DCL is suffering yet another episode of boardroom unrest as new shareholder Mike Norris moves against what he believes could be takeover moves by an underwriting company called Rentamobile.
DCL holds the licences for 3MP and 3AK (now leased to SEN) and has had cash flow problems for some time. The Stock Exchange has currently suspended the company’s shares from trading.
Rentamobile came on board to underwrite a recent rights issue, but if that stock is not taken up it could result in Rentamobile ending up owning about 40% of DCL.
Mike Norris’ companies, Radio Australia and Andros Nominees, have lodged an appeal to the Takeovers Panel in a bid to stop this happening, saying there was not enough disclosure of the issue to shareholders so that they could make up their minds about the possibility of Rentamobile owning so much of the company.
If a new shareholder entered the register on this basis it would dilute the value of Norris’ assets and lessen his influence in the company. The same could happen to the other shareholders.
The request to block Rentamobile cites Section 657A of the Corporations Act and requests “a declaration of unacceptable circumstances,” which could block any intentional or unintentional takeover.
Meanwhile 3MP industry observers have noticed some changes to the station’s format. One industry observer told radioinfo:
“It’s still easy listening, but there’s a noticeable change in the music and presentation style. Softer, relaxing. Gone are a lot of the marginal songs.
It’s well put together with a quieter approach in presentation from the jocks.
The station is now running a promo saying highlighting its “soft and easy favourites.”
The Panel announces that it has received an application from Radio Australia Pty Ltd and its associate Andros Nominees Pty Ltd (collectively, Radio Australia), pursuant to section 657A of the Corporations Act 2001 (Cth) (the Act) for a declaration of unacceptable circumstances in relation to the affairs of Data & Commerce Ltd (DCL).
Radio Australia Pty Ltd and Andros Nominees Pty Ltd hold 26,549,000 and 2,859,423 ordinary shares in DCL respectively, giving Radio Australia a voting power of 19.99% of the total issued capital of DCL.
On 14 April 2004, DCL lodged a prospectus for a non-renounceable rights offer (Rights Offer), underwritten by Rentamobile Pty Ltd (Rentamobile) to the extent of 119,842,526 shares (representing approximately 81% of the offer). Radio Australia alleges that the Rights Offer may allow Rentamobile to acquire a substantial holding in DCL and obtain control of DCL in circumstances where there was insufficient disclosure relating to Rentamobile and its intentions; an unreasonably short period of time for DCL shareholders to consider the Rights Offer; and no DCL shareholder approval to the acquisition of DCL shares by Rentamobile.
Radio Australia seeks final orders preventing DCL from accepting entitlement and acceptance forms under the prospectus unless and until DCL provides additional information in relation to Rentamobile (including its intentions, its funding to underwrite the Rights Offer and general disclosure of Rentamobile and its business) and that DCL extend the period of the Rights Offer.
Alternatively, Radio Australia seeks final orders preventing the issue of any shares to Rentamobile which would have the effect of causing its voting power in DCL to exceed 19.9% (unless DCL shareholder approval is obtained in accordance with section 611 item 7 of the Act) or preventing the issue of any shares to Rentamobile under the Rights Offer.
The Panel has not decided whether to conduct proceedings in relation to the application and makes no comment on the merits of the application. It also notes that it has not received submissions from the other parties to the application and it is, therefore, unaware of their views.
Andrew Knox, Michael Ashforth and Simon Withers have been appointed as the sitting panel to consider the application.