Jupiters") and TABCORP Holdings Limited
("TABCORP") are pleased to announce the signing of the Merger Implementation
Agreement (the "Merger Agreement") relating to the proposed merger between the
two companies.
Upon implementation of the merger, the merged entity will be Australia's largest
gambling and entertainment company, operating approximately 18,000 gaming
machines, with Keno operations on the east coast of Australia, four casino and
hotel facilities in Queensland and New South Wales and off course wagering and
sportsbetting operations in Victoria.
The merged entity will be well positioned to pursue growth opportunities in
Australia and abroad with substantial earnings and an investment grade credit
rating. In the medium term, significant value will also be able to be created
for TABCORP shareholders (including former Jupiters' shareholders) from
synergies within the merged entity, increased scale and business diversity and
enhanced financial strength.
The merger is subject to approval by Jupiters' shareholders, the Supreme Court
of Queensland and the Queensland State Government. Further conditions to the
merger are described below and in the attachment to this announcement.
SCHEMES OF ARRANGEMENT
It is proposed that the merger will be implemented by way of three schemes of
arrangement. The Board of Jupiters unanimously recommends that Jupiters'
shareholders and optionholders support those schemes of arrangement.
Jupiters Ordinary Shares
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Jupiters has agreed to propose to its ordinary shareholders a scheme of
arrangement (the "Ordinary Scheme") whereby TABCORP will acquire all of
Jupiters' 201.8 million ordinary shares. The consideration to be received by
Jupiters' ordinary shareholders reflects the terms of the Ordinary Scheme
announced by Jupiters and TABCORP on 5 March 2003.
Jupiters' ordinary shareholders will have the flexibility to choose to receive
the consideration which best meets their individual objectives, subject to any
necessary scale back:
- under the CASH AND SHARES ALTERNATIVE, they will receive 24 TABCORP shares
and $285 cash for every 100 Jupiters ordinary shares they own;
- under the MAXIMUM CASH ALTERNATIVE, they will be able to elect to receive
$285 cash and up to an additional $240 cash in lieu of TABCORP shares (to
the extent cash is available from a pool of approximately $574 million) for
every 100 Jupiters ordinary shares they own; and
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- under the MAXIMUM SHARE ALTERNATIVE, they will be able to elect to receive
24 TABCORP shares and up to an additional 28.5 TABCORP shares in lieu of
cash (to the extent TABCORP shares are available from a pool of
approximately 48.4 million shares) for every 100 Jupiters ordinary shares
they own.
In addition, Jupiters' ordinary shareholders will receive:
- a fully franked special dividend of $0.75 cash per ordinary share; and
- a proportion of the net proceeds from the sale of Centrebet (see further
details below).
The special dividend is subject to receiving satisfactory tax rulings from the
ATO. If satisfactory tax rulings are not received, Jupiters' ordinary
shareholders will instead receive from TABCORP an additional $0.75 per ordinary
share.
The Ordinary Scheme must be approved by Jupiters' ordinary shareholders and the
Court. The Ordinary Scheme is not conditional on either the RPS Scheme or the
Option Scheme (see below).
Jupiters Reset Preference Shares
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Jupiters has agreed to propose to holders of Reset Preference Shares ("RPS") a
scheme of arrangement ("the RPS Scheme") whereby TABCORP will acquire all of
Jupiters' 1.9 million RPS. Under the RPS Scheme, RPS holders will receive
$105.26 cash for each RPS plus the value of any dividends accrued to the time of
the implementation of the RPS Scheme.
The RPS Scheme must be approved by RPS holders and the Court. The RPS Scheme is
conditional on the Ordinary Scheme proceeding but is not conditional on the
Option Scheme (see below).
RPS holders will also have to take into account their rights to request
conversion of their RPS and Jupiters' proposed response to any such requests
(see below).
Jupiters Options
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Jupiters has agreed to propose a scheme of arrangement to holders of Jupiters
executive options (the "Option Scheme") whereby optionholders will receive cash
consideration from TABCORP in exchange for the cancellation of all of the 1.57
million options on issue. The consideration payable will be $2.07 per option for
options expiring on 30 August 2011 and $2.14 per option for options expiring on
5 November 2011.
The Option Scheme must be approved by the optionholders. The Option Scheme is
conditional on the Ordinary Scheme proceeding but is not conditional on the RPS
Scheme.
CENTREBET SALE PROCESS
The sale process for Jupiters' Centrebet business is underway, with short-listed
potential purchasers currently conducting due diligence on the business. Final
bids are expected to be received by late June and a final sale agreement
negotiated by late July.
Jupiters intends that any final sale agreement will complete as soon as possible
and, in any event, before 31 October 2003.
If the sale of Centrebet occurs in that timeframe and the Ordinary Scheme is
approved, Jupiters' ordinary shareholders will receive the value of the Net
Centrebet Proceeds (as described in the attachment to this announcement) pro
rated according to the number of Jupiters ordinary shares
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held by them. If satisfactory tax rulings are obtained, the value will be
distributed by Jupiters as a fully franked special dividend to Jupiters'
ordinary shareholders. If satisfactory tax rulings are not obtained, the value
will be distributed by TABCORP as an additional cash payment under the Ordinary
Scheme.
If the sale of Centrebet is not completed by 31 October 2003 and the Ordinary
Scheme is approved, TABCORP will issue one unsecured note to Jupiters' ordinary
shareholders in respect of each Jupiters ordinary share held. In these
circumstances, TABCORP will continue to pursue the sale of Centrebet until 30
June 2004. If a sale of Centrebet is completed by 30 September 2004, TABCORP
will redeem each note for a cash amount equivalent to the pro rata proportion of
the Net Centrebet Proceeds represented by one Jupiters ordinary share at the
time of the merger. If a sale agreement is not entered into before 30 June 2004
or a sale is not completed before 30 September 2004, the notes will lapse and
Centrebet will remain in the TABCORP group.
CONDITIONS TO THE MERGER
Both parties have undertaken detailed due diligence and have reached agreement
on all relevant commercial issues.
The merger remains subject to various conditions including:
- approval of the Ordinary Scheme by Jupiters' ordinary
shareholders and the Supreme Court of Queensland;
- grant of regulatory approvals, particularly approval of the
Queensland State Government under relevant gaming legislation;
- satisfaction of the conditions of TABCORP's loan facilities to be
used to fund the cash components of the schemes (excluding
conditions which are procedural and in the sole control of
TABCORP);
- specified events not occurring in relation to, and specified
actions not being taken by, Jupiters;
- specified events not occurring in relation to, and specified
actions not being taken by, TABCORP; and
- no material adverse change in Jupiters or TABCORP occurring.
The conditions are described in more detail in the attachment to this
announcement.
Both Jupiters and TABCORP are confident that the conditions will be satisfied.
FINANCING
TABCORP has entered into commitment letters with a syndicate of banks to provide
the debt funding required to complete the merger.
TABCORP REGULATORY APPROVALS
TABCORP has applied to various regulatory authorities for the necessary
approvals to allow the merger to proceed. Although the various regulatory
authorities have not yet formally responded to
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the applications, TABCORP expects to have a formal response prior to the scheme
meetings of Jupiters' shareholders and optionholders.
TAX RULINGS
Jupiters has applied or will shortly apply to the Australian Tax Office ("ATO")
for tax rulings in relation to the proposed fully franked special dividend of
$0.75 cash per Jupiters ordinary share and the proposed Centrebet special
dividend (described above). Although the ATO has not yet formally responded to
the applications which have been lodged, nothing has come to Jupiters' attention
that would indicate that the applications will be unsuccessful.
EXCLUSIVITY AND COST REIMBURSEMENT
Jupiters has agreed not to solicit competing proposals to the proposed merger
with TABCORP. In addition, Jupiters has agreed to notify TABCORP of any
approaches from a third party in relation to a competing proposal.
Jupiters has agreed to pay TABCORP $12.2 million to reimburse it for costs
incurred in relation to the proposed merger if the merger does not proceed for
various reasons (as detailed in the attachment to this announcement).
TABCORP has agreed to pay Jupiters $7.5 million to reimburse it for costs
incurred in relation to the proposed merger if the merger does not proceed for
various reasons (as detailed in the attachment to this announcement).
DIVIDENDS
Jupiters' ordinary shareholders will receive a final ordinary dividend with
respect to the June 2003 financial year and will not participate in the TABCORP
final dividend with respect to the June 2003 financial year.
The amount of the Jupiters dividend will be determined in accordance with
Jupiters' usual dividend payment practice, but will be no more than 12 cents per
ordinary share.
Jupiters has suspended its dividend reinvestment plan, effective immediately.
RESET PREFERENCE SHARES
TABCORP notes that Jupiters today separately announced various amendments to the
terms of issue of the RPS and how those terms are to be applied in the context
of the merger. TABCORP considered those amended terms before entering into the
Merger Agreement.
Going forward, holders of RPS may lodge a conversion notice with Jupiters,
requesting conversion of their RPS into Jupiters ordinary shares - including
under conversion rights which might be triggered in connection with the merger.
As provided for in the terms of the RPS, Jupiters will not permit such
conversions and instead will redeem, or arrange for the sale to TABCORP of, the
relevant RPS. To facilitate the merger, TABCORP has agreed to purchase any RPS
which Jupiters arranges to sell to it, and to subscribe for new securities in
Jupiters to facilitate the redemption of other RPS.
If the merger is implemented, but the RPS Scheme is not approved, TABCORP
intends that Jupiters will continue with the above approach to conversion
requests.
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TIMING AND MERGER DOCUMENTATION
It is currently anticipated that merger documentation will be sent to Jupiters'
shareholders and optionholders in August 2003 and that meetings to consider the
merger will be held in September 2003. This assumes that the Centrebet sale
completes by September 2003.
The merger documentation will include full details of the proposed merger.
PricewaterhouseCoopers Securities Ltd has been appointed to prepare an
independent expert's report for each of the Ordinary Scheme and the RPS Scheme,
which will be included in the merger documentation.
The ultimate timetable will depend on when the tax rulings outlined above are
obtained and the results of the Centrebet sale process. (If the Centrebet sale
does not complete before 31 October 2003, the meetings to consider the merger
may not occur until the first week of November 2003.)
THE MERGED COMPANY BOARD
It is expected that Mr Lawrie Willett AO (the Chairman of Jupiters) and Mr John
Story (a non-executive director of Jupiters) will be appointed to the TABCORP
Board when the merger becomes effective (subject to the necessary regulatory
approvals having been obtained by that date).
Jupiters and TABCORP will continue to keep their shareholders informed of any
significant developments.
12 June 2003
For any inquiries, please contact:
AT JUPITERS AT TABCORP
Rob Hines Rohan Martin
Chief Executive Officer Acting General Manager - Public Affairs
and Managing Director TABCORP Holdings Limited
Jupiters Limited (03) 9868 2891
(07) 5584 8900
AT CITIGROUP AT UBS INVESTMENT BANK
Paul Binsted Peter Scott
Citigroup Global Markets UBS Investment Bank
(02) 8225 4663 (03) 9242 6367
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ATTACHMENT TO ASX ANNOUNCEMENT
JUPITERS AND TABCORP FINALISE MERGER TERMS
CONDITIONS TO THE MERGER
The Merger Agreement includes a number of conditions which must be satisfied (or
waived by the relevant party) for the merger to proceed, including those set out
below.
In addition to those conditions, implementation of the Ordinary Scheme will be
subject to the approval of Jupiters' ordinary shareholders, and implementation
of the RPS Scheme and the Option Scheme will be subject to the approval of,
respectively, RPS holders and optionholders. Each scheme of arrangement will
also be subject to approval of the Supreme Court of Queensland.
The parties are required to use their best endeavours to satisfy the conditions
by no later than the time Jupiters applies to the Court for approval of the
schemes of arrangement (assuming Jupiters' ordinary shareholder approval is
obtained).
Regulatory approvals
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All regulatory approvals required to implement the merger must be obtained,
including in particular the approvals required from the Queensland State
Government under relevant gaming legislation.
Financing conditions
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The conditions to funding under the commitment letter and definitive financing
documentation put in place by TABCORP to fund completion of the merger (other
than conditions of a procedural nature that are within TABCORP's sole control)
must have been satisfied or waived by the banks.
No Jupiters prescribed occurrence
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No restructuring of Jupiters' share capital, nor any insolvency event, can have
occurred. In addition, Jupiters must not have (amongst other things):
- disposed of any of its subsidiaries, or acquired or disposed of
businesses or assets worth more than $10 million;
- paid any dividend or other distribution (other than the Jupiters'
final dividend for the June 2003 financial year and any dividends
on the RPS);
- entered into any contract with a period of more than two years,
or worth more than $500,000 (except where previously legally
committed);
- incurred any debt or made any loan, other than under existing
facilities;
- made any capital expenditure in excess of $500,000 (except where
previously legally committed);
- varied or waived its rights under any material contract; or
- applied or amended the terms of the RPS in a manner that it has
not made known prior to the Merger Agreement being signed.
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Such actions are not prevented, however, where the relevant matter was disclosed
to TABCORP prior to the Merger Agreement being signed or if it relates to
Centrebet (amongst other exceptions).
No TABCORP prescribed occurrence
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No restructuring of TABCORP's share capital, nor any insolvency event, can have
occurred. In addition, following the announcement by TABCORP of a significant
corporate action involving:
- the issue of securities (other than in connection with the merger
or any employee share plan or dividend reinvestment plan);
- the acquisition of assets or securities (other than in the
ordinary course of business) with a cumulative value of more than
$185 million; or
- the disposal of substantially all of one of its operating
divisions,
TABCORP's volume weighted average share price cannot be below $8.98, where that
fall relative to $10.26 represents an underperformance relative to the S&P/ASX
100 Index since 5 March 2003 of more than 7.5 percentage points.
No material adverse change
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No material adverse change to Jupiters or TABCORP or their respective businesses
can have occurred. For both parties, such a change is measured by its effect on
either operating earnings before interest and tax ("EBIT") or net assets. In
addition, in the case of Jupiters only, capital expenditure in excess of those
levels disclosed to TABCORP prior to the Merger Agreement being signed will also
be taken into account.
In the case of Jupiters, EBIT effects must be greater than $1 million to be
taken into account, while for assets the threshold is $5 million. The aggregate
impact of relevant EBIT effects, asset effects and capex must be at least $60
million (after applying a factor of 10 to EBIT effects).
In the case of TABCORP, EBIT effects must be greater than $7 million to be taken
into account, while for assets the threshold is $36 million. The aggregate
impact of relevant EBIT effects and asset effects must be at least $438 million
(after applying a factor of 10 to EBIT effects).
Matters relating to the operation of Centrebet are not taken into account for
the purpose of assessing where a material adverse change has occurred in
relation to Jupiters.
Centrebet
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Jupiters must have complied with its obligations in relation to the operation
and disposal of the Centrebet business. Jupiters is required to use reasonable
endeavours to sell the Centrebet business before 31 October 2003, and on certain
key terms agreed with TABCORP.
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EXCLUSIVITY AND COST REIMBURSEMENT
Consistent with the parties' agreement to work exclusively together on the
proposed merger, the Merger Agreement requires Jupiters not to solicit or
encourage any proposal that might compete with the merger, or to agree to any
such solicited proposal.
In addition, Jupiters must notify TABCORP if any approaches are made to it in
connection with a competing proposal, or if Jupiters engages in discussions or
provides information for the purposes of a competing proposal.
If Jupiters pursues an unsolicited competing proposal that the Board of Jupiters
considers, on the basis of appropriate advice, is sufficiently certain and more
favourable than the merger, then Jupiters will be required to reimburse TABCORP
$12.2 million for costs incurred by TABCORP in relation to the proposed merger.
Similarly, Jupiters will be required to reimburse that amount to TABCORP in
circumstances where:
- a third party acquires control of Jupiters or a substantial part
of its business or assets;
- the Board of Jupiters withdraws its recommendation of the merger,
other than where Jupiters shows that is on the basis of the
independent expert's opinion; or
- the merger does not proceed due to a material breach by Jupiters
of its obligations under the Merger Agreement.
TABCORP will be required to reimburse Jupiters $7.5 million for costs incurred
by Jupiters in relation to the proposed merger, where:
- TABCORP terminates the Merger Agreement as a result of the
conditions to its funding arrangements for the merger not being
satisfied (or waived by the banks), except where TABCORP shows
that the dominant reason for that is a material adverse change in
the business or financial condition of the Jupiters group; or
- the merger does not proceed due to a material breach by TABCORP
of its obligations under the Merger Agreement.
NET CENTREBET PROCEEDS
The Merger Agreement sets out the basis of calculation of the Net Centrebet
Proceeds to be distributed to Jupiters' ordinary shareholders, assuming the
Centrebet business is sold.
The relevant amount will be calculated on the basis of the actual amount
received under the sale agreement by the Jupiters group, plus the amount of any
adjustments made to deal with the liability assumed by the purchaser for
customer deposits and undecided bets. In addition, an amount equal to the net
profit after tax of the Centrebet business for the period from 1 July 2003 to
completion of the Centrebet sale will be added.
From that sum will be deducted the amount of any cash transferred to the
purchaser, as well as costs and taxes incurred or to be incurred in connection
with the sale. Further deductions will be applied if the sale of Centrebet does
not complete by 31 October 2003.
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