Your reference: Our reference: MEW:JTE:1050372
18 September 2020
Private & Confidential
ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000
- Dear Sir/Madam - 5GN OFF-MARKET TAKEOVER BID FOR WCG – SERVICE OF BIDDER'S STATEMENT
We act on behalf of 5G Networks Limited (ASX: 5GN) (5GN).
We attach, by way of service pursuant to item 5 of section 633(1) of the Corporations Act 2001 (Cth) (Corporations Act), a copy of the bidder’s statement dated today’s date in relation to 5GN’s off-market takeover bid for all the ordinary shares on issue in the capital of Webcentral Group Limited (ASX: WCG) (WCG).
A copy of the attached bidder’s statement has been lodged with the Australian Securities and Investments Commission and sent to WCG today.
On behalf of our client, we give notice under section 633 (4)(a) of the Corporations Act that the date set by 5GN for the purposes of section 633(2) of the Corporations Act as the date for determining the people to whom information is to be sent under items 6 and 12 of section 633(1) of the Corporations Act is the date set out in the attached bidder’s statement namely, today.
Yours faithfully
CORNWALLS
Contact Michael Wilton Partner [email protected] +61 3 9608 2186 +61 413 890 280
For personal use only use personal For encl
A L10 114 William St, Melbourne Vic 3000 P GPO Box 1466, Melbourne Vic 3001 DX 636 Melbourne T +61 3 9608 2000 W cornwalls.com.au
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Jake Erman-Keogh This is an important document and requires your immediate attention. If you are in any doubt about how to deal with this document, you should contact your broker, financial adviser or legal adviser immediately. BIDDER’S STATEMENT
CONTAINING A RECOMMENDED OFFER
by 5G Networks Limited ACN 163 312 025 (5GN) to purchase all of your ordinary shares in Webcentral Group Limited ACN 073 716 793 (Webcentral)
You will receive 1 5GN share for every 12 of your Webcentral shares
The Webcentral Directors unanimously recommend that you ACCEPT THE OFFER
in the absence of a superior proposal For personal use only use personal For
1 KEY DATES TABLE OF CONTENTS
Event Date 1. IMPORTANT NOTICES 4
Date of this Bidder’s Statement 18 September 2020 2. LETTER FROM THE CHAIRMAN 6
Date of Offer 18 September 2020 3. REASONS YOU SHOULD ACCEPT 5GNS OFFER 8 4. SUMMARY OF THE OFFER 11 Offer Closes (unless extended or withdrawn) 20 October 2020 5. INFORMATION ON 5GN AND THE 5GN GROUP 14 6. INFORMATION ON 5GN’S SECURITIES 21 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP 24 KEY CONTACTS 8. INFORMATION ON WEBCENTRAL’S SECURITIES 40 9. SOURCES OF CONSIDERATION 41 10. BIDDER’S INTENTIONS IN RELATION TO WEBCENTRAL 42 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP 46 Name 12. RISK FACTORS 67 Share Registrar for the Offer: 13. TAX CONSIDERATIONS 72 Link Market Services Limited GPO Box 3560 14. ADDITIONAL INFORMATION 76 Sydney NSW 2001 15. THE TERMS AND CONDITIONS OF THE OFFER 83
Offer Information Line: 16. COMPANY DIRECTORY 94 Within Australia: 1800 606 866 17. APPROVAL OF BIDDER’S STATEMENT 95 Outside Australia: +61 1800 606 866 18. GLOSSARY 96
Calls to these numbers may be recorded. For personal use only use personal For
2 1. IMPORTANT NOTICES 1. IMPORTANT NOTICES
1.1 NATURE OF THIS DOCUMENT Foreign Shareholders and Small Parcel Shareholders who accept the Offer will be paid a cash amount calculated This Bidder’s Statement is issued by 5G Networks Limited ACN 163 312 025 (5GN) under Part 6.5 of in accordance with section 15.7. This Bidder’s Statement does not constitute an offer to issue or sell, or the the Corporations Act. soliciting of an offer to buy, any securities referred to in this Bidder’s Statement in any jurisdiction in which the A copy of this Bidder’s Statement was lodged with ASIC on 18 September 2020. Neither ASIC nor its offer or issue of such securities would be unlawful. In particular, 5GN Shares have not been, and will not be, officers takes any responsibility for the content of this Bidder’s Statement. registered under the Securities Act 1933 of the United States of America (Securities Act) and may not be offered or sold in the United States or to, or for the account or benefit of, a US person (as defined in Regulation S under 1.2 INVESTMENT ADVICE the Securities Act), except in a transaction exempt from the registration requirements of the Securities Act and applicable United States state securities laws. Webcentral Shareholders who are resident outside of Australia In preparing this Bidder’s Statement, 5GN has not taken into account the individual objectives, financial situation and its external territories or New Zealand should refer to section 14.5 for further details. or needs of individual Webcentral Shareholders. Accordingly, before making a decision whether or not to accept the Offer, you may wish to consult with your financial or other professional adviser. 1.6 WARNING STATEMENT FOR WEBCENTRAL SHAREHOLDERS IN NEW ZEALAND
1.3 DISCLAIMER AS TO FORWARD LOOKING STATEMENTS This Bidder’s Statement is not a New Zealand product disclosure statement or other similar offering or disclosure document under New Zealand law and has not been registered, filed with or approved by any New Zealand Some of the statements appearing in this Bidder’s Statement may be in the nature of forward looking regulatory authority under or in accordance with the Financial Markets Conduct Act 2013 or any other relevant statements. You should be aware that such statements are only predictions and are subject to inherent risks and New Zealand law. The offer of 5GN Shares under the Offer is being made to existing Webcentral Shareholders uncertainties. These risks and uncertainties include factors and risks specific to the industry in which Webcentral with registered addresses in New Zealand in reliance upon an exemption from the relevant New Zealand and 5GN and the members of the 5GN Group operate as well as general economic conditions, prevailing securities regime and, accordingly, this Bidder’s Statement may not contain all the information that a product exchange rates and interest rates and conditions in the financial markets. disclosure statement under New Zealand law is required to contain.
Actual events or results may differ materially from the events or results expressed or implied in any forward 1.7 PRIVACY looking statement. None of 5GN, the officers or employees of 5GN, any persons named in this Bidder’s Statement with their consent and any person involved in the preparation of this Bidder’s Statement makes any 5GN has collected or will collect your information from the Webcentral register of members for the purpose of representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward looking making the Offer and, if accepted, administering a record of your acceptance of the Offer for your holding of statement, or any events or results expressed or implied in any forward looking statement, except to the extent Webcentral Shares. If the Offer is declared unconditional, this information will be used in issuing and accounting required by law. You are cautioned not to place undue reliance on any forward looking statement. The forward to you for your Offer Consideration. The Corporations Act requires the name and address of shareholders to looking statements in this Bidder’s Statement reflect views held only as at the date of this Bidder’s Statement. be held in a public register. Your information may be disclosed on a confidential basis to 5GN Group Members and external service providers, and may be required to be disclosed to regulators such as ASIC and ASX. The 1.4 DISCLAIMER AS TO WEBCENTRAL AND MERGED GROUP INFORMATION registered address of 5GN is Level 8, 99 William Street, Melbourne, Victoria, Australia 3000.
The information on Webcentral, Webcentral’s securities and the Webcentral Group contained in this Bidder’s 1.8 DEFINED TERMS Statement has been prepared by 5GN using publicly available information. A number of defined terms are used in this Bidder’s Statement. Unless the context requires otherwise, a contrary The information in this Bidder’s Statement concerning Webcentral and the assets and liabilities, financial position intention appears or words are defined in the Glossary in section 18, words or expressions used in this Bidder’s and performance, profits and losses and prospects of the Webcentral Group has not been independently verified Statement have the same meaning and interpretation as in the Corporations Act. by 5GN. Accordingly, 5GN does not, subject to the Corporations Act and any other applicable law, make any representation or warranty, express or implied, as to the accuracy or completeness of such information.
The information on the Merged Group contained in this Bidder’s Statement, to the extent that it incorporates or reflects information on Webcentral and the Webcentral Group, has also been prepared using publicly available information. Accordingly, information in relation to the Merged Group is subject to the foregoing disclaimer to that extent.
Further information relating to Webcentral’s business may be included in Webcentral’s target’s statement which Webcentral must provide to its Shareholders in response to this Bidder’s Statement.
1.5 FOREIGN JURISDICTIONS For personal use only use personal For Webcentral Shareholders should note that consideration for the Offer is 5GN Shares, which are shares in an Australian public company listed on ASX. The Offer is subject to disclosure requirements in Australia which are likely different from those applicable in other countries. Webcentral Shareholders whose address as shown in the register of members of Webcentral is in a jurisdiction other than Australia or its external territories or New Zealand, unless 5GN otherwise determines (in its absolute discretion), will not be entitled to receive 5GN Shares on acceptance of the Offer (unless 5GN is satisfied that it is not precluded from lawfully issuing 5GN Shares either unconditionally or after compliance with conditions that 5GN regards as acceptable and not unduly onerous).
4 5 2. LETTER FROM THE CHAIRMAN 2. LETTER FROM THE CHAIRMAN
Dear Webcentral shareholder, ABOUT 5GN If you ACCEPT the Offer, you will have the opportunity to exchange your Webcentral Shares for shares in a leading On behalf of the directors of 5GN, I am pleased to present you with this bidder’s statement which details ASX-listed telecommunications and digital services company. 5GN’s offer (Offer) to acquire all of Your Shares in Webcentral.
Under the Offer, you (provided that you are not a Foreign Shareholder or Small Parcel Shareholder) will receive 1 5GN ACCEPTING THE OFFER Share for every 12 Webcentral Shares you own (Offer Consideration). Based on the volume weighted average price of 5GN Shares on Tuesday 15 September and Wednesday 16 September 2020 (the last two trading days prior to the date Webcentral Shareholders who accept the Offer will generally be paid (by the issue of 5GN Shares) on the earlier of the Bidder’s Statement) of $1.74, the Offer impliedly values each Webcentral Share at $0.145. of the date that is one month after the Offer becomes, or is declared, unconditional or 21 days after the end of the Offer Period. The Offer is subject to the conditions set out in section 15.8. The Offer represents, in 5GN’s view, the best opportunity available to Webcentral’s Shareholders to crystallise meaningful value from, and de-risk, their investment in Webcentral in the foreseeable future. Detailed information in respect of the Offer is set out in this Bidder’s Statement.
For the reasons set out in this Bidder’s Statement, I strongly encourage all Webcentral Shareholders to ACCEPT the Offer You should read this Bidder’s Statement in its entirety. The Offer is open for acceptance until 7.00 pm (Sydney time) on Tuesday 20 October 2020, unless extended in accordance with the Corporations Act. To accept the Offer, you should REASONS TO ACCEPT THE OFFER: follow the instructions detailed on the Acceptance Form.
• The implied Offer value represents a very attractive and significant premium of: I ENCOURAGE YOU TO ACCEPT THE OFFER. • 31% to the closing price of Webcentral Shares on 3 September 2020, being the last day on which Webcentral If you have any questions in relation to the Offer, please contact the Offer Information Line on 1800 606 866 Shares traded before Webcentral announced the 5GN takeover proposal; and (from within Australia) or +61 1800 606 866 (from outside Australia) between 8.30am and 5.00pm (Sydney time), • 38% to the 1-month VWAP of Webcentral Shares up to and including 3 September 2020, being the last day on Monday to Friday. which Webcentral Shares traded before Webcentral announced the 5GN takeover proposal. Yours sincerely • The only conditions to the Offer are (a) a 50.1% minimum acceptance condition, (b) a no ’prescribed occurrences’ condition and (c) a no material adverse change condition. 5GN will declare the Offer wholly unconditional as soon as possible (and, in any event within one Business Day) after 5GN obtains a relevant interest in at least 50.1% of the Webcentral Shares, unless any condition has been breached prior to the date on which 5GN obtains such a relevant interest; Albert Cheok • De-risks your investment in Webcentral within a stronger, larger, more diversified and liquid vehicle; Non-Executive Chairman • Enhanced operational value through 5GN’s technical, financial and operating capability; and • Potential access to CGT scrip for scrip rollover relief.
In addition to the above reasons, the Offer represents an attractive alternative to the proposal offered to Webcentral Shareholders under the Web.com Scheme proposed by Web.com Group Inc. (Web.com) (Web.com Proposal) as announced on 13 July 2020. The Offer provides Webcentral Shareholders: • ongoing exposure to potential improvement in the performance of Webcentral after a period of underperformance and a declining share price for Webcentral; • value from any potential benefits of scale and potential synergies of the combined group made up of 5GN and Webcentral; • opportunity to gain exposure to potential growth in the 5GN business; • the ability to participate in any turnaround of Webcentral; and • less completion risk and higher execution certainty as compared to the Web.com Proposal.
SUPPORT FROM WEBCENTRAL DIRECTORS For personal use only use personal For In addition, Webcentral has announced that the Webcentral Directors intend to unanimously recommend that Webcentral Shareholders accept the Offer in the absence of a Superior Proposal and that the Webcentral Directors intend to accept, or procure the acceptance of, the Offer in respect of all Webcentral Shares in which they have a relevant interest, in the absence of a Superior Proposal.
6 7 3. REASONS YOU SHOULD ACCEPT 5GNS OFFER 3. REASONS YOU SHOULD ACCEPT 5GNS OFFER
3.1 THE IMPLIED VALUE OF THE OFFER CONSIDERATION REPRESENTS AN ATTRACTIVE AND SIGNIFICANT PREMIUM TO THE RECENT TRADING VALUE OF WEBCENTRAL SHARES 1. The implied value of the Offer Consideration represents an attractive significant premium to the recent trading value of Webcentral Shares The Offer Consideration is 1 5GN Share for every 12 Webcentral Shares that you own. Based on the 2 day VWAP of 5GN Shares up to and including Wednesday, 16 September 2020, being the last day on which 5GN Shares traded prior to the date of this Bidder’s Statement, the implied value of the Offer Consideration was The Offer is unanimously recommended by Webcentral’s board of directors, $0.145 which represents an attractive and significant premium to the historical trading prices of Webcentral 2. in the absence of a Superior Proposal Shares, as follows: • a 31% premium to the closing price of Webcentral Shares on 3 September 2020, being the last day on which Webcentral Shares traded before the date that Webcentral announced the 5GN takeover proposal; and If the Offer is successful 5GN will provide a loan to Webcentral to allow • 3. Webcentral to pay out its Existing Debt Facilities to its Existing Financiers in full, a 38% premium to the 1-month VWAP of Webcentral Shares up to and including 3 September 2020, being the last day on which Webcentral Shares traded before the date that Webcentral announced relieving Webcentral of its debt burdens the 5GN takeover proposal.
3.2 RECOMMENDED OFFER 4. 5GN has significant acquisition and turnaround expertise having acquired The Webcentral Board has unanimously recommended that Webcentral Shareholders ACCEPT the Offer 7 businesses since 2017 in the absence of a Superior Proposal.
All of the Webcentral Directors intend to accept, or procure the acceptance of the Offers in respect of all There is currently no Superior Proposal or alternative offer for your Webcentral 5. Webcentral Shares in which they have a relevant interest, in the absence of a Superior Proposal. Shares which is capable of acceptance If you ACCEPT the Offer and the Offer becomes or is declared unconditional, you will receive 1 5GN Share for every 12 Webcentral Shares that you own. As at the date of this Bidder’s Statement, 5GN is not aware of any Superior Proposal or alternative offer having been received by Webcentral which is capable of acceptance by Accepting the Offer will allow you to de-risk your existing investment in Webcentral Shareholders and Webcentral has not made 5GN aware of any party having expressed an intention 6. Webcentral within a larger, more diversified and liquid vehicle that is 5GN to Webcentral to make such a proposal or offer.
3.3 REMOVAL OF DEBT BURDEN
If 5GN acquires a relevant interest in at least 50.1% of the Webcentral Shares and the Offer becomes or is 7. The Webcentral Share price may fall if the Offer lapses declared wholly unconditional, 5GN will provide funding to Webcentral to allow Webcentral to pay out the Existing Debt Facilities to the Existing Financiers in full.
As at 31 July 2020, the total amount drawn under the Existing Debt Facilities was approximately $47.6 million. 1 Refer to the ASX Announcement made by Webcentral on 17 September 2020. This amount includes:
• approximately $41.6 million of term debt; The above table is only a headline summary of some of the benefits to ebcentralW Shareholders that the 5GN Board considers the Offer provides. Further detail on each of these 7 reasons for ACCEPTING • bank guarantees of approximately $5.5 million, of which approximately $1.9 million are subject to the Offer is set out in sections 3.1 to 3.7. guarantees held in favour of Webcentral from sub-tenants. Net exposure after deducting these back-to-back arrangements is approximately $3.6 million; and You should read this Bidder’s Statement in its entirety before deciding whether to accept the Offer. • an interest rate hedge, of which the estimated mark-to-market valuation as at 31 July 2020 is approximately $450,000.
Webcentral has been in default under these facilities for some time.
Notwithstanding their previous support, there can be no assurance that the Existing Financiers will remain For personal use only use personal For supportive of Webcentral if the Offer is not successful.
8 9 3. REASONS YOU SHOULD ACCEPT 5GNS OFFER 4. SUMMARY OF THE OFFER
3.4 5GN EXPERIENCED IN BUSINESS TURNAROUND Key Details Summary 5GN has demonstrated acquisition and turnaround expertise having acquired 7 businesses since 2017: Enspire, Aptel, Anittel / Hostworks, Melbourne Data Centre, Australian Pacific Data Centre, North Sydney Data Centre What 5GN is offering to buy 5GN is offering to buy all Your Shares which it does not already own on the and ColoAU. Accordingly, 5GN has a strong track record in identifying and implementing cost and revenue terms set out in this Bidder’s Statement. You may only accept the Offer in synergies resulting from these acquisitions. respect of all of the Webcentral Shares held by you.
If the Offer is successful, 5GN will be afforded the opportunity to endeavour to utilise this expertise and acumen What will you receive if you If you accept the Offer, you will, subject to the satisfaction of the conditions to return Webcentral to profitability. accept the Offer? to the Offer, receive 1 5GN Share for every 12 of Your Shares. This impliedly values Your Shares at $0.145 each. 2 3.5 NO SUPERIOR COMPETING OFFERS If you are a Foreign Shareholder (being a Webcentral Shareholder whose As far as 5GN is aware, the Offer is the only proposal that has been publicly announced as at the date of this address as shown in the register of members of Webcentral is in a Bidder’s Statement that provides you with an opportunity to sell your Webcentral Shares. jurisdiction other than Australia or its external territories or New Zealand – see the definition of ‘Foreign Shareholder’ for further information) or a Small As at the date of this Bidder’s Statement, 5GN is not aware of any other party intending to make a competing Parcel Shareholder, you will not receive 5GN Shares. Instead, if you accept proposal that includes an offer for Webcentral Shares. the Offer in respect of Your Shares, you will be paid by the Nominee the net proceeds of the sale of the 5GN Shares you would have otherwise been 3.6 DE-RISK INVESTMENT entitled to. See section 15.7 for more information. By ACCEPTING 5GN’s Offer, you would materially de-risk your investment in Webcentral through both the When you will receive the 5GN Generally, 5GN will issue the 5GN Shares due to you under the Offer on or receipt of up-front value for your Webcentral Shares and through being part of the combined group; a stronger, Shares before the earlier of: larger, more diversified and more liquid vehicle. • one month after you accept this Offer or one month after all of the By ACCEPTING the Offer, Webcentral Shareholders will have exposure to a company with a larger market conditions have been freed or fulfilled (whichever is the later); and capitalisation and considerably more share trading liquidity across ASX as compared to Webcentral on a standalone basis. • 21 days after the end of the Offer Period. Full details of when consideration will be provided are set out in section Furthermore, the Merged Group will have a significantly larger balance sheet than Webcentral on a standalone 15.6 of this Bidder’s Statement. basis which will enhance its ability to attract partners and funding for its current and future growth opportunities. Foreign Shareholders and Small Parcel Shareholders will be provided with 3.7 WEBCENTRAL SHARE PRICE MAY FALL IF THE OFFER LAPSES the net proceeds of sale to which they are entitled under the Offer at a different time. See section 14.7 for more information. While there are many factors that influence the market price of Webcentral Shares, there is a risk that Webcentral’s Share price will fall to levels experienced prior 5GN’s takeover proposal announced on 7 Will you need to pay brokerage or If Your Shares are registered in an Issuer Sponsored Holding in your name September 2020, given that the current share price is based on the market’s expectation of the Offer proceeding stamp duty on acceptances? and you deliver them directly to 5GN, you will not incur any brokerage fees successfully. or be obliged to pay stamp duty in connection with your acceptance of the Offer. If Your Shares are registered in a CHESS Holding, or if you are a beneficial owner whose Webcentral Shares are registered in the name of a broker, bank custodian or other nominee, you will not be obliged to pay stamp duty by accepting the Offer, but you should ask your Controlling Participant (usually your broker) or that nominee whether it will charge any transactional fees or service charges in connection with acceptance of the Offer.
Closing Date The Offer closes at 7.00 pm (Sydney time) on Tuesday 20 October 2020 unless it is extended under the Corporations Act.
What risks are associated with You should carefully consider the risk factors that could affect the
For personal use only use personal For the Offer? performance of 5GN and the Merged Group before deciding whether to accept the Offer. A summary of the key risk factors is set out in section 12.
2 Based on the VWAP of 5GN Shares on Tuesday 15 September and Wednesday 16 September 2020, being the last two trading days before this Bidder’s Statement, which was $1.74.
10 11 4. SUMMARY OF THE OFFER 4. SUMMARY OF THE OFFER
Key Details Summary Key Details Summary
There are some conditions to The Offer is subject to a limited number of Bid Conditions, being (in Can you accept the Offer for part No. You cannot accept for part of your holding. You can only accept the the Offer summary form only): of your holdings? Offer forALL of Your Shares.
• (minimum acceptance) 5GN obtaining a relevant interest in at least What if you are a Foreign Foreign Shareholders and Small Parcel Shareholders that accept the 50.1% of Webcentral Shares (on a fully diluted basis). Shareholder or hold a Small Offer will not receive 5GN Shares. Rather, the 5GN Shares that Foreign • (no prescribed occurrences) no prescribed occurrences occurring. Parcel? Shareholders and Small Parcel Shareholders would have been entitled to • (no material adverse change) no material adverse change occurring with receive will be issued to, and sold by, a Nominee and the net proceeds respect to Webcentral. attributable to each Foreign Shareholder or Small Parcel Shareholder (as 5GN will declare the Offer wholly unconditional as soon as possible (and in the case may be) will be paid to them by cheque in Australian dollars drawn any event within one Business Day) after it obtains a relevant interest in at on an Australian bank account. least 50.1% of the Webcentral Shares, unless any Bid Condition has been Foreign Shareholders and Small Parcel Shareholders should read section breached prior to the date on which 5GN obtains such a relevant interest. 15.7 which provides further information on Foreign Shareholders, Small Full terms of the Bid Conditions are set out in section 15.8 of this Bidder’s Parcel Shareholders and the Nominee sale process. 5GN’s determination of Statement. 5GN strongly advises Webcentral Shareholders read the terms whether a Webcentral Shareholder is a Foreign Shareholder or Small Parcel and conditions in full. Shareholder is final. Depending on the Foreign Shareholder’s particular circumstances, an What happens if the conditions If the conditions of the Offer are not satisfied or waived by the Closing Date, amount may be withheld by 5GN from the (gross) cash proceeds and paid of the Offer are not satisfied or the Offer will lapse and your acceptance will be void. to the Commissioner of Taxation on account of foreign resident capital waived? gains withholding tax (see sections 13.3 and 15.6 for more information). How you accept the Offer You may only accept the Offer for all of Your Shares. What happens if you do not You will remain a Webcentral Shareholder and will not be issued any 5GN Issuer sponsored shareholders accept the Offer? Shares as consideration under the Offer. If Your Shares are registered in an Issuer Sponsored Holding (such holdings If 5GN becomes entitled to compulsorily acquire your Webcentral Shares, will be evidenced by an ‘I’ appearing next to your holder number on the it intends to proceed with the compulsory acquisition. If your Webcentral accompanying Acceptance Form), to accept this Offer, you must complete Shares are compulsorily acquired by 5GN, it will be on the same terms and sign the Acceptance Form enclosed with this Bidder’s Statement and (including the same consideration for each Webcentral Share acquired) as return it so that is received at the address given on the form before the the Offer, except for the timing of payment of consideration, which will be Closing Date. conducted in accordance with the requirements of the Corporations Act. Refer to sections 10.3 and 10.7 for details regarding 5GN’s intentions if CHESS shareholders 5GN does not become entitled to compulsorily acquire Webcentral Shares. If Your Shares are registered in a CHESS Holding (such holdings will Where to go for further For all queries in relation to the Offer, please contact the Offer be evidenced by an ‘X’ appearing next to your holder number on the information? Information Line on 1800 606 866 (within Australia) or +61 1800 606 accompanying Acceptance Form), you may accept the Offer by either: 866 (outside Australia). Please note that in order to comply with legal • completing and signing the Acceptance Form enclosed with this Bidder’s requirements, any calls to the above numbers will be recorded. Inquiries in Statement and returning it so that it is received at the address given relation to the Offer will not be received on any other telephone numbers of on the form in sufficient time for your instructions to be relayed and 5GN or its advisers. processed by your Controlling Participant; or • instructing your Controlling Participant (normally your broker) to accept Important Notice The information in this section 4 is a summary only of 5GN’s Offer and the Offer on your behalf, is qualified by the detailed information set out elsewhere in this Bidder’s Statement. You should read the Bidder’s Statement and, if it is available before the Offer closes. before you accept the Offer, the target’s statement that Webcentral will Participants shortly be sending to you, in their entirety before deciding whether to
For personal use only use personal For accept the Offer. If you are a Participant, acceptance of the Offer must be initiated in accordance with rule 14.14 of the ASX Settlement Operating Rules before the Closing Date. Full details on how to accept the Offer are set out in section 15.3.
12 13 5. INFORMATION ON 5GN AND THE 5GN GROUP 5. INFORMATION ON 5GN AND THE 5GN GROUP
5.1 OVERVIEW OF 5GN AND ITS BUSINESS (C) JOE GANGI (INDEPENDENT DIRECTOR)
5GN is a licenced telecommunications carrier operating across Australia and international markets. 5GN offers Mr Joe Gangi has over 30 years of experience in corporate management and governance and has been an business customers a unique and seamless digital experience across data network connectivity, cloud and data independent director of 5GN since the company’s inception and initial IPO. He is a member of the RMIT centres, underpinned through our expertise in managed IT services. University, Engineering Faculty, Industry Advisory Committee and is an active advisor to several private sector boards. He also provides strategic planning and consulting services to the Local Government sector. Following our recent capital raising, 5GN currently has approximately $52.5 million of cash and undrawn His expertise lies in business management and leadership with a focus on business sustainability, growth debt facilities. and development, strategic and client relationship management and risk management. 5GN currently owns and operates its own nationwide high-speed 100Gb data network with points of presence (D) JASON ASHTON (INDEPENDENT DIRECTOR) in all major Australian capital cities in addition to high speed international connectivity to Japan, New Zealand, Singapore and USA. 5GN has commenced the rollout of fibre in 5 Australian capital cities to connect 80 Mr Jason Ashton has more than 25 years of experience in the Internet and Telecommunications industries. data centres. Jason was co-founder (1993) and Managing Director of business ISP Magna Data which was acquired In addition, 5GN offers managed cloud and infrastructure hosting through its 5GN cloud platforms and the in 1999. Jason was also co-founder (2002) of ASX listed BigAir Group Limited and was its Chief Executive 4 owned and operated data centres, which have a combined rack capacity of more than 800 and over 8MW Officer from 2006 until its acquisition by Superloop Limited in 2016 (ASX:SLC). He served as an executive of power. Our 5GN data centres are connected to secure 100Gb networks across Adelaide, Melbourne, director at Superloop from 2016 to 2018. and Sydney. (E) GLEN DYMOND (CHIEF FINANCIAL OFFICER AND JOINT COMPANY SECRETARY) As an organisation, 5GN is dedicated and passionate about delivering unique value to our 2500+ customers Mr. Glen Dymond has more than 25 years of experience in senior finance and operations management which include several top 50 ASX listed and Government organisations. This commitment is strengthened by roles at several ASX-listed entities, including Zenitas Healthcare Limited), Spotless Group Limited, a core focus on digital leadership, innovation and an exceptional customer experience. Broadspectrum Limited and ConnectEast Group. Mr. Dymond’s commercial finance and operations Data Networks: 5GN’s data network solutions help businesses to connect with secure world-class technologies experience has been achieved across a diverse range of businesses. This includes process development to enhance both application performance and availability. 5GN Managed Network is an agile and secure optical to drive financial performance, as well as client commercial management and driving successful change fibre network that enables customers to connect to their data at ultra-high speeds with minimal latency. This is management across organisations undergoing rapid growth and change. augmented though our rapidly growing metropolitan fibre network which will soon extend 180 km across our (F) MICHAEL WILTON (GENERAL COUNSEL AND JOINT COMPANY SECRETARY) major cities, connecting to more than 80 data centres. Mr Michael Wilton is an experienced equity capital markets and M&A lawyer, having more than Data centre & Cloud services: 5GN provides market leading cloud services that combine the security of 25 years’ experience in those sectors. He also has substantial expertise in IT and telecommunications. private cloud with public cloud platforms. The platform is orchestrated and governed from a single management In addition to his role at 5GN, Mr Wilton is a partner in the Melbourne office of Cornwalls Lawyers. console which securely manages the cloud ecosystem. 5GN cloud combines the control, flexibility and security of a national private cloud, with the agility and innovation of public cloud. Data centre services are used to host (G) GARRY WHITE (SALES DIRECTOR) critical infrastructure in addition to the inter-connection of cloud services, partners, network carriers and offices. Mr Garry White comes from a successful background in both the ICT and telecommunications sectors, Managed Services: 5GN managed services provides solutions that optimise customers ICT environments to holding over 20 years of experience. Prior to joining 5GN, Garry has delivered success for leading accelerate the future opportunities through Managed IT and Service Management. Managed IT provides business organisations across Australia, New Zealand, Hong Kong, Singapore and the UK including being the Sales solutions through introducing new business models and digitally enabled platforms and services. Service Director for one of Australia’s largest Telcos. Management provides end to end service management for data networks, cloud and data centre services. 5.2 PRINCIPAL ACTIVITIES OF 5GN AND THE 5GN GROUP 5GN BOARD AND KEY MANAGEMENT PERSONNEL
(A) ALBERT CHEOK (CHAIRMAN) 5GN is a licenced telecommunications carrier operating across Australia and international markets. 5GN Group supplies a range of IT and telecommunications services to its business customers. Mr Albert Cheok possesses over 35 years of high-level experience in the banking, financial and corporate sectors across the Asia Pacific region. Albert’s roles range from Chairman of Bangkok Bank Berhad in 5.3 FINANCIAL INFORMATION ON THE 5GN GROUP Malaysia, to the Manager of Reserve Bank of Australia. Carrying various accolades of the top REIT Fund Manager in Asia for 2016 and a Fellow of the Certified Public Accountants Australia, Albert is presently the This section includes historical financial information in relation to 5GN. The information included is limited Vice Governor of the Malaysian Institute of Corporate Governance. to standalone financial information for 5GN and the 5GN Group. Accordingly, it does not reflect any impact of the Offer.
For personal use only use personal For (B) JOSEPH DEMASE (MANAGING DIRECTOR) Reference to financial information relating to the 5GN Group refers to the consolidated entity shown in the Mr Joseph Demase comes from a background in building a host of successful businesses including the financial statements for the financial periods identified below, and does not include any changes to balances completion of 2 ASX listings in the telecommunications sector. Further to this, Joseph has experience in as a result of subsequent announcements not otherwise mentioned in this Bidder’s Statement. the telecommunications sector in both Australia and UK, along with over 25 years of business experience, allowing Joseph to skilfully identify market opportunities. Joseph displays an abundance of experience, having succeeded in a broad range of executive positions.
14 15 5. INFORMATION ON 5GN AND THE 5GN GROUP 5. INFORMATION ON 5GN AND THE 5GN GROUP
The historical financial information for 5GN and the 5GN Group has been presented in an abbreviated form; CONSOLIDATED STATEMENT OF FINANCIAL POSITION extracted from the annual reports for the relevant periods described. Accordingly, it does not contain all of the supporting disclosures detailed within the annual report (in accordance with the requirements of the Australian Accounting Standards (AASB) and the Corporations Act), and is therefore not intended to represent AASB Audited for the Financial Year ended 30 June and Corporations Act compliant information. Compliant financial information for 5GN (including supporting $’000 disclosures) can be found in 5GN’s annual reports for the relevant periods. Copies of these reports are available 2020 2019 at 5gnetworks.com.au/investor-centre. ASSETS
Current assets CONSOLIDATED STATEMENT OF PROFIT OR LOSS Cash and cash equivalents 22,118 5,660 Restricted cash 1,397 1,000 Audited for the Financial Year ended 30 June Trade and other receivables 2,808 3,981 $’000 2020 2019 Contract assets 700 629 Revenue 49,325 51,155 Other current assets 727 1,205 Other Income 439 17 TOTAL CURRENT ASSETS 27,750 12,475
Network and data centre costs (20,098) (24,656) Non-current assets Rent and office expenses (313) (383) Trade and other receivables - 70 Marketing and travel expenses (322) (552) Property, plant and equipment 9,062 5,112 Employee benefits expenses (19,997) (20,945) Right to use asset 12,369 14,142 Other expenses (2,455) (1,384) Deferred tax asset 1,725 610 Intangible assets 16,861 13,370 Impairment losses of financial assets (275) (38) TOTAL NON-CURRENT ASSETS 40,017 33,304 Share based expenses (1,424) (2,217) TOTAL ASSETS 67,767 45,779 Acquisition costs (638) (678) Depreciation expenses (4,890) (3,313) LIABILITIES Amortisation expenses (78) - Current liabilities Finance costs (1,425) (1,147) Trade and other payables 6,709 5,101 Loss before income tax (2,151) (4,141) Borrowings 1,212 382 Income tax (expense)/benefit 606 - Lease liability 2,141 1,818 LOSS FOR THE YEAR (1,545) (4,141) Employee benefits 2,292 2,179
Provision for income tax 41 172 Other comprehensive Loss for the year, - - net of income tax Contract liabilities 1,313 1,241 Other liabilities 2,951 278
TOTALonly use personal For COMPREHENSIVE LOSS FOR THE YEAR (1,545) (4,141) TOTAL CURRENT LIABILITIES 16,659 11,171
16 17 5. INFORMATION ON 5GN AND THE 5GN GROUP 5. INFORMATION ON 5GN AND THE 5GN GROUP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) CONSOLIDATED STATEMENT OF CASH FLOWS
Audited for the Financial Year Audited for the Financial Year ended 30 June ended 30 June $’000 $’000 2020 2019 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Non-current liabilities Receipts from customers 53,591 53,564 Trade and other payables 1,274 1,349 Payments to suppliers and employees (44,791) (52,122) Borrowings 2,578 3,700 Interest received 38 17 Lease liability 11,302 12,853 Interest paid (1,326) (1,019) Employee benefits 299 318 R&D Tax concession received - 501 TOTAL NON-CURRENT LIABILITIES 15,453 18,220 NET CASH FLOWS FROM OPERATING ACTIVITIES 7,512 941 TOTAL LIABILITIES 32,112 29,391
NET ASSETS 35,655 16,388 CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash on Purchase of Australian Pacific Data Centres (3,547) - EQUITY Net Cash on Purchase of North Sydney Data Centre (533) - Contributed equity 38,644 18,606
Reserves 3,125 2,351 Net Cash on Purchase of Anittel/Hostworks Group - (1,700)
Accumulated losses (6,114) (4,569) Net Cash on Purchase of Melbourne Data Centre - (869)
TOTAL EQUITY 35,655 16,388 Purchase of property, plant and equipment (3,308) (1,201) Increase in pledged bank deposits (397) (1,000)
NET CASH FLOWS USED IN INVESTING ACTIVITIES (7,785) (4,770)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares 18,386 8,500
Proceeds from exercise of options 2,264 24
Proceeds from applications for share purchase plan 763 -
Proceeds from issue of loan agreements - 500
Proceeds from borrowings 3,263 3,825
Repayment of loan agreements / convertible notes - (500)
Repayment of borrowings (4,690) (4,448)
Payment of capital raising costs (974) (442) For personal use only use personal For
18 19 5. INFORMATION ON 5GN AND THE 5GN GROUP 6. INFORMATION ON 5GN’S SECURITIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) 6.1 5GN’S ISSUED SECURITIES As at the date of this Bidder’s Statement, the following securities in 5GN are currently on issue. Audited for the Financial Year ended 30 June Class Number $’000 2020 2019 Fully paid ordinary shares 106,872,198
Payment of financing costs - (180) Performance rights 5,000,000
Capital Lease payments (1,701) (1,147) Options (ESOP) 8,500,000
Dividends Paid (580) - Each performance right and each option is capable of being converted into one 5GN fully paid ordinary share. NET CASH FLOWS FROM FINANCING ACTIVITIES 16,731 6,132 6.2 RECENT TRADING OF 5GN SHARES
Net increase in cash and cash equivalents 16,458 2,303 The closing price of 5GN Shares on ASX on Wednesday 16 September 2020, being the last trading day prior to the date of this Bidder’s Statement, was $1.78. Cash and cash equivalents at beginning of period 5,660 3,357 During the 12 months ended on Wednesday 16 September 2020: CASH AND CASH EQUIVALENTS AT END OF PERIOD 22,118 5,660 • the highest recorded closing price for 5GN Shares on ASX was $2.40 on 31 August 2020; and • the lowest recorded closing price for 5GN Shares on ASX was $0.57 on 18 March 2020. 5.4 PUBLICLY AVAILABLE INFORMATION ABOUT 5GN The share trading history of 5GN Shares since listing is available online at the ASX website at the following link: 5GN is a listed disclosing entity for the purposes of the Corporations Act and as such is subject to regular www.asx.com.au/asx/share-price-research/company/5GN. reporting and disclosure obligations. Specifically, as a listed company, 5GN is subject to the Listing Rules which require continuous disclosure of any information 5GN has concerning it that a reasonable person would expect 6.3 DIVIDEND HISTORY to have a material effect on the price or value of its securities. The dividend history of 5GN over the last 5 calendar years is detailed below: Documents lodged by 5GN with ASX can be viewed online at the ASX website at www.asx.com.au (ASX code: 5GN). Ex-Date Distribution amount (cents per 5GN Share) Franked %
In addition, 5GN is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC 19 September 2019 $0.01 100% by 5GN may be obtained from, or inspected at, an ASIC office. 17 September 2020 $0.01 100% On request to 5GN and free of charge, Webcentral Shareholders may obtain a copy of: • the annual financial report of 5GN for the year ended 30 June 2020 (being the annual financial report most 5GN Shares which will be issued as consideration for the Webcentral Shares under the Offer will not participate recently lodged with ASIC before lodgement of this Bidder’s Statement with ASIC); and in the 2020 dividend because they will not be issued before the record date for determining entitlements to that • any continuous disclosure notice given to ASX by 5GN since the lodgement with ASIC of the annual financial dividend (the record date is 18 September 2020). l report of 5GN for the year ended 30 June 2020 referred to above and before lodgement of this Bidder’s Statement with ASIC 6.4 RIGHTS AND LIABILITIES ATTACHING TO 5GN SHARES A substantial amount of information about 5GN is available in electronic form from: www.5gnetworks.com.au. (A) INTRODUCTION There is no information about 5GN that has been excluded from a continuous disclosure notice in accordance The rights and liabilities attaching to the 5GN Shares which will be issued as the consideration under the with the Listing Rules which is information that investors and their professional advisers would reasonably Offer are set out in 5GN’s constitution and are subject to the Corporations Act and the Listing Rules. require for the purpose of making an informed assessment of (i) the assets and liabilities, financial position and performance, profits and losses and prospects of 5GN; and (ii) the rights and liabilities attaching to 5GN Shares. The main rights and liabilities attaching to the 5GN Shares are summarised below. This summary does not
For personal use only use personal For purport to be exhaustive and must be read subject to the full text of 5GN’s constitution.
20 21 6. INFORMATION ON 5GN’S SECURITIES 6. INFORMATION ON 5GN’S SECURITIES
(B) VOTING (F) TRANSFER OF SHARES
Subject to any rights and restrictions for the time being attached to any class or classes of shares, at Subject to 5GN’s constitution and the Listing Rules, shareholders may transfer any share held by them by an: general meetings of shareholders: • ASX Settlement Operating Rules transfer or any other method of transferring or dealing in shares • each shareholder is entitled to vote in person or by proxy, attorney or representative; and introduced by ASX or operated in accordance with the ASX Settlement Operating Rules or Listing Rules • on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of and in any such case recognised under the Corporations Act; or a shareholder has one vote; and • instrument in writing in any usual or common form or in any other form that the 5GN Directors approve. • on a poll, every person present who is a shareholder or a proxy, attorney or representative of a (G) ISSUE OF FURTHER SHARES shareholder shall, in respect of each fully paid share held by him or her, or in respect of which he or she is appointed a proxy, attorney or representative, has one vote for the share but, in respect of partly Unissued shares shall be under the control of the 5GN Directors and, subject to the Corporations Act, the paid shares, shall have such number of votes as bears the same proportion which the amount paid Listing Rules and 5GN’s constitution, those directors may at any time issue such number of shares either (not credited) is of the total of such shares registered in the shareholder’s name as the amount paid as ordinary shares or shares of a named class or classes (being either an existing class or a new class) at (not credited) bears to the total amounts paid and payable (excluding amounts credited). the issued price that those directors determine and with such preferred, deferred, or other special rights (C) GENERAL MEETINGS or such restrictions, whether with regard to dividend, voting, return of capital or otherwise, as the 5GN Directors shall, in their absolute discretion, determine. Each shareholder is entitled to receive notice of and to be present in person or by proxy, attorney or representative to attend and vote at general meetings of 5GN and to receive all notices, accounts and 6.5 5GN’S SHARE AND OPTION PLANS other documents required to be sent to shareholders under the 5GN’s constitution, the Corporations Act or the Listing Rules. As at the date of this Bidder’s Statement, 5GN has the following share plans in operation:
(D) DIVIDENDS (A) EXECUTIVE AND DIRECTOR SHARE OPTION PLAN
The 5GN Directors may from time to time declare a dividend to be paid to the shareholders entitled 5GN has established an Executive and Director Share Option Plan (ESOP) to reward directors and to the dividend. executives for the achievement of key performance indicators (KPIs) and to better align their interests with the interests of 5GN Shareholders. Under the ESOP, 5GN Directors and senior managers have been Subject to the rights of the holders of any shares created or raised under any special arrangement as to issued with options which generally vest over a number of years subject to the achievement of KPIs (key dividends, the dividend as declared shall be payable on all shares according to the proportion that the performance indicators) which are a mix of financial and non-financial targets. amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such shares in accordance with Part 2.5 of Chapter 2H of the Corporations Act. The 5GN Directors may (B) EMPLOYEE SHARE PLAN from time to time pay to the shareholders any interim dividends that they may determine. 5GN has established an Employee Share Plan (ESP) to better align the interests of employees of 5GN and No dividend shall be payable except out of profits. A determination by the 5GN Directors as to the profits of its subsidiaries with the interests of 5GN Shareholders. Under the ESP, employees may be issued with 5GN shall be conclusive. 5GN Shares, normally for no consideration, taking advantage of the tax concessions and disclosure relief available for broad based employee share schemes. No dividend shall carry interest as against 5GN. In addition, 5GN must comply with section 254T of the Corporations Act when declaring a dividend. Current legislation permits up to $1,000 worth of shares to be issued to employees under a broad based Webcentral Shareholders who acquire 5GN Shares issued under the Offer will not be entitled to the dividend employee share plan to be tax free. payable on 18 October 2020 as the 5GN Shares will not be issued before the record date for determining entitlements to that dividend which is 18 September 2020. 6.6 OPTIONS AND PERFORMANCE RIGHTS
(E) WINDING UP As at the date of this Bidder’s Statement, the number of options and performance rights on issue are set out in section 6.1 above.. If 5GN is wound up, the liquidator may, with the authority of a special resolution, divide among the shareholders in kind the whole or any part of the property of 5GN, and may for that purpose set such value 6.7 SUBSTANTIAL HOLDERS IN 5GN’S SHARES as he or she considers fair upon any property to be so divided, and may determine how the division is to As at the date of this Bidder’s Statement, so far as known to 5GN based on substantial holder notices given be carried out as between the shareholders or different class of shareholders. The liquidator may, with the to 5GN and information given by 5GN Directors, there are no substantial holders of 5GN Shares, except as set authority of a special resolution, vest the whole or any part of any such property in trustees upon such out below: For personal use only use personal For trusts for the benefit of the contributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any shares or other securities in respect of which there is any liability. Substantial holder Number of 5GN Shares held Voting Power
JD Management Group Pty Ltd, 16,383,430 15.33% JMD Superannuation Fund, Studio Incorporate Pty Ltd and Joseph Demase
22 23 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
7.1 OVERVIEW OF WEBCENTRAL AND ITS BUSINESS 7.3 THE 2019 / 2020 STRATEGIC REVIEW
The Webcentral Group is an Australian full-service digital services partner for small and medium businesses During 2019, Webcentral continued to implement a recovery plan that had been initiated in the second half of in the various stages of their online journey, from inception to acceleration. 2018 to address lower than expected solutions sales in its SMB division. Despite improvements in the SMB division following implementation of this plan, however, on 26 June 2019 Webcentral announced to the ASX that Since its incorporation in 1996, Webcentral (previously called Melbourne IT Limited and Arq Group Limited) has its Enterprise division was also facing challenges and that, accordingly, Webcentral’s forecast underlying EBITDA helped the digital success of more than one million Australian and New Zealand small to medium businesses. from its core operations for FY19 had been revised down.
With roots in domain name and hosting, Webcentral is the small and medium business digital growth solution Webcentral affirmed this guidance in its half year results announced to the ASX on 22 August 2019, based experts helping businesses get online, improve their online performance, and protect their online presence. on projections of recovery in its Enterprise division during the remainder of FY19. However, it quickly became In 2019 the Webcentral Group divested its Enterprise division (section 7.3 below) and the business of the apparent that this recovery would not materialise, and that this underperformance could not be addressed by Webcentral Group now comprises the SMB division which supplies services under the brands Netregistry, cost-cutting alone. Accordingly, Webcentral released a further announcement on 24 September 2019, advising WME, Melbourne IT and Domainz. that its previous forecast for underlying EBITDA had been significantly reduced.
Through the Netregistry, WME, Domainz and Melbourne IT brands, the Webcentral Group is well positioned Against that background, Webcentral had received informal and preliminary approaches from parties interested to offer small and medium business SMB( ) customers affordable domain, hosting, email and digital in discussing value-creating opportunities relating to both its SMB and Enterprise divisions. In light of this, marketing services to help them get online, improve their online performance and protect their online brand. Webcentral’s announcement to the ASX on 24 September 2019 disclosed that Webcentral had appointed The Webcentral Group is committed to delivering outcomes for customers with a clearly defined return on Macquarie Capital (Australia) Limited to undertake a strategic review, exploring all avenues for maximising their digital investment. shareholder value. Those avenues included, but were not limited to, the sale of one or more of the Enterprise or SMB business divisions, as well as other various capital management changes. The SMB division caters for the 2 core customer proposition categories of ‘Get Online’ and ‘Improve Online Performance’. ‘Get Online’ domain, website hosting, email products and templated website builds are the The announcement of the strategic review generated a number of further inbound approaches from parties primary products sold, supporting small business customers in the initial stage of their online journey primarily interested in acquiring either the Enterprise division or the SMB division, prompting Webcentral to test the market through the Netregistry brand. Bespoke website builds and scalable integrated digital performance marketing for the sale of these businesses and initiate a structured due diligence process in October 2019. Several parties programs sold under the WME brand help customers improve their online performance. were granted additional business information and limited access to management before being invited to submit non-binding indicative offers. Webcentral received numerous offers from various potential bidders from around During 2019 and into 2020, Webcentral’s SMB division concentrated efforts on 3 key areas. The first area the globe with all offers received for either the Enterprise division or SMB division. Selected parties were provided was sustainable and ongoing cost management that sought to reduce costs without impacting the ability of with access to a data room and invited to submit offers to acquire one or other of the business units. the business to deliver both strong top line revenue growth in digital solutions or negatively impact its ability to service and retain its large base of foundations customers. The second area of focus was stabilisation Given, among other things, the greater level of interest in the Enterprise division and limited management time of revenues in the large foundations customer base, primarily composing domain names, web hosting and and resources to pursue both sale processes simultaneously, the decision was made to focus on the sale of associated services lines of business. This was driven largely by streamlining the processes in Webcentral’s the Enterprise division. No non-binding indicative offers were received from anyone wishing to buy both the onshore and offshore customer care teams. The third area of focus was a return to growth in new digital Enterprise division and the SMB division. business in both the WME and Netregistry brands. Alongside the strategic review starting to progress, as announced to the ASX on 13 November 2019, The overall focus of Webcentral’s SMB division has moved away from solely being an acquisition and retention Webcentral again revised its guidance downwards due to underperformance of the Enterprise division. business in subscriptions and shifted towards a focus on helping customers’ business thrive online. As noted in that announcement, Webcentral also engaged in discussions with its Existing Financiers to obtain a waiver of a breach of a covenant under its Existing Debt Facilities, which breach had been triggered by the 7.2 WEBCENTRAL BOARD AND KEY MANAGEMENT PERSONNEL underperformance of the business. On 11 February 2020, Webcentral announced that it had entered into a binding agreement to sell its Enterprise The Webcentral Board comprises the following directors: division to an entity owned by a consortium comprising Quadrant Private Equity and certain members of the (a) Andrew Reitzer, Non-Executive Director and Chair Enterprise leadership team for $35 million (less a final payment of $6 million due to the vendors of InfoReady Pty (b) Andrew Macpherson, Non-Executive Director Limited, which was acquired by Webcentral in 2016) on a cash free, debt free basis. The sale included the rights to the Arq brand. The sale completed on 2 March 2020 and the net proceeds were used to reduce the amounts (c) Karl Siegling, Non-Executive Director drawn under the Existing Debt Facilities.
Webcentral’s executive team comprises the following key management personnel: Certain members of the Enterprise leadership team, including then CEO, Tristan Sternson, transferred with the
For personal use only use personal For Enterprise division. Accordingly, following the sale of the Enterprise division, the then head of the SMB division, (d) Brett Fenton, Interim Chief Executive Officer Brett Fenton, was promoted to interim CEO to drive the remainder of the strategic review process, which (e) Brendan White, Interim Chief Financial Officer continued with a focus on the potential sale of the SMB division.
A number of parties that expressed interest in the SMB division were granted due diligence access and submitted non-binding indicative proposals to acquire Webcentral.
24 25 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
Certain of those proposals required the Existing Financiers to extend the maturity date of the Existing Debt As at 31 July 2020, the total amount drawn under the Existing Debt Facilities was approximately $47.6 million. Facilities and/or to compromise part of the principal amount outstanding under the Existing Debt Facilities. This amount includes: Neither of these conditions was acceptable to the Existing Financiers, whose fundamental requirements are to • approximately $41.6 million of term debt; be repaid in full. Further, certain proposals were also insufficiently constructed at the time of submission and did • bank guarantees of approximately $5.5 million, of which approximately $1.9 million are subject to not have committed financing to enable the Existing Debt Facilities to be repaid in full upon implementation of guarantees held in favour of Webcentral from sub-tenants. Net exposure after deducting these back-to-back the proposals, which was again not acceptable to the Existing Financiers. arrangements is approximately $3.6 million; and The scheme of arrangement proposed by Web.com emerged from the strategic review as the superior offer • an interest rate hedge, of which the estimated mark-to-market valuation as at 31 July 2020 is for Webcentral Shareholders, balancing the maximisation of shareholder value with transaction certainty. approximately $450,000. The Web.com Scheme was announced to the ASX on 13 July 2020. Subsequent to the announcement of the Web.com Scheme, 5GN put forward a competing proposal to Webcentral, resulting in the 5GN Offer which the Additionally, as at 31 March 2020, Webcentral’s Net Leverage Ratio was approximately 4.01x.213. This represents Webcentral Board concluded is a superior proposal to the Web.com Scheme. a significantly higher figure than the financial covenants established under the Existing Debt Facilities and is above the figures reported by certain of Webcentral’s ASX-listed peers in the IT services sector. 7.4 WEBCENTRAL’S DEBT FACILITIES The total amount drawn under the Existing Debt Facilities matures on 2 July 2021.4
The Webcentral Group requires the ongoing support of the Existing Financiers, and the Existing Debt Facilities, The Existing Financiers have provided support to Webcentral throughout its strategic review process, allowing to continue as a going concern. Webcentral time to explore potential solutions to its declining performance, high Net Leverage Ratio and pending debt maturity. For example: The Existing Debt Facilities were originally entered into in June 2018 to replace the previous debt facilities available to the Webcentral Group. • Webcentral sought, and received from the Existing Financiers, an extension on the repayment of $2.5 million originally due on 31 March 2020, until 31 August 2020 – this date was later extended to 30 November 2020; In response to certain actual financial covenant breaches (in the quarter ended 30 September 2019) and certain • anticipated (but later realised) financial covenant breaches (in the quarter ended 31 December 2019), Webcentral Webcentral sought, and received from the Existing Financiers, waivers for actual and anticipated financial and the Existing Financiers amended the terms of the Existing Debt Facilities on 23 December 2019. The revised covenant breaches for the quarters ended 30 September 2019, 31 December 2019, 31 March 2020 and 30 Existing Debt Facilities provided the Webcentral Group with access to: June 2020; and • although the 31 January Review Event is subsisting, and the Existing Financiers therefore have the right to • committed funding of up to $61.2 million; and cancel, and demand repayment of, the Existing Debt Facilities upon providing Webcentral with 60 days’ • uncommitted funding of up to $7.5 million. written notice, the Existing Financiers have repeatedly chosen to reserve their rights in this regard.
The Existing Financiers imposed certain conditions on the Webcentral Group as part of amending the Existing Notwithstanding their previous support, there can be no assurance that the Existing Financiers will remain Debt Facilities, including (among other things): supportive of Webcentral if the Offer is not successful. • inserting a review event, to be tested on 31 January 2020, relating to the amount outstanding to the Existing 5GN has agreed to provide a secured loan to Webcentral to allow Webcentral to pay the Existing Financiers the Financiers on that date (31 January Review Event); and full amount of their Existing Debt Facilities outstanding and has also agreed to provide an unsecured loan to • requiring Webcentral, and the majority of its subsidiaries, to grant all-assets security in favour of the Existing Webcentral to provide Webcentral with funding for working capital purposes. Financiers to secure the entire amount outstanding under the Existing Debt Facilities. Webcentral has obtained a waiver from the requirements of Listing Rule 10.1 to enable security to be granted The amendments to the Existing Debt Facilities enabled Webcentral to draw $2.5 million in December 2019, for the secured loan. 5GN has also provided an unsecured loan to Webcentral to allow Webcentral to pay the and a further $2.5 million in February 2020, to assist with funding working capital requirements. Webcentral $500,000 reimbursement fee that Webcentral paid under the SID. See sections 7.7 and 10.3. If 5GN does not subsequently paid down $22.108 million of the total drawn debt using proceeds received from the sale of the acquire 100% of the shares in Webcentral it will require those loans to be repaid. 5GN expects the loans to be Enterprise division in March 2020. repaid out of the earnings of Webcentral, new debt capital or new equity capital.
There were no monetary or non-monetary defaults subsisting under the Existing Debt Facilities as of 7.5 FINANCIAL INFORMATION ON THE WEBCENTRAL GROUP 18 August 2020 based on Webcentral’s Scheme Booklet in relation to the proposed scheme of arrangement with Web.com. However, 5GN understands that the 31 January Review Event was subsisting as of the date of This section includes historical financial information in relation to WCG. The information included is limited this Bidder’s Statement. Accordingly, the Existing Financiers have the right to cancel, and demand repayment of, to standalone financial information for WCG and the WCG Group. Accordingly, it does not reflect any impact the Existing Debt Facilities upon providing Webcentral with 60 days’ written notice. of the Offer.
For personal use only use personal For Under the Existing Debt Facilities, Webcentral is prohibited from making distributions to Webcentral Reference to financial information relating to the WCG Group refers to the consolidated entity shown in the Shareholders without the prior written consent of the Existing Financiers. financial statements for the financial periods identified below, and does not include any changes to balances as a result of subsequent announcements not otherwise mentioned in this Bidder’s Statement. On 6 February 2020, the Existing Financiers advised Webcentral that until such time as the 31 January Review Event has been remedied to their satisfaction, or waived by them in writing, no further distributions may be
made. As noted above, the 31 January Review Event is subsisting as of the date of this Bidder’s Statement. 3 Based on net debt of $41.93 million and consolidated EBITDA for the 12 months ended 31 March 2020 of $10.45 million. If the Offer is not successful, it is expected to be very challenging for Webcentral to agree a solution with the 4 This excludes an amount of $2.5 million, which matures on 30 November 2020. Existing Financiers under which distributions to Webcentral Shareholders would be permitted.
26 27 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
The historical financial information for WCG and the WCG Group has been presented in an abbreviated form; CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) extracted from the annual reports for the relevant periods described. Accordingly, it does not contain all of the supporting disclosures detailed within the annual report (in accordance with the requirements of the Australian Audited for the Financial Year Accounting Standards (AASB) and the Corporations Act), and is therefore not intended to represent AASB ended 30 June and Corporations Act compliant information. Compliant financial information for WCG (including supporting $’000 disclosures) can be found in WCG’s annual reports for the relevant periods. Copies of these reports are available 2020 2019 at www.webcentralgroup.com.au/investors
IMPORTANT NOTE ON SOURCES OF WCG HISTORICAL FINANCIAL INFORMATION Discontinued Operation - -
5GN has relied on publicly available information, being that disclosed in financial reports issued by WCG to (Loss) / profit from discontinued operation, net of tax (85,272) 13,101 prepare the financial information for WCG presented in this Bidder’s Statement. Financial information relating to LOSS AFTER TAX FOR THE YEAR (131,223) (131,223) WCG has been sourced from its audited financial report for the Financial Years ended 31 December 2019, as well as its reviewed results for the half-year ended 30 June 2020 (released on 28 August 2020).
5GN does not, except as required by law, make any representation or warranty, express or implied, as to the Other Comprehensive Income accuracy or completeness of this information. Items that may be reclassified to the profit or loss in subsequent periods (net of tax): CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Currency translation differences 19 (5) Changes in fair value of cash flow hedges, net of tax (297) - Audited for the Financial Year Items that will not be reclassified to profit or loss in subsequent ended 30 June $’000 periods (net of tax): 2020 2019 Net gains on equity instruments designated at fair value 10 152 Continuing Operations through OCI Revenue from contracts with customers 83,615 100,094 Other comprehensive (loss) / income for the period, net of tax (268) 147 Cost of Sales (27,672) (34,981) GROSS PROFIT 55,943 65,113 TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (131,491) (2,179)
Other income 1,315 68 (Loss) / profit for the period attributable to: Gain/(loss) on reassessment of contingent consideration liability 98 (9,702) Members of the parent (131,303) (2,457) Salaries and employee benefits expenses (30,576) (35,685) Non-controlling interests 80 131 Depreciation expenses (7,026) (4,376) (131,223) (2,326) Amortisation of intangible assets (3,511) (9,004) Other expenses (12,953) (18,878) TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Finance costs (5,810) (4,287) Members of the parent (131,571) (2,310) Transaction costs (2,259) (892) Non-controlling interests 80 131 Restructuring costs (365) - (131,491) (2,179) Impairment of goodwill (41,123) -
Gainonly use personal For on disposal of assets 554 - (LOSS) BEFORE TAX (45,713) (17,643)
Income tax (expense)/benefit (238) 2,216 LOSS AFTER TAX FROM CONTINUING OPERATIONS (45,951) (15,427)
28 29 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
Audited for the Financial Year Audited for the Financial Year ended 30 June ended 30 June $’000 $’000 2020 2019 2020 2019 ASSETS Other financial liabilities 5,549 12,971 Current assets Current lease liabilities 6,160 - Cash and cash equivalents 8,949 8,279 Liabilities directly associated with assets held for sale 15,931 11,292
Trade and other receivables 13,910 26,403 TOTAL CURRENT LIABILITIES 123,148 75,428 Prepayments of domain name registry charges 7,810 7,327
Lease receivables 2,064 - Non-current liabilities
Current tax refund 375 - Income received in advance 11,297 9,563
Other assets 2,928 6,634 Provisions 3,187 3,530
Assets held for sale 38,674 32,698 Deferred tax liabilities 7,549 5,469
TOTAL CURRENT ASSETS 74,710 81,341 Interest bearing loans and borrowings - 74,992 Non-current lease liabilities 12,970 850
Non-current assets TOTAL NON-CURRENT LIABILITIES 35,003 94,404
Plant and equipment 8,198 13,899 TOTAL LIABILITIES 158,151 169,832
Right-of-use assets 16,554 - NET ASSETS 30,881 162,496 Intangible assets 77,804 225,239
Prepayment of domain name registry charges 678 2,508 EQUITY
Lease receivables 1,830 - Contributed equity 91,179 85,724
Deferred tax assets 7,323 6,775 Foreign currency translation reserve (533) (552) Financial assets 1,375 1,870 Share based payments reserve 193 1,136 Other assets 560 696 Other reserves (278) 9 TOTAL NON-CURRENT ASSETS 114,322 250,987 Retained earnings (59,806) 76,053
TOTAL ASSETS 189,032 332,328 EQUITY ATTRIBUTABLE TO MEMBERS OF THE PARENT 30,755 162,370
Non-controlling interest 126 126
LIABILITIES TOTAL EQUITY 30,881 162,496 Current liabilities
Trade and other payables 8,692 17,138
Income received in advance 22,792 28,632
Current tax liability - 1,909 For personal use only use personal For Provisions 1,585 3,406
Derivative financial instruments 510 80
Interest bearing loans and borrowings 61,929 -
30 31 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
CONSOLIDATED STATEMENT OF CASH FLOWS 7.6 RECENT FINANCIAL RESULTS OF WCG
On 28 August 2020, WCG released its interim financial report for the half-year ended 30 June 2020. As per the Audited for the Financial Year independent auditor’s review report contained within WCG’s interim financial report for the half-year ended ended 30 June $’000 30 June 2020, these results were subject to a review, and not an audit under the Australian Auditing Standards, 2020 2019 which consequently does not enable the auditor to obtain the reasonable assurance that would make them aware of all of the significant matters that might be identified in an audit. CASH FLOWS FROM OPERATING ACTIVITIES
Receipt of service revenue and recoveries 187,353 228,893 The interim historical financial information for WCG and the WCG Group has been presented in an abbreviated form; extracted from the source described above. Accordingly, it does not contain all of the supporting Payments to suppliers and employees (168,489) (200,828) disclosures detailed within the annual report (in accordance with the requirements of the Australian Accounting Interest received 202 68 Standards AASB and the Corporations Act), and is therefore not intended to represent AASB and Corporations Interest paid (3,390) (2,687) Act compliant information. Compliant financial information for WCG (including supporting disclosures) can be found in WCG’s annual reports for the relevant periods. Copies of these reports are available at Bank charges and credit card merchant fees paid (1,135) (1,530) www.webcentralgroup.com.au/investors. Income tax refunds - 1,121 Income tax paid (3,269) (6,770) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME NET CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES 11,272 18,267
Audited for the Financial Year CASH FLOWS FROM INVESTING ACTIVITIES ended 30 June $’000 Purchases of pant and equipment and intangible assets (3,423) (13,894) 2020 2019 Proceeds from subleases 1,869 - Continuing Operations Payment of financial liability for InfoReady earn out (incl. dividends) (4,110) (5,668) Revenue from contracts with customers 30,699 46,665 Return of capital from Tiger Pistol 505 - Reversal of revenue due to settlement of customer disputes (9,096) - Transaction costs (2,394) (85) NET REVENUE FROM CONTRACTS WITH CUSTOMERS 21,603 46,665 Sale of the TPPW Reseller business 21,268 - Cost of Sales (11,608) (16,140)
NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES 13,715 (19,647) GROSS PROFIT 9,995 30,525
CASH FLOWS FROM FINANCING ACTIVITIES Other income 2,804 255 Proceeds from borrowings 7,375 - Loss on reassessment of contingent consideration liability - 98 Repayment of borrowings (21,292) - Salaries and employee benefits expenses (13,855) (15,834) Payment of dividend on ordinary shares, net of dividend reinvest- (4,378) (10,361) Depreciation expenses (3,593) (3,547) ment Amortisation expenses (1,992) (1,770) Payment of dividend to non-controlling interests (80) (105) Other expenses (6,289) (6,416) Payment of lease liabilities (5,961) (120) Finance costs (2,345) (2,342) NET CASH FLOWS USED IN FINANCING ACTIVITIES (24,336) (10,586) Transaction costs (1,260) (427) Restructuring costs (2,107) (365) NET DECREASE IN CASH AND CASH EQUIVALENTS 651 (11,966)
For personal use only use personal For (LOSS)/PROFIT BEFORE TAX (18,642) 179
Net foreign exchange differences 19 (5) Income tax benefit/(expense) 666 1,430 Cash and cash equivalents at beginning of period 8,279 20,250 (LOSS)/PROFIT AFTER TAX FROM CONTINUING (17,976) 1,609 CASH AND CASH EQUIVALENTS AT END OF PERIOD 8,949 8,279 OPERATIONS
32 33 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED) CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited for the Financial Year Audited for the Financial Year ended 30 June ended 30 June $’000 $’000 2020 2019 2020 2019 ASSETS
Discontinued Operation Current assets Loss from discontinued operation, net of tax (1,129) (2,174) Cash and cash equivalents 3,418 8,949 LOSS AFTER TAX FOR THE PERIOD (19,105) (565) Trade and other receivables 5,373 13,910 Prepayments of domain name registry charges 8,198 7,810 Lease receivables 3,115 2,064 OTHER COMPREHENSIVE INCOME Current tax refund 1,260 375 Items that may be reclassified to the profit or loss in subsequent periods (net of tax): Other assets 3,273 2,928 Currency translation differences (101) - Assets held for sale - 38,674 Changes in fair value of cash flow hedges, net of tax 4 (319) TOTAL CURRENT ASSETS 24,637 74,710
Items that will not be reclassified to profit or loss in subsequent periods (net of tax): Non-current assets Net gains on equity instruments designated at fair value - 33 Plant and equipment 6,403 8,198 through OCI Right-of-use assets 10,025 16,554 OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET (97) (286) Intangible assets 76,557 77,804 OF TAX Prepayment of domain name registry charges 688 678 Lease receivables 3,587 1,830 TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (19,202) (850) Deferred tax assets 16 - Financial assets 1,409 1,375 (Loss) / profit for the period attributable to: Other assets 483 560 Members of the parent (19,114) (607) TOTAL NON-CURRENT ASSETS 99,168 106,999 Non-controlling interests 9 43 TOTAL ASSETS 123,805 181,709 (19,105) (564)
LIABILITIES Total comprehensive loss attributable to: Current liabilities Members of the parent (19,211) (893) Trade and other payables 13,750 8,692 Non-controlling interests 9 43 Income received in advance 22,725 22,792
(19,202) (850) Provisions 1,706 1,585 Derivative financial instruments 554 510
For personal use only use personal For Interest bearing loans and borrowings 42,234 61,929 Other financial liabilities - 5,549 Current lease liabilities 6,548 6,160 Liabilities directly associated with assets held for sale - 15,931 TOTAL CURRENT LIABILITIES 87,517 123,148
34 35 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED) CONSOLIDATED STATEMENT OF CASH FLOWS
Audited for the Financial Year Audited for the Financial Year ended 30 June ended 30 June $’000 $’000 2020 2019 2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES Non-current liabilities Receipt of service revenue and recoveries 35,696 96,680 Income received in advance 11,465 11,297 Provisions 2,943 3,187 Receipt of government grants 222 - Deferred tax liabilities - 226 Payments to suppliers and employees (42,774) (86,095)
Lease liabilities 10,214 12,970 Interest received 122 19 TOTAL NON-CURRENT LIABILITIES 24,622 27,680 Interest paid (1,655) (1,728) TOTAL LIABILITIES 112,139 150,828 Bank charges and credit card merchant fees paid (520) (682)
NET ASSETS 11,666 30,881 Income tax paid (630) (3,268) Payments for transaction costs (other) (1,057) (241)
EQUITY NET CASH FLOWS (USED IN) / FROM OPERATING ACTIVITIES (10,595) 4,686 Contributed equity 91,179 91,179 Foreign currency translation reserve (634) (533) CASH FLOWS FROM INVESTING ACTIVITIES Share based payments reserve 180 193 Purchases of plant and equipment and intangible assets (776) (1,875) Other reserves (274) (278) Retained earnings (78,920) (59,806) Lease payments received 1,110 980
EQUITY ATTRIBUTABLE TO MEMBERS OF THE PARENT 11,531 30,755 Payment of financial liability for InfoReady earn out (5,979) (2,001) Non-controlling interest 135 126 Return of capital from Tiger Pistol - 506 TOTAL EQUITY 11,666 30,881 Payments for transaction costs (sale of Enterprise) (3,950) -
Proceeds from disposal of the Enterprise business 36,284 -
NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES 26,688 (2,390)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 2,625 5,000
Repayment of borrowings (22,108) -
Payment of dividend on ordinary shares - (4,378)
For personal use only use personal For Payment of dividend to InfoReady vendors - (109)
Payment of dividend to non-controlling interests - (80)
Payment of lease liabilities (2,103) (3,350)
NET CASH FLOWS USED IN FINANCING ACTIVITIES (21,586) (2,917)
36 37 7. INFORMATION ON WEBCENTRAL AND THE 7. INFORMATION ON WEBCENTRAL AND THE WEBCENTRAL GROUP WEBCENTRAL GROUP
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) Copies of each of these documents can be found in the Investor Centre section of the Webcentral website (www. webcentralgroup.com.au) or the ASX website (www.asx.com.au). Copies of the documents lodged with ASIC in relation to Webcentral may be obtained from ASIC. Audited for the Financial Year ended 30 June $’000 The below table contains announcements released by Webcentral to the ASX from 30 March 2020 (being the 2020 2019 date on which Webcentral lodged its annual report for 2019 with the ASX) until Wednesday 16 September 2020.
Announcement Date
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,493) (622) AGM Notice of Meeting, Proxy Form, Annual Report 24 April 2020
Corporate Governance Statement & Appendix 4G 24 April 2020 Update on AGM Arrangements 8 May 2020 Net foreign exchange differences (38) - ARQ FY19 AGM – Webcast Details 25 May 2020 Cash and cash equivalents at beginning of period 8,949 8,279 AGM 2020 Chairman and CEO Presentation 28 May 2020 CASH AND CASH EQUIVALENTS AT END OF PERIOD 3,418 7,658 Results of Annual General Meeting 28 May 2020 Arq Group rebranded to Webcentral Group 26 June 2020 7.7 WEB.COM SCHEME AND THE 5GN OFFER Recommended scheme of arrangement to acquire Webcentral 13 July 2020 On 13 July 2020, Webcentral announced that it had entered into a Scheme Implementation Deed dated Resignation and appointment of Company Secretary 20 July 2020 12 July 2020 (SID) with Web.com Group, Inc. (Web.com), under which it was proposed that Web.com would acquire the entire issued capital of Webcentral by way of a scheme of arrangement under the Corporations Keybridge activity and recommended Web.com scheme 3 August 2020 Act (Web.com Scheme). Under the Web.com Scheme, Webcentral Shareholders would have received cash Change of Director’s Interest Notice – L Bloch 4 August 2020 consideration of $0.10 for every Webcentral Share that they hold (Scheme Consideration). Response to ASX Appendix 3Y Query 10 August 2020 The Supreme Court of New South Wales made orders on 21 August 2020 convening a meeting of Webcentral Market update on H1 2020 financial results and scheme of arrangement 14 August 2020 Shareholders to consider the Web.com Scheme on 29 September 2020 and approving the Scheme Booklet. Additional information regarding the terms of, and conditions precedent to, the Web.com Scheme can be found Director resignation and Appendix 3Z – L Bloch 17 August 2020 in the Scheme Booklet which is available at www.webcentralgroup.com.au/investors/. Update on scheme of arrangement – Settlement of Customer Dispute 20 August 2020
5GN initially gave Webcentral a non-binding indicative proposal to make a takeover bid offering 1 5GN Share Court approves convening of Scheme Meeting 21 August 2020 for every 12 Webcentral Shares subject to certain conditions (the principal terms of the Offer). The Webcentral Scheme Booklet registered with ASIC 21 August 2020 Board subsequently determined that the 5GN proposal was a “Superior Proposal” for the purposes of the SID and commenced the 5 business day matching right process in the SID. That process expired on Monday 14 Scheme Booklet – Replacement Copy 28 August 2020 September 2020 and Web.com did not provide a Matching or Superior Proposal (as defined in clause 10.5(b) Appendix 4D and Interim Financial Report 28 August 2020 of the SID) during that period. On 17 September 2020, Webcentral received a further proposal from Web.com Release of Half Year 2020 Financial Results 28 August 2020 to increase the consideration payable under the Web.com Proposal to $0.18 per Webcentral Share. On 17 September 2020, Webcentral announced that it had determined that this would not provide an equivalent or Update of scheme – Independent Expert confirmation 28 August 2020 superior outcome for Webcentral Shareholders as a whole compared with the Offer. Trading Halt 4 September 2020
As a result, the Webcentral Board has recommended that Webcentral Shareholders accept the Offer, in the Ceasing to be a substantial holder 4 September 2020 absence of a Superior Proposal. In addition, Webcentral terminated the SID before entering into the Bid 5G Networks Takeover Proposal 7 September 2020 Implementation Agreement with 5GN. Becoming a substantial holder from 5GN 7 September 2020
7.8 PUBLICLY AVAILABLE INFORMATION ABOUT THE WEBCENTRAL GROUP 5GN: Proposed WCG Acquisition, $27.5M Placement & Debt Facility 7 September 2020
As an ASX listed company and a “disclosing entity” under the Corporations Act, Webcentral is subject to regular Change of Substantial Shareholder Notice from KBC 14 September 2020 For personal use only use personal For reporting and disclosure obligations. Among other things, these obligations require Webcentral to announce Trading Halt 15 September 2020 price sensitive information to the ASX as soon as Webcentral becomes aware of that information, subject to some exceptions. Update on Web.com Scheme and 5GN Proposal 15 September 2020 Web.com scheme - FIRB approval 16 September 2020 Pursuant to the Corporations Act, Webcentral is required to prepare and lodge with ASIC and the ASX both yearly and half-yearly financial statements accompanied by a statement and report from the Webcentral Change in substantial holding from WAA and WAM 16 September 2020 Directors and an audit or review report respectively. Pause in Trading 17 September 2020 Trading Halt 17 September 2020 Recommended takeover bid by 5GN and revised Web.com proposal 17 September 2020
38 39 8. INFORMATION ON WEBCENTRAL’S SECURITIES 8. INFORMATION ON WEBCENTRAL’S SECURITIES
8.1 WEBCENTRAL’S ISSUED SECURITIES 8.6 NO PRE-OFFER BENEFITS
According to documents lodged by Webcentral with ASX as at the date this Bidder’s Statement, the following During the period of 4 months before the date of this Bidder’s Statement, neither 5GN nor any associate of 5GN securities in Webcentral are currently on issue. gave, or offered to give, or agreed to give a benefit to another person which was likely to induce the other person, or an associate of the other person, to: Class Number • accept the Offer; or • dispose of Webcentral Shares, Fully paid ordinary shares 122,131,124 and which is not offered to all holders of Webcentral Shares under the Offer.
8.2 OPTIONS 8.7 NO ESCALATION AGREEMENTS
So far as is known to 5GN, based on documents lodged by Webcentral with ASX, there are currently no Neither 5GN nor any associate of 5GN has entered into any escalation agreement that is prohibited by section outstanding options over unissued Webcentral Shares on issue. 622 of the Corporations Act.
8.3 INTERESTS IN WEBCENTRAL SECURITIES
As at the date of this Bidder’s Statement and the date of the Offer:
• 5GN’s voting power in Webcentral was 10.07%; and • 5GN had a relevant interest in 12,300,000 Webcentral Shares. 9. SOURCES OF CONSIDERATION 8.4 DEALINGS IN SHARES
(a) Previous four months Neither 5GN nor any associate of 5GN has provided, or agreed to provide, consideration for Webcentral The consideration for the acquisition of the Webcentral Shares to which the Offer relates will be satisfied by the issue Shares under any purchase or agreement during the 4 months before the date of this Bidder’s Statement, of 5GN Shares. The maximum number of 5GN Shares which would become payable under the Offer if acceptances except as set out below: are received in respect of Webcentral Shares on issue as at the date of this Bidder’s Statement (other than those Webcentral Shares in which 5GN has a relevant interest) being 109,831,124 Webcentral Shares is approximately Date of dealing Price (A$) Number of Webcentral shares Nature of dealing 9,152,594 5GN Shares. acquired 5GN has the capacity to issue the maximum number of 5GN Shares which it may be required to issue under the 3 September 2020 0.12 12,300,000 Special crossing Offer under its constitution and the Listing Rules. on ASX
(b) Period before Offer Neither 5GN nor any associate of 5GN has provided, or agreed to provide, consideration for Webcentral Shares under any purchase or agreement during the period starting on the date of this Bidder’s Statement and ending on the date immediately before the date of the Offer other than as set out in section 8.4(a) above.
8.5 RECENT SHARE PRICE PERFORMANCE OF WEBCENTRAL The closing price of Webcentral Shares on ASX on Wednesday 16 September 2020, being the last trading day prior to the date of this Bidder’s Statement, was $0.165.
During the 12 months ended 16 September 2019:
For personal use only use personal For • the highest recorded closing price for Webcentral Shares on ASX was $0.54 on 19 September 2029; and • the lowest recorded closing price for Webcentral Shares on ASX was $0.064 on 10 July 2020.
40 41 10. BIDDER’S INTENTIONS IN RELATION TO WEBCENTRAL 10. BIDDER’S INTENTION IN RELATION TO WEBCENTRAL
10.1 INTRODUCTION 5GN has a clearly demonstrated acquisition and turnaround expertise having acquired 7 businesses since 2017: Enspire, Aptel, Anittel/Hostworks, Melbourne Data Centre, Australian Pacific Data Centre, North Sydney Data The intentions of 5GN are set out in this section 10. Those intentions have been formed on the basis of facts Centre and ColoAU. Accordingly, 5GN has a strong track record in identifying and implementing the targeted and information concerning Webcentral, and the general business environment, which are known at the time cost and revenue synergies resulting from these acquisitions. of preparing this Bidder’s Statement. Final decisions will only be reached by 5GN in light of material information and circumstances at the relevant time. Accordingly, the statements set out in this section are statements of 10.3 FUNDING current intention only and may vary as new information becomes available or circumstances change. 5GN has agreed to provide a secured loan to Webcentral to allow Webcentral to pay the Existing Financiers the The articulation and formulation of 5GN’s intentions are necessarily limited by virtue of the fact that it has full amount of their Existing Debt Facilities outstanding and has also agreed to provide an unsecured loan to only had access to publicly available information about Webcentral and its affairs, as well as the information Webcentral to provide Webcentral with funding for working capital purposes. Webcentral has obtained a waiver obtained from the limited scope due diligence undertaken by 5GN on Webcentral and its business in March from the requirements of Listing Rule 10.1 to enable security to be granted for the secured loan. 5GN has also and April 2020. provided an unsecured loan to Webcentral to allow Webcentral to pay the $500,000 reimbursement fee that The intentions and statements of future conduct set out in this section 10 must be read as being subject to: Webcentral paid under the SID. If 5GN does not acquire 100% of the shares in Webcentral it will require those loans to be repaid. 5GN expects the loans to be repaid out of the earnings of Webcentral, new debt capital or (a) the law (including the Corporations Act) and the Listing Rules, including in particular the requirements of new equity capital. the Corporations Act and the Listing Rules in relation to conflicts of interest and “related party” transactions given that, if 5GN gains control of Webcentral but does not acquire all of the Webcentral Shares, it will be 10.4 INTENTIONS FOR WEBCENTRAL AS A PART OWNED CONTROLLED ENTITY treated as a related party of Webcentral for these purposes; and This section 10.4 describes 5GN’s intentions if, as a result of acceptances under the Offer, 5GN controls (b) the legal obligation of the Webcentral Directors at the time, including any nominees of 5GN that may be Webcentral, but 5GN is not entitled to proceed to compulsory acquisition in accordance with Part 6A.1 of the appointed to the Webcentral Board in due course, to act in good faith and the best interests of Webcentral Corporations Act. In that circumstance, 5GN’s current intentions are as follows: and for proper purposes and to have regard to the interest of all Webcentral Shareholders (in which regard the role of independent directors of Webcentral will also be important). CORPORATE MATTERS
10.2 OVERVIEW AND RATIONALE FOR THE OFFER 5GN intends to: • subject to the Corporations Act and the constitution of Webcentral, seek to replace some of the members Subject to the results of the operational review referred to in sections 10.4 and 10.5, 5GN intends to continue of the Webcentral Board with nominees of 5GN, so that the nominees of 5GN will constitute a majority of the business of Webcentral and does not expect to make any major changes to the business of Webcentral or the members of the Webcentral Board. 5GN will have regard to the recommendations in the ASX Corporate any major redeployment of the fixed assets of Webcentral. Governance Guidelines when determining the composition of the Webcentral Board. Replacement board members have not yet been finally decided by 5GN and their identity will depend on the circumstances at the 5GN’s rationale for making the Offer is to return Webcentral to profitability by making available 5GN’s relevant time; and infrastructure and expertise to allow Webcentral to focus on its core annuity based revenue business and relieving some of the impact of Webcentral’s current debt burden. In particular, 5GN’s expertise in cloud • consider whether it is appropriate to maintain Webcentral’s listing on ASX, having regard to considerations solutions and other technical digital services will aid Webcentral to drive efficiencies and concentrate on its such as the costs associated with maintaining that listing, 5GN’s final level of ownership, the number of core businesses. remaining Webcentral Shareholders, the level of trading in Webcentral Shares and the guidance in ASX Guidance Note 33. If Webcentral becomes a part-owned controlled entity of 5GN, Webcentral Shareholders 5GN has confidence in the core Webcentral business. The addition of Webcentral to 5GN’s existing portfolio should be aware that the liquidity of Webcentral Shares could be materially diminished. of businesses will strengthen 5GN’s position as a leading licenced telecommunications carrier. 5GN operates across Australian and international markets offering its business customers a unique and seamless digital It is possible that, even if 5GN is not entitled to proceed to compulsory acquisition of minority holdings after experience across data network connectivity, cloud and data centres. the end of the Offer Period under Part 6A.1 of the Corporations Act, 5GN may subsequently become entitled to exercise rights of general compulsory acquisition under Part 6A.2 of the Corporations Act; for example, as a The acquisition presents a transformational opportunity for 5GN, by materially changing the scale and earnings result of acquisitions of Webcentral Shares in reliance on the ‘3% creep’ exception in item 9 of section 611 of the profile of its business. The acquisition should enable 5GN to present a broad range of internet, network and Corporations Act. If so, 5GN may exercise those rights depending on cloud products to the WCG customer base in addition to exploring new opportunities in targeted business markets. 5GN is confident that this strategy should accelerate the successful cross-sell programs for future OPERATIONAL REVIEW 5GN growth. After the end of the Offer Period or earlier if agreed with Webcentral, 5GN intends to propose to the The combined business should create a diverse enterprise with an industry significant customer base and deep Webcentral Board that a broad based review of Webcentral’s operations be conducted on both a strategic For personal use only use personal For management expertise. and financial level. 5GN intends, subject to the approval of the Webcentral Board, to participate in this review. The outcome of the operational review cannot be predicted. If the operational review results in a 5GN’s strategic goal is to restore the Webcentral business to profitability through digitising and streamlining recommendation that the retention of any components of Webcentral’s business is not justified, 5GN will operational processes, introducing customer centric product offers and the effective implementation of digital recommend to the Webcentral Board that it consider divesting those components. sales platforms. Importantly, the current 5GN product capacity has the scale to support exponential growth which will optimise the 5GN product infrastructure and improve profitability as a result of the increased customer subscriptions and platform utilisation.
42 43 10. BIDDER’S INTENTION IN RELATION TO WEBCENTRAL 10. BIDDER’S INTENTION IN RELATION TO WEBCENTRAL
While 5GN does not have any concluded intentions in relation to this broad-based review or its outcome, Some job losses may occur as a result, however, the incidence, extent and timing of such job losses cannot its current expectations is that the review will focus on opportunities in relation to: be predicted in advance. Where practicable, 5GN will seek to minimise job losses through redeployment of the • streamlining operational process and other matters as mentioned in section 10.2; relevant Webcentral employees into other parts of the 5GN business. If redundancies do occur, the relevant employees will be treated in accordance with their contractual and other legal entitlements. • potential cost synergies (refer to sections 11.2, 11.6 and 11.7) and • external commercial relationships with service providers. 10.7 INTENTIONS FOR WEBCENTRAL IF NOT CONTROLLED BY 5GN Following this broad-based review, the intentions described in this section 10 may be confirmed, developed or 5GN will declare the Offer wholly unconditional as soon as possible (and in any event within one Business Day) reconsidered but with due regard to the limitations described in this section 10 in implementing any intention. after it obtains a relevant interest in at least 50.1% of the Webcentral Shares, unless any Bid Condition has been REFINANCING 5GN FINANCIAL ACCOMMODATION breached prior to the date on which 5GN obtains such a relevant interest.
5GN may request the Webcentral Board as part of the broad-based review referred to in this section 10.4 or 5GN reserves its right to declare the Offer free from the 50.1% minimum acceptance condition (or any other subsequently to consider raising further debt or equity capital to be used to repay all or some of the funding condition) to the Offer. However, it has made no decision as to whether it will do so. provided by 5GN referred to in section 10.3 This section 10.7 describes 5GN’s intentions if it were to declare the Offer free of the 50.1% minimum LIMITATIONS IN GIVING EFFECT TO INTENTIONS acceptance condition and if Webcentral does not become a controlled entity of 5GN. In that circumstance: As mentioned above, the ability of 5GN to implement the intentions set out in this section 10.4 will be subject to the legal obligations of the Webcentral Directors to act in good faith and in the best interests of Webcentral and • 5GN does not expect to be in a position to give effect to the intentions set out in sections 10.3, 10.4 and for a proper purpose and to have regard to the interests of all Webcentral Shareholders, and the requirements 10.5; and of the law and the Listing Rules including in relation to transactions between related parties. 5GN will only make • a decision on the above mentioned courses of action subject to any appropriate legal and financial advice in 5GN’s current intention is to continue to hold any stake in Webcentral with a view to maximising returns for its relation to those obligations and requirements. investment (this may result in 5GN acquiring additional shares, to the extent permitted by law and may also result in 5GN seeking to undertake the operational review and potentially the business restructuring referred 10.5 INTENTIONS FOR WEBCENTRAL AS A WHOLLY OWNED CONTROLLED ENTITY to above sections).
This section 10.5 describes 5GN’s intentions if 5GN acquires a relevant interest in 90% or more of Webcentral 10.8 OTHER INTENTIONS Shares, and so becomes entitled to proceed to compulsory acquisition of outstanding Webcentral Shares in accordance with Part 6A.1 of the Corporations Act. Subject to the matters described above in this section 10 and elsewhere in this Bidder’s Statement and, in particular, the completion of the operational review of the Webcentral business, it is the intention of 5GN, on the In that circumstance, 5GN’s current intentions are as follows: basis of the facts and information concerning Webcentral that are known to it and the existing circumstances affecting the assets and operations of Webcentral at the date of this Bidder’s Statement, that: CORPORATE MATTERS • the business of Webcentral will be conducted in the same manner as at the date of this Bidder’s Statement; 5GN intends to: • there will be no redeployment of the fixed assets of Webcentral; and • proceed with compulsory acquisition of the outstanding Webcentral Shares in accordance with the provisions of Part 6A.1 of the Corporations Act; • the present employees of Webcentral will, where practicable, continue to be employed by Webcentral. • thereupon arrange for Webcentral to be removed from the official list of the ASX; and • replace the members of the Webcentral Board with the nominees of 5GN. Replacement board members have not yet been identified by 5GN and their identity will depend on the circumstances at the relevant time.
OPERATIONAL REVIEW
5GN intends to undertake the same operational review referred to in section 10.4.
10.6 IMPACT ON EMPLOYEES
The successful implementation of the Offer is expected to deliver benefits to Webcentral employees through For personal use only use personal For 5GN’s ability to continue to invest and grow the Webcentral business as well as providing new opportunities for employees in appropriate cases to move to roles in the broader 5GN organisation.
However, as a result of the implementation of the intentions set out in sections 10.4 and 10.5, it is possible that certain operational functions (such as those relating to the maintenance of Webcentral’s listing on the ASX, some head office functions and roles that duplicated those undertaken within 5GN) will become redundant.
44 45 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
11.1 CORPORATE ACTIVITIES AND STRATEGY 11.4 PRO FORMA FINANCIAL INFORMATION FOR THE MERGED GROUP
The addition of Webcentral to 5GN’s existing portfolio of businesses will strengthen 5GN’s position as a leading SUMMARY OF INFORMATION licenced telecommunications carrier operating across Australian and international markets offering its business customers a unique and seamless digital experience across data network connectivity, cloud, and data centres. The information included in sections 11.5 to 11.8 is pro forma financial information for the Merged Group, comprising 5GN and WCG as at 30 June 2020, in order to illustrate the impact of transactions relating The acquisition presents a transformational transaction for 5GN, materially changing the scale and earnings to the Offer as though they had occurred on 30 June 2020 from a statement of financial position profile of its business. The acquisition should enable 5GN to present a broad range of internet, network and perspective, and 1 July 2019 from a statement of profit or loss and statement of cash flows perspective cloud products to the WCG customer base in addition to exploring new opportunities in targeted business (collectively, the “Merged Group Pro Forma Financial Information”). markets. 5GN is confident that this strategy will accelerate the successful cross-sell programs for future 5GN growth. The Merged Group Pro Forma Financial Information is intended as indicative only. 5GN has drawn conclusions based on the facts and publicly available information known as at the date of this Bidder’s Statement. If the The combined business should create a diverse enterprise with an industry significant customer base and deep facts, circumstances, or other information should prove different, the conclusions may accordingly change. management expertise. The Merged Group Pro Forma Financial Information should be read in conjunction with the: 5GN’s strategic goal is to restore the Webcentral business to profitability through digitising and streamlining • assumptions underlying its preparation, as set out In section 11.5; operational processes, introducing customer centric product offers and effective implementation of digital sales • pro forma adjustments described in section 11.5, which have been made to reflect certain financial impacts platforms. Importantly, the current 5GN product capacity has the scale to support exponential growth which of the Offer; will optimise the 5GN product infrastructure and improve profitability as a result of the increased customer • accounting policies of 5GN and WCG as disclosed in their most recent financial reports; subscriptions and platform utilisation. • risk factors set out in section 12; and 5GN has clearly demonstrated acquisition and turnaround expertise having acquired 7 businesses since 2017: • other information contained in this Bidder’s Statement. Enspire, Aptel, Anittel / Hostworks, Melbourne Data Centre, Australian Pacific Data Centre, North Sydney Data Centre and ColoAU. Accordingly, 5GN have a strong track record in identifying and implementing the targeted BASIS OF PREPARATION cost and revenue synergies resulting from these acquisitions The Merged Group Pro Forma Financial Information has been prepared under three scenarios: 11.2 SYNERGIES AND OPPORTUNITIES • a scenario where WCG is wholly owned by 5GN following the Offer (“100% Acquisition Scenario”) – As described in section 10 above, 5GN intends to conduct a strategic review of Webcentral’s operations, assets presented in section 11.6; and and corporate structure. 5GN expects to be able to identify substantial synergies and savings. These synergies • a scenario where 5GN has a Relevant Interest in 50.1% of WCG Shares following the Offer and savings are discussed in more detail in section 11.8. These synergies and savings will be greater if 5GN is (“50.1% Acquisition Scenario”) – presented in section 11.7; and able to acquire full ownership of Webcentral with the ability to reduce corporate overheads including the costs of • a scenario where 5GN has a Relevant Interest in less than 50.0% of WCG Shares following the Offer maintaining a separate board of directors, ASX listing costs and conducting a separate audit. However, even if (“49.9% Acquisition Scenario”) – presented in section 11.8. 5GN is not able to acquire full control, it expects there to be substantial synergies and savings. The Merged Group Pro Forma Financial Information does not represent what the Merged Group would look like In addition to the proposed cost savings that will deliver significant earnings growth, 5GN expects to deliver on a consolidated basis, since it is not possible to produce this information from publicly available information. significant organic growth from the combined business through initiatives such as product bundling and No adjustments for anticipated synergy benefits have been included as the exact timing of those benefits cannot increased cross-sell opportunities. be reliably estimated. However, the Merged Group Pro Forma Financial Information does reflect the issue of new 5GN Shares to WCG Shareholders, and certain other adjustments that might be required as a result of this offer 11.3 EFFECT OF THE OFFER ON THE CAPITAL STRUCTURE OF THE MERGED GROUP (under each scenario).
The following table represents the effect of the Offer on 5GN’s capital structure, based on 5GN owning The Merged Group Pro Forma Financial Information is for illustrative purposes only and is based on numerous 100%, 50.1% and 49.9% respectively of the WCG Shares on issue at the date of this Bidder’s Statement assumptions that may or may not reflect the actual financial position of the Merged Group after completion (excluding the dilution on exercise of any 5GN Performance Rights, 5GN Options and WCG Performance Rights): of the Offer. The Merged Group Pro Forma Financial Information is presented in an abbreviated format, and does not contain Acquisition Scenario all of the disclosures required for AASB and Corporations Act compliant financial statements. In addition,
100% 50.1% 49.9% a number of balances have been aggregated due to limitations on the extent of publicly available information. For personal use only use personal For 5GN Shares on issue at the date of this Bidder’s Statement 106,872,198 106,872,198 106,872,198 SOURCES OF INFORMATION New 5GN Shares to be issued to WCG Shareholders under the Offer 10,177,593 5,200,750 5,078,619 Financial information relating to 5GN has been sourced from its audited financial report for the full year ended Total 5GN Shares on issue following completion of the Offer 117,049,791 112,072,948 111,950,817 30 June 2020, which was released to the ASX on 18 August 2020. Financial information relating to WCG has been sourced from its audited financial report for the full year ended New 5GN Shares issued to WCG Shareholders as a percentage of 8.70% 4.64% 4.54% 31 December 2019, and its reviewed financial report for the half-year ended 30 June 2020 (which included total 5GN Shares on issue following completion of the Offer comparative reviewed results for the half-year ended 30 June 2019).
46 47 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
The WCG profit and loss and cash flows used for the Merged Group Pro Forma Financial Information for the • the Merged Group Pro Forma Financial Information does not include any fair value adjustments to identifiable period ending 30 June 2020 have been calculated based on the results for the half-year ended 30 June 2020, assets and liabilities of WCG acquired by 5GN as may be required under the requirements of AASB 3 plus the results for the Financial Year ended 31 December 2019, less the results for the half-year ended Business Combinations, nor any resulting tax adjustments at the acquisition date that may be required under 30 June 2019 (information extracted from the relevant reports cited above). AASSB 112 Income Taxes, and any resulting impact to goodwill recognised;
In the case of the profit and loss for WCG, the information included in the Merged Group Pro Forma Financial • no 5GN or WCG Performance Rights have been assumed to have vested and been exercised for the Information relates to continuing operations only, and hence excludes the impact of financial performance purposes of the compilation of the Merged Group Pro Forma Financial Information; and relating to discontinued operations. This reflects the expectation that such operations will not continue under the • the profit or loss for 5GN and WCG for the Financial Year ended 30 June 2020 has been adjusted to remove the Merged Group. Due to limits on available information (and the resultant inability to reliably do so), no adjustments impact of the following one-off and unusual items recognised during that period, including the estimated tax. have been made to the consolidated statements of financial position or consolidated statements of cash flows of WCG, to remove the effect of discontinued operations of WCG as part of the Merged Group Pro Forma In the case of 5GN, this information has been prepared based on the statutory reported statement of profit Financial Information. or loss (and supporting notes) for the corresponding period, while the WCG balances have been prepared in accordance with the method described under ‘Sources of information’ in section 11.4. 5GN has relied on the information in financial reports issued by WCG to prepare the financial information for WCG contained in this Bidder’s Statement. The financial information reflects the latest relevant publicly available Figure 1: Unusual Items information for WCG that is capable of being considered. $’000 Year ended 30 June 2020 5GN does not, except as required by law, make any representation or warranty, express or implied, as to the accuracy or completeness of this information. WCG 5GN Aggregated
11.5 PRO FORMA ADJUSTMENTS AND TRANSACTION ASSUMPTIONS Reversal of revenue due to settlement of 9,096 - 9,096 customer disputes The following assumptions have been made in producing the Merged Group Pro Forma Financial Information: Government grants (222) - (222) • the pro forma financial information has been prepared using the reported statutory financial information for both 5GN and WCG for the period 1 July 2019 to 30 June 2020; Transaction costs 3,092 - 3,092 • the Merged Group Pro Forma Financial Information is unaudited and amounts presented have been rounded; Restructuring costs 2,107 - 2,107 • in determining the consideration for the acquisition of the WCG Shares under the Offer, either as a 100%, Impairment of goodwill 41,123 - 41,123 50.1% consolidated subsidiary or a 49.9% associate (depending on the relevant scenario), each 5GN Share to be issued under the Offer, and recognised within contributed equity within the pro forma financial Gain on disposal of assets (554) - (554) information is assumed to have an issue price of $1.78 per 5GN share (being the closing price of 5GN Shares on 16 September 2020, the last day on which 5GN Shares traded prior to the date of this Bidder’s Statement). Net TPP Wholesale reseller separation income (68) - (68) The actual fair value of 5GN Shares to be issued under the Offer may differ from the assumed issue price Arq Group brand costs 273 - 273 noted above and will be determined by the market price of 5GN Shares at the actual date of acquisition of WCG; Integration costs 800 - 800 • the Merged Group Pro Forma Financial Information does not include the anticipated synergies to be derived Property costs 525 - 525 from the operation as a Merged Group (refer to section 11.2), or transaction costs associated with the Offer; Other net non-operating (income) / expense (275) - (275) • the accounting policies of 5GN and WCG are assumed to be similar and consistent in all material respects for the purposes of the compilation of the Merged Group Pro Forma Financial Information. Share Based Payments - 1,424 1,424 • AASB 16 Leases was initially adopted by WCG and reflected in the financial results for the Financial Year Acquisition Costs - 638 638 ended 31 December 2019 (and by extension, the financial results for the half-year ended 30 June 2020). By electing to apply the ‘Modified Retrospective Method’ under the standard, the comparative figures for TOTAL UNUSUAL ITEMS BEFORE INCOME TAX 55,897 2,062 57,959 the Financial Year ended 31 December 2018 were not restated to reflect the impact of AASB 16, and are as such not reflective of the requirements of AASB 16; Income tax benefits arising from unusual items (4,432) (619) (5,051) 5GN adopted AASB 16 in a prior reporting period, and as such the results for the Financial Year ended
For personal use only use personal For TOTAL UNUSUAL ITEMS AFTER INCOME TAX 51,465 1,443 52,908 30 June 2020, and comparative figures for the Financial Year ended 30 June 2019 are reflective of the requirements of AASB 16; No adjustments have been made to the pro forma unaudited statement of financial position or the pro forma • WCG elected to apply the practical expedient available under AASB 16 Leases, such that rent unaudited statement of cash flows in relation to the unusual items identified in the Figure 1 above on the basis concessions occurring as a direct consequence of the COVID-19 pandemic are not accounted for as lease that insufficient information is available. modifications, within their financial results for the half-year ended 30 June 2020;
The impact of the difference in accounting policies cannot be quantified based on available information for the purposes of presenting Merged Group Pro Forma Financial Information.
48 49 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
11.6 100% ACQUISITION SCENARIO PRO FORMA UNAUDITED STATEMENT OF FINANCIAL POSITION
PRO FORMA UNAUDITED STATEMENT OF PROFIT OR LOSS The table at Figure 3 sets out the Merged Group pro forma unaudited statement of financial position as at 30 June 2020, and has been prepared to illustrate the impact of the following: The table at Figure 2 sets out the Merged Group pro forma unaudited statement of profit or loss for the • the acquisition of all of the WCG Shares on issue under the Offer (not already held by 5GN) as if the acquisition 12 months ended 30 June 2020, which has been prepared to illustrate the impact of the following: had occurred on 30 June 2020; • the acquisition of all WCG Shares by 5GN under the Offer as if the acquisition had occurred on 1 July 2019; and • the acquisition of 12,300,000 WCG Shares by 5GN on 3 September 2020 for cash consideration of $1,476,000, • the pro forma impact of the unusual items identified in Figure 1. as though it had occurred on 30 June 2020; • the acquisition of the remaining WCG Shares by 5GN under the Offer, based on a price for WCG Shares of Figure 2: Merged Group pro forma unaudited statement of profit of loss for the year ended 30 June 2020 $0.148 per WCG Share (being the closing price for 5GN Shares on 16 September 2020, the last trading day prior to the date of this Bidder’s Statement, divided by the Offer Consideration) and the associated issue of 100% Acquisition Scenario Year ended 30 June 2020 5GN Shares as consideration based on a price for 5GN Shares of $1.78 per share (being the closing price for $’000 5GN Shares on 16 September 2020, the last trading day prior to the date of this Bidder’s Statement); 5G Networks Webcentral5 Adjustments Merged Group • pro-forma recognition of the required accounting entries to eliminate the 5GN investment in WCG upon consolidation of the Merged Group, involving the recognition of goodwill as a result of the transaction, and elimination of the Revenue 49,325 58,553 9,096 116,974 relevant WCG equity balances. The value of goodwill may subsequently change as a result of the ‘Purchase Cost of goods sold (20,098) (23,140) - (43,238) Price Allocation’ process outlined below; GROSS PROFIT 29,227 35,413 9,096 73,736 • the Merged Group Pro Forma Financial Information does not include any fair value adjustments to identifiable assets and liabilities of WCG acquired by 5GN as may be required under a ‘Purchase Price Allocation’ process
(in accordance with the requirements of AASB 3 Business Combinations, nor any resulting tax adjustments at Other income 439 3,864 (565) 3,738 the acquisition date that may be required under treatment prescribed under AASB 112 Income Taxes, and any resulting impact to goodwill; Employee benefits expenses (19,997) (28,597) - (48,594) • the new shares issued by 5GN in respect of the consideration paid under the Offer; Other expenses (3,090) (12,826) 1,598 (14,318) • the impact of 5GN’s $27.5m capital raise, completed on 7 September 2020, as though it had occurred on 30 Share based expenses (1,424) - 1,424 - June 2020 (representing gross proceeds; transaction costs have not been taken into account given uncertainty around quantum and timing); and Acquisition costs (638) - 638 - • the intended repayment of WCG’s existing debt facility in full, as described under section 10.3, as though it had Transaction costs - (3,092) 3,092 - occurred on 30 June 2020. Note that potential transaction / refinancing costs have not been taken into account Restructuring costs - (2,107) 2,107 - given uncertainty around quantum and timing. Gain on disposal of assets - 554 (554) - Figure 3: Merged Group pro forma unaudited statement of financial position as at 30 June 2020 Net impairment losses on financial (275) - - (275) assets and liabilities 100% Acquisition Scenario Year ended 30 June 2020 $’000 Impairment of goodwill - (41,123) 41,123 - 5G Webcentral 5GN capital Pro forma Merged Group 6 7 Depreciation expenses (4,890) (7,072) - (11,962) Networks raise adjustments pro-forma Amortisation expenses (78) (3,733) - (3,811) ASSETS Finance costs (1,425) (5,813) - (7,238) Current assets PROFIT /(LOSS) BEFORE TAX (2,151) (64,532) 57,959 (8,724) Cash and cash equivalents 22,118 3,418 27,500 (43,710) 9,326 Restricted cash 1,397 - - - 1,397 Income tax (expense) / benefit 606 (1,002) (5,051) (5,447) Trade and other receivables 2,808 5,373 - - 8,181 PROFIT / (LOSS) FOR THE YEAR (1,545) (65,534) 52,908 (14,171) Contract assets 700 - - - 700
Prepayments - 8,198 - - 8,198 For personal use only use personal For Profit / (Loss) Attributable To: Current tax assets - 1,260 - - 1,260 Owners of Merged Group (1,545) (64,776) 52,150 (14,171) Other assets 727 6,388 - - 7,115 Non-controlling interests - (758) 758 - TOTAL CURRENT ASSETS 27,750 24,637 27,500 (43,710) 36,177
5 Sum of results for the half-year ended 30 June 2020, plus the results for the Financial Year ended 31 December 2019, less the results for Non-current assets the half-year ended 30 June 2019. Prepayments - 688 - - 688
6 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). 7 Pro forma adjustments detailing the impact of the non-capital raise related items described above.
50 51 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
Figure 3: Merged Group pro forma unaudited statement of financial position as at 30 June 2020 (Continued) PRO FORMA UNAUDITED STATEMENT OF CASH FLOWS
The table at Figure 4 sets out the Merged Group pro forma unaudited statement of cash flows for the 12 months 100% Acquisition Scenario Year ended 30 June 2020 ended 30 June 2020, and has been prepared to illustrate the impact of the following: $’000 5G Webcentral 5GN capital Pro forma Merged Group • Networks raise6 adjustments7 pro-forma the acquisition of 12,300,000 WCG shares by 5GN on 3 September 2020 for cash consideration of $1,476,000, as though it had occurred on 1 July 2019; Property, plant & equipment 9,062 6,403 - - 15,465 • the acquisition of the remaining WCG shares (not already held) by 5GN under the Offer, as if the acquisition Right-of-use asset 12,369 10,025 - - 22,394 had occurred on 1 July 2019; Deferred tax asset 1,725 16 - - 1,741 • the impact of 5GN’s $27.5m capital raise, completed on 7 September 2020, as though it had occurred Intangible assets 16,861 76,557 - 6,102 99,520 on 30 June 2020 (representing gross proceeds; transaction costs have not been taken into account given Financial assets - 1,409 - - 1,409 uncertainty around quantum and timing); and Other assets - 4,070 - - 4,070 • the intended repayment of WCG’s existing debt facility in full, as described under section 10.3, as though it TOTAL NON-CURRENT ASSETS 40,017 99,168 - 6,102 145,287 had occurred on 30 June 2020. Note that potential transaction / refinancing costs have not been taken into TOTAL ASSETS 67,767 123,805 27,500 (37,608) 181,464 account given uncertainty around quantum and timing.
Figure 4: Merged Group pro forma unaudited statement of cash flows for the year ended 30 June 2020 LIABILITIES Current liabilities 100% Acquisition Scenario Year ended 30 June 2020 Trade and other payables 6,709 13,750 - - 20,459 $’000 8 Borrowings 1,212 42,234 - (42,234) 1,212 5G Webcentral 5G capital Pro forma Merged Networks raise9 adjustments Group Lease liability 2,141 6,548 - - 8,689 10 pro-forma Provisions 2,292 1,706 - - 3,998 CASH FLOWS FROM OPERATING Deferred revenue 1,313 22,725 - - 24,038 ACTIVITIES Provision for income tax 41 - - - 41 Receipts from customers & recoveries 53,591 126,369 - - 179,960 Other liabilities 2,951 554 - - 3,505 Payments to suppliers and employees (44,791) (126,957) - - (171,748) TOTAL CURRENT LIABILITIES 16,659 87,517 - (42,234) 61,942 Interest paid (1,326) (3,317) - - (4,643) Receipt of government grants - 222 - - 222 Non-current liabilities Interest received 38 305 - 343 Trade and other payables 1,274 - - - 1,274 - Borrowings 2,578 - - - 2,578 Net Income tax (paid) / refunded - (631) - - (631) Lease liability 11,302 10,214 - - 21,516 NET CASH FLOWS FROM OPERATING 7,512 (4,009) - - 3,503 ACTIVITIES Provisions 299 2,943 - - 3,242
Deferred revenue - 11,465 - - 11,465
PROVISION FOR INCOME TAX 15,453 24,622 - - 40,075 CASH FLOWS FROM INVESTING ACTIVITIES OTHER LIABILITIES 32,112 112,139 - (42,234) 102,017 Net cash on acquisitions (4,080) - - (1,476) (5,556)
Purchase of property, plant and (3,308) (2,324) - - (5,632) NET ASSETS 35,655 11,666 27,500 4,626 79,447 equipment
Increase in pledged bank deposits (397) - - - (397)
EQUITYonly use personal For Lease payments received - 1,999 - - 1,999 Contributed equity 38,644 91,179 27,500 (74,887) 82,430 Reserves 3,125 (728) - 728 3,125 8 Accumulated losses (6,114) (78,920) - 78,920 (6,114) Sum of results for the half-year ended 30 June 2020, plus the results for the Financial Year ended 31 December 2019, less the results for the half-year ended 30 June 2019. Equity attributable to members 35,655 11,531 27,500 4,761 79,447 9 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). of the parent 10 Pro forma adjustments detailing the impact of the non-capital raise related items described above. Non-controlling interest - 135 - (135) - TOTAL EQUITY 35,655 11,666 27,500 4,626 79,447
52 53 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
Figure 4: Merged Group pro forma unaudited statement of cash flows for the year ended 30 June 2020 (Continued) 11.7 50.1% ACQUISITION SCENARIO
PRO FORMA UNAUDITED STATEMENT OF PROFIT OR LOSS 100% Acquisition Scenario Year ended 30 June 2020 $’000 The table at Figure 5 details the Merged Group pro forma unaudited statement of profit or loss for the 12 months 5G Webcentral8 5G capital Pro forma Merged 9 ended 30 June 2020, and has been prepared the illustrate the adjustments identified within the 100% Acquisition Networks raise adjustments Group Scenario, with the exception that: 10 pro-forma • the required additional number of shares (not already held) required to hold 50.1% of the outstanding WCG Payment of earn out - (8,088) - - (8,088) Shares are acquired by 5GN under the Offer, as if the acquisition had occurred on 1 July 2019; and Return of capital - (1) - - (1) • recognition of the relevant non-controlling interest representing the portion of WCG’s profit or loss for the Net proceeds from disposal of - 51,208 - - 51,208 period not attributable to owners of the Merged Group. discontinued operation • recognition of the required accounting entries to recognise 5GN’s share of WCG’s attributable profit after NET CASH FLOWS USED IN (7,785) 42,794 - (1,476) 33,533 tax for the 12 months ended 30 June 2020 under the equity method of accounting, as presented in the INVESTING ACTIVITIES table below:
Figure 5: Merged Group pro forma unaudited statement of profit or loss for the year ended 30 June 2020 CASH FLOWS FROM FINANCING ACTIVITIES Year ended 30 June 2020 50.1% Acquisition Scenario Proceeds from issue of shares 18,386 - 27,500 - 45,886 $’000 5G Networks Webcentral11 Adjustments Merged Group pro-forma Proceeds from exercise of options 2,264 - - - 2,264 Revenue 49,325 58,553 9,096 116,974 Proceeds from applications for share 763 - - - 763 purchase plan Cost of goods sold (20,098) (23,140) - (43,238) Proceeds from borrowings 3,263 5,000 - - 8,263 GROSS PROFIT 29,227 35,413 9,096 73,736 Repayment of borrowings (4,690) (43,400) - (42,234) (90,324) Other income 439 3,864 (565) 3,738 Payment of capital raising costs (974) - - - (974) Capital lease payments (1,701) (4,714) - - (6,415) Employee benefits expenses (19,997) (28,597) - (48,594) Dividends Paid (580) 109 - - (471) Other expenses (3,090) (12,826) 1,598 (14,318) Payment of financing costs 16,731 (43,005) 27,500 (42,234) (41,008) Share based expenses (1,424) - 1,424 - Capital lease payments (1,701) (4,714) - (6,415) Acquisition costs (638) - 638 - Dividends Paid (580) 109 - (471) Transaction costs - (3,092) 3,092 - NET CASH FLOWS FROM FINANCING 16,731 (43,005) 27,500 (42,234) (41,008) Restructuring costs - (2,107) 2,107 - ACTIVITIES Gain on disposal of assets - 554 (554) - Net impairment losses on financial (275) - - (275) assets and liabilities Net increase in cash and cash 16,458 (4,220) 27,500 (43,710) (3,972) equivalents Impairment of goodwill - (41,123) 41,123 - Net foreign exchange differences - (19) - - (19) Depreciation expenses (4,890) (7,072) - (11,962) Amortisation expenses (78) (3,733) - (3,811) Cash and cash equivalents at beginning 5,660 7,657 - - 13,317 of period Finance costs (1,425) (5,813) - (7,238) CASH AND CASH EQUIVALENTS AT 22,118 3,418 27,500 (43,710) 9,326 PROFIT /(LOSS) BEFORE TAX (2,151) (64,532) 57,959 (8,724)
ENDonly use personal For OF PERIOD Income tax (expense) / benefit 606 (1,002) (5,051) (5,447) PROFIT / (LOSS) FOR THE YEAR (1,545) (65,534) 52,908 (14,171)
Profit / (Loss) Attributable To: Owners of Merged Group (1,545) (64,776) 59,170 (7,150) Non-controlling interests - (758) (6,262) (7,021)
11 Sum of results for the half-year ended 30 June 2020, plus the results for the Financial Year ended 31 December 2019, less the results for the half-year ended 30 June 2019. 54 55 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
PRO FORMA UNAUDITED STATEMENT OF FINANCIAL POSITION Figure 6: Merged Group pro forma unaudited statement of financial position as at 30 June 2020 (Continued)
The table at Figure 6 details the Merged Group pro forma unaudited statement of financial position 50.1% Acquisition Scenario Year ended 30 June 2020 as at 30 June 2020, and has been prepared to illustrate the impact of the following: $’000 5G Webcentral 5GN Pro forma Merged • the acquisition of 12,300,000 WCG shares by 5GN on 3 September 2020 for cash consideration of Networks capital adjustments13 Group $1,476,000, as though it had occurred on 30 June 2020; raise12 pro-forma
• the acquisition of the required additional number WCG shares under the Offer, which results in 5GN holding Financial assets - 1,409 - - 1,409 a Relevant Interest in 50.1% of the WCG Shares, as if the acquisition had occurred on 30 June 2020; Other assets - 4,070 - - 4,070
• the acquisition of WCG Shares by 5GN under the Offer, based on a price for WCG Shares of $0.148 per TOTAL NON-CURRENT ASSETS 40,017 99,168 - (32,508) 106,677 WCG Share (being the closing price for 5GN Shares on 16 September 2020, the last trading day prior to the TOTAL ASSETS 67,767 123,805 27,500 (76,218) 142,854 date of this Bidder’s Statement divided by the Offer Consideration) and the associated issue of 5GN Shares
as consideration based on a price for 5GN Shares of $1.78 per share (being the closing price for 5GN Shares on 16 September 2020, the last trading day prior to the date of this Bidder’s Statement); LIABILITIES Current liabilities • the impact of 5GN’s $27.5m capital raise, completed on 7 September 2020, as though it had occurred on 30 June 2020 (representing gross proceeds; transaction costs have not been taken into account given Trade & other payables 6,709 13,750 - - 20,459 uncertainty around quantum and timing; and Borrowings 1,212 42,234 - (42,234) 1,212 • the intended loan to WCG in order for it to repay it’s existing debt facility in full, as described under section Lease liability 2,141 6,548 - - 8,689 10.3, as though it had occurred on 30 June 2020. Note that potential transaction / refinancing costs have not Provisions 2,292 1,706 - - 3,998 been taken into account given uncertainty on quantum and timing. Deferred revenue 1,313 22,725 - - 24,038 Provision for income tax 41 - - - 41 Figure 6: Merged Group pro forma unaudited statement of financial position as at 30 June 2020 Other liabilities 2,951 554 - - 3,505 50.1% Acquisition Scenario Year ended 30 June 2020 TOTAL CURRENT LIABILITIES 16,659 87,517 - (42,234) 61,942 $’000 5G Webcentral 5GN Pro forma Merged Networks capital adjustments13 Group
raise12 pro-forma Non-current liabilities Trade & other payables 1,274 - - - 1,274 ASSETS Borrowings 2,578 - - - 2,578 Current assets Lease liability 11,302 10,214 - - 21,516 Cash & cash equivalents 22,118 3,418 27,500 (43,710) 9,326 Provisions 299 2,943 - - 3,242 Restricted cash 1,397 - - - 1,397 Trade & other receivables 2,808 5,373 - - 8,181 Deferred revenue - 11,465 - - 11,465 Contract assets 700 - - - 700 TOTAL NON-CURRENT 15,453 24,622 - - 40,075 LIABILITIES Prepayments - 8,198 - - 8,198 TOTAL LIABILITIES 32,112 112,139 - (42,234) 102,017 Current tax assets - 1,260 - - 1,260
Other assets 727 6,388 - - 7,115 NET ASSETS 35,655 11,666 27,500 (33,984) 40,837 TOTAL CURRENT ASSETS 27,750 24,637 27,500 (43,710) 36,177
EQUITY Non-current assets Prepayments - 688 - - 688 Contributed equity 38,644 91,179 27,500 (83,927) 73,396
For personal use only use personal For Property, plant & equipment 9,062 6,403 - - 15,465 Reserves 3,125 (728) - 728 3,125 Right-of-use asset 12,369 10,025 - - 22,394 Accumulated losses (6,114) (78,920) - 78,920 (6,114) Deferred tax asset 1,725 16 - - 1,741 Equity attributable to members 35,655 11,531 27,500 (4,279) 70,407 of the parent Intangible assets 16,861 76,557 - (32,508) 60,910 Non-controlling interest - 135 - (29,704) (29,569)
12 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). TOTAL EQUITY 35,655 11,666 27,500 (33,984) 40,837 13 Pro forma adjustments detailing the impact of the non-capital raise related items described above. 12 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). 13 Pro forma adjustments detailing the impact of the non-capital raise related items described above.
56 57 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
PRO FORMA UNAUDITED STATEMENT OF CASH FLOWS Figure 7: Merged Group pro forma unaudited statement of cash flows for the year ended 30 June 2020 (Continued)
The table at Figure 7 sets out the Merged Group pro forma unaudited statement of cash flows for the 12 months ended 30 June 2020, and has been prepared to illustrate the impact of the following: 50.1% Acquisition Scenario Year ended 30 June 2020 $’000 • the acquisition of 12,300,000 WCG shares by 5GN on 3 September 2020 for cash consideration of 5G Webcentral 5G capital Pro forma Merged $1,476,000, as though it had occurred on 1 July 2020; Networks 14 raise15 adjustments Group 16 pro-forma • 5GN acquiring the required additional number of shares to hold 50.1% of the shares in WCG under the Offer, as if the acquisition had occurred on 1 July 2019; Lease payments received - 1,999 - - 1,999
• the impact of 5GN’s $27.5m capital raise, completed on 7 September 2020, as though it had occurred Payment of earn out - (8,088) - - (8,088) on 30 June 2020 (representing gross proceeds; transaction costs have not been taken into account given Return of capital - (1) - - (1) uncertainty around quantum and timing; and
• the intended loan to WCG in order for it to repay it’s existing debt facility in full, as described under section Net proceeds from disposal of - 51,208 - - 51,208 10.3, as though it had occurred on 30 June 2020. Note that potential transaction / refinancing costs have not discontinued operation been taken into account given uncertainty on quantum and timing. NET CASH FLOWS USED IN (7,785) 42,794 - (1,476) 33,533 INVESTING ACTIVITIES Figure 7: Merged Group pro forma unaudited statement of cash flows for the year ended 30 June 2020
50.1% Acquisition Scenario Year ended 30 June 2020 CASH FLOWS FROM FINANCING $’000 ACTIVITIES 5G Webcentral 5G capital Pro forma Merged Networks 14 raise15 adjustments Group Proceeds from issue of shares 18,386 - 27,500 - 45,886 16 pro-forma Proceeds from exercise of options 2,264 - - - 2,264
CASH FLOWS FROM OPERATING Proceeds from applications for share 763 - - - 763 ACTIVITIES purchase plan Receipts from customers & recoveries 53,591 126,369 - - 179,960 Proceeds from borrowings 3,263 5,000 - - 8,263 Payments to suppliers and employees (44,791) (126,957) - - (171,748) Repayment of borrowings (4,690) (43,400) - (42,234) (90,324) Interest paid (1,326) (3,317) - - (4,643) Payment of capital raising costs (974) - - - (974) Receipt of government grants - 222 - - 222 Capital lease payments (1,701) (4,714) - - (6,415) Interest received 38 305 - - 343 Dividends Paid (580) 109 - - (471) Net Income tax (paid) / refunded - (631) - - (631) NET CASH FLOWS FROM FINANCING 16,731 (43,005) 27,500 (42,234) (41,008) NET CASH FLOWS FROM OPERATING 7,512 (4,009) - - 3,503 ACTIVITIES ACTIVITIES
Net increase in cash and cash 16,458 (4,220) 27,500 (43,710) (3,972) CASH FLOWS FROM INVESTING equivalents ACTIVITIES Net foreign exchange differences - (19) - - (19) Net cash on acquisitions (4,080) - - (1,476) (5,556) Cash and cash equivalents at beginning 5,660 7,657 - - 13,317 Purchase of property, plant and (3,308) (2,324) - - (5,632) of period equipment
CASH AND CASH EQUIVALENTS AT 22,118 3,418 27,500 (43,710) 9,326 For personal use only use personal For Increase in pledged bank deposits (397) - - - (397) END OF PERIOD
14 Sum of results for the half-year ended 30 June 2020, plus the results for the Financial Year ended 31 December 2019, less the results for 14 Sum of results for the half-year ended 30 June 2020, plus the results for the Financial Year ended 31 December 2019, less the results for the half-year ended 30 June 2019. the half-year ended 30 June 2019. 15 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). 15 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). 16 Pro forma adjustments detailing the impact of the non-capital raise related items described above. 16 Pro forma adjustments detailing the impact of the non-capital raise related items described above.
58 59 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
11.8 49.9% ACQUISITION SCENARIO Figure 8: Merged Group pro forma unaudited statement of profit of loss for the year ended 30 June 2020
PRO FORMA UNAUDITED STATEMENT OF PROFIT OR LOSS 49.9% Acquisition Scenario Year ended 30 June 2020 The table at Figure 8 details the Merged Group pro forma unaudited statement of profit or loss for the 12 months $’000 ended 30 June 2020, and has been prepared the illustrate the impact of the following: 5G Networks Webcentral Adjustments Merged Group pro-forma • the acquisition of the required additional number of WCG Shares by 5GN under the Offer, which results in 5GN holding a Relevant Interest in 49.9% of the WCG Shares, as if the acquisition had occurred on 1 July 2019; and 5GN does not have control of WCG (as defined under AASB 10 Consolidated Financial Employee benefits expenses (19,997) - - (19,997) Statements), but is deemed to exert significant influence; Other expenses (3,090) - - (3,090) • for the purposes of determining 5GN’s share of WCG’s attributable profit after tax for the 12 months ended 30 June 2020, the profit after tax (as determined under the method described under ‘Sources of information’ in Share based expenses (1,424) - 1,424 - section 11.4) has been adjusted to remove the impact of 5GN’s share of WCG’s unusual items during the period, Acquisition costs (638) - 638 - and the associated impact on income tax expense (as depicted in the table at Figure 1 in section 11.5); and Net impairment losses on financial (275) - -- (275) • recognition of the required accounting entries to recognise 5GN’s share of WCG’s attributable profit after tax assets and liabilities for the 12 months ended 30 June 2020 under the equity method of accounting, as presented in the table below: Depreciation expenses (4,890) - - (4,890) Amortisation expenses (78) - - (78) 5GN’s share of WCG’s attributable profit after tax ($’000) Year ended 30 June 2020 Finance costs (1,425) - - (1,425) WCG profit / (loss) for the year (65,534) PROFIT /(LOSS) BEFORE TAX (2,151) - (4,877) (7,028) Unusual items attributable to WCG after income tax (figure 1) 51,465
WCG adjusted profit for the year (14,069) Income tax (expense) / benefit 606 - (619) (13)
Non-controlling interests (163) PROFIT / (LOSS) FOR THE YEAR (1,545) - (5,496) (7,041)
Profit attributable to owners of WCG (13,906) Profit / (Loss) Attributable To: 5G ownership interest in WCG 49.9% Owners of Merged Group (1,545) - (5,496) (7,041) 5G share of net profits of associate (6,939) Non-controlling interests - - - -
PRO FORMA UNAUDITED STATEMENT OF FINANCIAL POSITION Figure 8: Merged Group pro forma unaudited statement of profit of loss for the year ended 30 June 2020 The table at Figure 6 details the Merged Group pro forma unaudited statement of financial position as at 49.9% Acquisition Scenario Year ended 30 June 2020 30 June 2020, and has been prepared to illustrate the impact of the following: $’000 • 5G Networks Webcentral Adjustments Merged Group the acquisition of 12,300,000 WCG shares by 5GN on 3 September 2020 for cash consideration of pro-forma $1,476,000, as though it had occurred on 30 June 2020; • the acquisition of the required additional number WCG shares under the Offer, which results in 5GN holding a Revenue 49,325 - - 49,325 Relevant Interest in 49.9% of the WCG Shares, as if the acquisition had occurred on 30 June 2020, and 5GN Cost of goods sold (20,098) - - (20,098) does not have control of WCG (as defined under AASB 10 Consolidated Financial Statements), but is deemed to exert significant influence; GROSS PROFIT 29,227 - - 29,227 • the acquisition of WCG Shares by 5GN under the Offer, based on a price for WCG Shares of $0.148 per For personal use only use personal For WCG Share (being the closing price for 5GN Shares on 16 September 2020, the last trading day prior to the Other income 439 - - 439 date of this Bidder’s Statement, divided by the Offer Consideration) and the associated issue of 5GN Shares Share of net profit / (loss) of - - (6,939) (6,939) as consideration based on a price for 5GN Shares of $1.78 per share (being the closing price for 5GN Shares associate on 16 September 2020, the last trading day prior to the date of this Bidder’s Statement);
60 61 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
• the impact of 5GN’s $27.5m capital raise, completed on 7 September 2020, as though it had occurred Figure 9: Merged pro forma unaudited statement of financial position as at 30 June 2020 (Continued) on 30 June 2020 (representing gross proceeds; transaction costs have not been taken into account given uncertainty around quantum and timing; and 49.9% Acquisition Scenario Year ended 30 June 2020 • the intended loan to WCG in order for it to repay it’s existing debt facility in full, as described under $’000 section 10.3, as though it had occurred on 30 June 2020. Note that potential transaction / refinancing 5G Webcentral 5GN Pro forma Merged 18 costs have not been taken into account given uncertainty on quantum and timing. Networks capital adjustments Group raise17 pro-forma Figure 9: Merged pro forma unaudited statement of financial position as at 30 June 2020 Lease liability 2,141 - - - 2,141
49.9% Acquisition Scenario Year ended 30 June 2020 Provisions 2,292 - - - 2,292 $’000 Deferred revenue 1,313 - - - 1,313 5G Webcentral 5GN Pro forma Merged Networks capital adjustments18 Group Provision for income tax 41 - - - 41 17 raise pro-forma Other liabilities 2,951 - - - 2,951
ASSETS TOTAL CURRENT LIABILITIES 16,659 - - - 16,659 Current assets
Cash & cash equivalents 22,118 - 27,500 (43,710) 5,908 Non-current liabilities Restricted cash 1,397 - - - 1,397 Trade & other payables 1,274 - - - 1,274 Trade & other receivables 2,808 - - - 2,808 Borrowings 2,578 - - - 2,578 Contract assets 700 - - - 700 Lease liability 11,302 - - - 11,302 Other assets 727 - - - 727 Provisions 299 - - - 299
TOTAL CURRENT ASSETS 27,750 - 27,500 (43,710) 11,540 TOTAL NON-CURRENT LIABIL- 15,453 - - - 15,453 ITIES
Non-current assets TOTAL LIABILITIES 32,112 - - - 32,112 Property, plant & equipment 9,062 - - - 9,062 Right-of-use asset 12,369 - - - 12,369 NET ASSETS 35,655 - 27,500 7,215 70,370 Deferred tax asset 1,725 - - - 1,725 Intangible assets 16,861 - - - 16,861 EQUITY Financial assets - - - 42,234 42,234 Contributed equity 38,644 - 27,500 7,215 73,359 Investments in associates - - - 8,691 8,691 Reserves 3,125 - - - 3,125
TOTAL NON-CURRENT ASSETS 40,017 - - 50,925 90,942 Accumulated losses (6,114) - - - (6,114)
TOTAL ASSETS 67,767 - 27,500 7,215 102,482 Equity attributable to members of 35,655 - 27,500 7,215 70,370 the parent
Non-controlling interest - - - - - LIABILITIES TOTAL EQUITY 35,655 - 27,500 7,215 70,370 Current liabilities
Trade & other payables 6,709 - - - 6,709 17 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). For personal use only use personal For 18 Borrowings 1,212 - - - 1,212 Pro forma adjustments detailing the impact of the non-capital raise related items described above.
17 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). 18 Pro forma adjustments detailing the impact of the non-capital raise related items described above.
62 63 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP THE MERGED GROUP
PRO FORMA UNAUDITED STATEMENT OF CASH FLOWS Figure 10: Merged Group pro forma unaudited statement of cash flows for the year ended 30 June 2020 (Continued)
The table at Figure 10 sets out the Merged Group pro forma unaudited statement of cash flows for the 12 months ended 30 June 2020, and has been prepared to illustrate the impact of the following: 49.9% Acquisition Scenario Year ended 30 June 2020 $’000 • the acquisition of 12,300,000 WCG shares by 5GN on 3 September 2020 for cash consideration 5G Webcentral 5G capital Pro forma Merged of $1,476,000, as though it had occurred on 1 July 2020; Networks raise19 adjustments Group 20 pro-forma • 5GN acquiring the required additional number of shares to hold 49.9% of the shares in WCG under the Offer, as if the acquisition had occurred on 1 July 2019, and 5GN does not have control of WCG (as defined under AASB 10 Consolidated Financial Statements), but is deemed to exert significant influence; CASH FLOWS FROM FINANCING • the impact of 5GN’s $27.5m capital raise, completed on 7 September 2020, as though it had occurred ACTIVITIES on 30 June 2020 (representing gross proceeds; transaction costs have not been taken into account given Proceeds from issue of shares 18,386 - 27,500 - 45,886 uncertainty around quantum and timing; and Proceeds from exercise of options 2,264 - - - 2,264 • the intended loan to WCG in order for it to repay it’s existing debt facility in full, as described under section 10.3, as though it had occurred on 30 June 2020. Note that potential transaction / refinancing Proceeds from applications for share 763 - - - 763 costs have not been taken into account given uncertainty on quantum and timing. purchase plan Proceeds from borrowings 3,263 - - - 3,263 Figure 10: Merged Group pro forma unaudited statement of cash flows for the year ended 30 June 2020 Repayment of borrowings (4,690) - - - (4,690) 49.9% Acquisition Scenario Year ended 30 June 2020 Payment of capital raising costs (974) - - - (974) $’000 5G Webcentral 5G capital Pro forma Merged Capital lease payments (1,701) - - - (1,701) 19 Networks raise adjustments Group Dividends Paid (580) - - - (580) 20 pro-forma NET CASH FLOWS FROM FINANCING 16,731 - 27,500 - 44,231 CASH FLOWS FROM OPERATING ACTIVITIES ACTIVITIES
Receipts from customers & recoveries 53,591 - - - 53,591 Net increase in cash and cash 16,458 - 27,500 (43,710) 248 Payments to suppliers and employees (44,791) - - - (44,791) equivalents Interest paid (1,326) - - - (1,326) Cash and cash equivalents at beginning 5,660 - - - 5,660 Interest received 38 - - - 38 of period
Interest received 7,512 - - - 7,512 CASH AND CASH EQUIVALENTS AT 22,118 - 27,500 (43,710) 5,908 NET CASH FLOWS FROM OPERATING 7,512 - - - 7,512 END OF PERIOD ACTIVITIES
CASH FLOWS FROM INVESTING 11.10 SYNERGIES AND SAVINGS ACTIVITIES 5GN believes that there are significant synergies and savings that can be delivered across the 5GN and Net cash on acquisitions (4,080) - - (1,476) (5,556) Webcentral businesses. The extent of the synergies and savings depends on whether 5GN acquires all of the Purchase of property, plant and (3,308) - - - (3,308) Webcentral Shares, so that it owns 100% of Webcentral, or whether 5GN controls Webcentral, but is not entitled equipment to proceed to compulsory acquisition and acquire 100% of Webcentral.
Increase in pledged bank deposits (397) - - - (397) In a scenario where 5GN acquires 100% of Webcentral and the businesses are combined, 5GN expects that
Increase in loan receivables - - - (42,234) (42,234) synergies and savings across both businesses of over $7m per annum on a run rate basis can be generated. For personal use only use personal For NET CASH FLOWS USED IN (7,785) - - (43,710) (51,495) On a strategic shareholding basis, where 5GN does not acquire 100% of Webcentral, 5GN expects that INVESTING ACTIVITIES synergies and savings across both businesses of over $3m per annum on a run rate basis can be generated.
19 Pro forma adjustments detailing the impact of the 5GN 7 September 2020 capital raise (described above). 20 Pro forma adjustments detailing the impact of the non-capital raise related items described above.
64 65 11. EFFECT OF THE OFFER ON 5GN AND PROFILE OF THE MERGED GROUP 12. RISK FACTORS
If the Offer becomes unconditional, Webcentral Shareholders who accept the Offer will become 5GN shareholders, and 5GN will acquire an increased interest in Webcentral. In that event, Webcentral Shareholders will continue to Whether these synergies and savings can be generated depends on a number of factors, some of which are be indirectly exposed to the risks associated with having an interest in Webcentral’s assets and general economic, not in the control of 5GN including Webcentral taking the requisite steps to achieve the synergies and savings. share market and industry risks. There are also additional risks relating to the Offer and the Merged Group, to which This may be the case where 5GN does not acquire 100% of Webcentral. Other factors include: Webcentral Shareholders will be exposed through their holding of 5GN Shares • it may take some time to achieve the synergies and savings including implementing the outcome of the The value of 5GN Shares is influenced by a range of factors, many of which are beyond the control of the Merged Group. operational review referred to in section 10.4; These risk factors are divided into: • there may be short term costs associated with delivering the synergies and savings; • specific risks relating to the Offer and the creation of the Merged Group; • there may be inefficiencies experienced in implementing the synergies and savings; and • risks relating to the telecommunications and digital services sectors; and • there may be contractual obligations or other circumstances that have not been identified that might prevent • other general risks. immediate generation of some or all of the synergies and savings. You should carefully consider the following risk factors, as well as the other information provided by 5GN, and consult 11.11 FORECAST FINANCIAL INFORMATION FOR THE MERGED GROUP your financial and legal advisers before making a decision as to whether to accept the Offer.
The 5GN Board has given careful consideration as to whether a reasonable basis exists to produce reliable and The risk factors presented in this section are not an exhaustive list of all risks and risk factors related to 5GN, the Merged meaningful forecast financial information in relation to the Merged Group, other than 5GN’s production and cost Group or the Offer. There may be additional risks and uncertainties that 5GN is aware of, or that it currently considers to guidance for FY20 and the general overview of the strategy and financial profile of the Merged Group set out in be immaterial, or that are not currently known to 5GN that may become important factors that adversely affect 5GN’s this Bidder’s Statement. The 5GN Board has concluded that such forecast financial information has the potential operating and financial performance. to be misleading and a reasonable basis does not exist for producing forecasts that would be sufficiently This section does not take into account the investment objectives, financial situation, position or particular needs meaningful and reliable to be of value to either WCG Shareholders or 5GN shareholders. of Webcentral Shareholders
12.1 RISKS RELATING TO THE OFFER AND THE CREATION OF THE MERGED GROUP
(A) ISSUE OF 5GN SHARES AS CONSIDERATION
Webcentral Shareholders are being offered consideration under the Offer that consists of a specified number of 5GN Shares, rather than a number of 5GN Shares with a specified market value. As a result, the value of the consideration will fluctuate depending upon the market value of the 5GN Shares.
Furthermore, under the Offer, 5GN will issue a significant number of 5GN Shares. Some Webcentral Shareholders may not intend to continue to hold their 5GN Shares and may wish to sell them on ASX. There is a risk that if a significant number of Webcentral Shareholders seek to sell their 5GN Shares, this may adversely impact the price of 5GN Shares.
(B) INTEGRATION RISKS
There are risks that any integration between the businesses of 5GN and the Webcentral Group may take longer than expected and that anticipated efficiencies and benefits of that integration may be less than estimated. These risks include possible differences in the management culture of the two groups, inability to achieve synergy benefits and cost savings, and the potential loss of key personnel, suppliers or other contractual arrangements.
(C) ACCOUNTING FOR THE OFFER
5GN will be required to perform a fair value assessment of all Webcentral’s assets and liabilities if the Offer is successful. This assessment may result in increased noncash depreciation and amortisation charges.
There is a risk that these charges may be substantially greater than those that would exist in 5GN and For personal use only use personal For Webcentral as separate businesses. This may reduce the future earnings of the Merged Group.
(D) ACQUISITIONS
5GN regularly identifies and assesses potential opportunities for acquisitions and growth initiatives where it considers the opportunities may create shareholder value. The Merged Group will continue to identify and assess such opportunities. While the Merged Group intends to undertake appropriate due diligence to properly assess any such opportunities, these transactions involve inherent risks. These risks could cause
66 67 12. RISK FACTORS 12. RISK FACTORS
the Merged Group not to realise the benefits anticipated to result from such transactions (or the benefits (H) POTENTIAL UNAVAILABILITY OF CGT SCRIP FOR SCRIP ROLLOVER RELIEF may take longer than expected to be realised), which may have a material adverse effect on the Merged Webcentral Shareholders who accept the Offer and receive 5GN Shares may, in some circumstances Group’s ability to grow and on its financial position and financial performance. In addition, acquisitions may (particularly where 5GN does not obtain 80% or more of the Webcentral Shares under the Offer) have a CGT be funded by the issue of additional 5GN Shares, which may dilute 5GN shareholders, or by debt, which will liability but will not be able to claim CGT scrip for scrip rollover relief in respect of the 5GN Shares received affect the Merged Group’s balance sheet accordingly. in exchange for the Webcentral Shares. The Australian taxation implications of accepting the Offer are (E) FINANCING RISKS AND CAPITAL REQUIREMENTS discussed in greater detail in section 0.
The Merged Group’s capital requirements will depend on a number of factors. While 5GN expects the 12.2 RISKS RELATING TO THE TELECOMMUNICATIONS AND DIGITAL SERVICES SECTORS WHICH THE Merged Group to have sufficient funding in relation to its existing operations (based on existing estimates MERGED GROUP WILL OPERATE IN of funding requirements), funding requirements may change in the future depending on multiple factors including (without limitation) further acquisitions, divestments and commodity prices. (A) COMPETITION
The Merged Group may be required to seek additional financing (either in the form of debt or equity) and The digital services industry is rapidly evolving with a heightened environment of change characterised there is no guarantee that the Merged Group will be able to secure the required level of funding. Any debt by disruptive technologies. The Merged Group therefore faces potential loss of its competitive or market financing, if available, may involve restrictions on the Merged Group’s financing and operating activities, position as a result of potential product innovation by existing competitors or new entrants to the market. or its business strategy and additional equity financing may dilute shareholders and may be undertaken at The Merged Group may not anticipate or respond to any such developments with sufficient speed to lower prices than the current market price. No assurances can be made that appropriate capital or funding, maintain its market position. Other competitive risks faced by Webcentral include price competition, if and when needed, will be available on terms favourable to the Merged Group or at all. If the Merged competitor marketing campaigns, mergers of, or acquisitions by, competitors and possible new entrants Group is unable to obtain additional financing as needed, it may be required to reduce, delay or suspend its to the market. operations and this could have a material adverse effect on 5GN’s operations and financial position. (B) TECHNOLOGY AND CHANGE In the ordinary course of operations and development, 5GN will be required to issue financial assurances, The digital services industry is evolving rapidly with the frequent introduction of new technologies, products particularly assurances and bond/bank guarantee instruments, to secure statutory and environmental and innovations. Consumer behaviours, preferences and trends are also constantly changing upon the performance undertakings and commercial arrangements. 5GN’s ability to provide such assurances is onset of new methods of communication and digital platforms. The Merged Group must likewise evolve subject to external financial and credit market assessments, and its own financial position. and adapt its products and service offering to maintain pace with the industry in which it operates and to (F) DUE DILIGENCE maintain its competitive position. Given the pace of change, there is no guarantee that the Merged Group will be able to continue to introduce new and superior products, or products that are perceived to be new Information relating to Webcentral that has been presented in, or omitted from, this Bidder’s Statement, and superior by consumers, at the rate seen by other competitors in the market generally. The Merged including all Webcentral financial information, has been based on publicly available information. 5GN has Group’s ability to do so is constrained by factors including its available capacity, resources and capital to not yet had the opportunity to carry out any due diligence in respect of Webcentral. Any inaccuracy invest in product develop, innovation and design. This may adversely impact on the Merged Group’s long or omission in such publicly available information may adversely affect the results of operations of the and short term business performance. Merged Group. (C) INFRASTRUCTURE AND TECHNOLOGY FAILURE In addition, Webcentral may be a party to contracts that grant the counterparty certain rights (including review or termination) on a change of control of Webcentral. An exercise of these rights by a counterparty The Merged Group will rely on its infrastructure and technology to provide its customers with a highly reliable may adversely affect Webcentral or the Merged Group. service. There may be a failure to deliver this level of service as a result of numerous factors, including human error, power loss, improper maintenance by landlords and security breaches. Service interruptions, (G) RISKS ASSOCIATED WITH RETENTION OF A MINORITY STAKE regardless of their cause, may cause contractual and other losses to the Merged Group.
There are some risks associated with the Offer for Webcentral Shareholders who do not accept the Offer (D) CYBER AND SECURITY RISKS and remain Webcentral Shareholders. As a technology business, the Merged Group’s business may be particularly adversely affected by If, in connection with or following the Offer, 5GN acquires between 90% and 100% of the Webcentral technological disruptions, including through impacts of malicious third party applications that could interfere Shares, 5GN may be entitled to compulsorily acquire the remaining Webcentral Shares from Webcentral with its products and platforms. It is possible that the measures taken by the Merged Group will not prevent Shareholders. If, in connection with the Offer, 5GN acquires more than 50.1% but less than 90% of unauthorised access to its systems and technologies, risking third party access to confidential or otherwise the Webcentral Shares, 5GN will hold a controlling interest in Webcentral. The remaining Webcentral sensitive data. This could lead to loss of key business or customer information, reputational damage and Shareholders will be in a minority position in a company with a large controlling shareholder whose claims from customers or other third parties whose data may be affected. A cyber-attack on the Merged
For personal use only use personal For objectives for the company may differ from their own. They could also encounter a lower level of liquidity in Group could also result in failures and disruptions to its systems and products. Any resulting inability of the Webcentral Shares than exists today, which could result in a lower price for those Webcentral Shares should Webcentral Group to provide its services to customers could lead to reputational damage, loss of market they wish to sell them in future. share and claims for compensation from customers.
If, following the Offer, 5GN does not acquire a relevant interest of at least 50.1% of the Webcentral Shares, it may choose to waive the 50.1% condition of its Offer resulting in 5GN holding a non-controlling interest in Webcentral. If this occurred, it is possible that 5GN and another person or persons could each hold large minority interests in Webcentral. In such a situation, any commercial misalignment between large minority shareholders could impact on the efficient and effective governance of Webcentral and could adversely affect its ongoing performance.
68 69 12. RISK FACTORS 12. RISK FACTORS
(E) INTELLECTUAL PROPERTY (C) ECONOMIC CONDITIONS
5GN and in turn, the Merged Group, holds various intellectual property, trademarks and other rights which The operating and financial performance of the Merged Group will be influenced by a variety of general are inherently at risk of infringement by third parties. Failure by the Merged Group to protect these rights economic and business conditions, including levels of consumer spending, oil prices, inflation, interest rates could impact the value of these rights, the Merged Group’s ability to maintain customer recognition and the and exchange rates, supply and demand, industrial disruption, access to debt and capital markets and risk of confusion between Webcentral and third parties. government fiscal, monetary and regulatory policies.
(F) EMPLOYEE RETENTION AND TURNOVER Changes in general economic conditions may result from many factors including government policy, international economic conditions, significant acts of terrorism, hostilities or war or natural disasters. 5GN and in turn, the Merged Group depends on the talent and experience of its staff and employees. A prolonged deterioration in general economic conditions, including an increase in interest rates or a It is essential that appropriately skilled staff be available in sufficient numbers to support the Merged decrease in consumer and business demand, could be expected to have an adverse impact on 5GN’s Group’s business. While 5GN has initiatives in place to mitigate the risk of its key staff leaving, the loss operating and financial performance and financial position. of such staff may have a negative impact on the Merged Group. (D) CHANGES IN TAX RULES OR THEIR INTERPRETATION (G) COVID-19 PANDEMIC Changes in tax law (including value added or indirect taxes and stamp duties), or changes in the way Events related to COVID-19 have resulted in significant market falls and volatility. There is continued tax laws are interpreted, may impact the Merged Group’s tax liabilities or the tax treatment of an 5GN uncertainty as to the government response and the likelihood of an Australian economic recession of shareholder’s investment. In particular, both the level and basis of taxation may change. In addition, uncertain duration and severity. If the operations of customers of the Merged Group are interrupted or an investment in 5GN Shares involves tax considerations which may differ for each 5GN shareholder. suspended for a prolonged period as a result of any such events, there may be a material adverse impact Each Webcentral Shareholder is encouraged to seek professional tax advice in connection with the on the operating and financial performance and prospects of the Merged Group. Offer and how they may be discretely impacted.
There are also other changes in the domestic and global macroeconomic environment associated with (E) FORCE MAJEURE EVENTS events relating to COVID-19 that are beyond the control of the Merged Group and may be exacerbated in an economic recession or downturn. These include, but are not limited to: Events may occur within or outside Australia that could impact upon the Australian economy, the Merged Group’s operations and the price of 5GN Shares. These events include but are not limited to acts of • changes in inflation, interest rates and foreign currency exchange rates; terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labour strikes, civil wars, • changes in employment level and labour costs; natural disasters, outbreaks of disease, uranium concentrate risk or other natural or man-made events or • changes in aggregate investment and economic output; and occurrences that can have an adverse effect on the demand for the Merged Group’s products and its ability • other changes in economic condition which may affect the revenue or costs of the Merged Group. to operate its assets. 5GN has only a limited ability to insure against some of these risks. (F) LITIGATION 12.3 GENERAL RISKS As at the date of this Bidder’s Statement, 5GN is not aware of any material disputes or litigation being (A) SHARE MARKET CONDITIONS undertaken . However, it is possible that the Merged Group may be involved in disputes and litigation There are risks associated with any investment in securities. Publicly listed securities have experienced in the course of its future operations. There is a risk that any material or costly dispute or litigation extreme price and volume fluctuations that have often been unrelated to the operating performances of and compensation or damages could adversely impact the financial position or performance of the such companies. Merged Group.
The price at which 5GN Shares are quoted on the ASX may increase or decrease due to a number of factors. These factors may cause the 5GN Shares to trade at prices below the price at the date of the Offer. There is no assurance that the price of the 5GN Shares will increase following the Offer, even if 5GN’s earnings increase.
Some of the factors which may affect the price of 5GN Shares include economic conditions in both Australia and internationally, investor sentiment and local and international share market conditions, changes in interest rates and the rate of inflation, variations in commodity prices, the global security situation and the possibility of terrorist disturbances, changes to government regulation, policy or legislation, changes which may occur to the taxation of companies as a result of changes in Australian and foreign taxation laws,
For personal use only use personal For changes to the system of dividend imputation in Australia, and changes in exchange rates.
(B) EQUITY DILUTION
5GN may elect to issue 5GN Shares or other securities in 5GN in the future. While 5GN will be subject to the constraints of the Listing Rules regarding the percentage of capital that it is able to issue within a 12 month period (other than where exceptions apply), the increase in the number of securities issued and the possible sale of these securities may have the effect of depressing the price of 5GN securities already on issue. In addition, 5GN shareholders at the time may be diluted as a result of the issue of such securities.
70 71 13. TAX CONSIDERATIONS 13. TAX CONSIDERATIONS
This following is a general description of the Australian income tax (including CGT) and GST consequences for Broadly, the capital proceeds for the disposal of Webcentral Shares should be equal to the Offer Webcentral Shareholders who either accept the Offer and dispose of their Webcentral Shares to 5GN, or whose consideration receivable by the Webcentral Shareholder. On the basis that all consideration will be Webcentral Shares are compulsorily acquired in accordance with Part 6A.1 of the Corporations Act. 5GN Shares, the capital proceeds should be equal to the market value of the 5GN Shares received by the Webcentral Shareholder, at the time of the CGT event. This section 13 deals only with Webcentral Shareholders who hold their Webcentral Shares on capital account for income tax purposes. It does not deal with Webcentral Shareholders who: If an investor is an individual or complying superannuation entity and has held the Share for at least 12 months or more before disposal of the Share, the investor will generally be entitled to a • are in the business of trading or dealing in securities, or otherwise hold their Shares on revenue account or as “CGT discount” for any capital gain made on the disposal of the Share. Where the CGT discount trading stock; applies, any capital gain arising (after applying any available capital losses) may be reduced by: • are subject to special taxation rules (e.g. banks, insurance companies, tax exempt organisations, superannuation • 50% in the case of individuals, or funds, managed investment trusts, dealers in securities); • one third in the case of complying superannuation entities. • acquired their Webcentral Shares pursuant to an employee share, option or rights plan; Webcentral Shareholders that are companies are not entitled to a CGT discount. • are taken for CGT purposes to have acquired their Webcentral Shares before 20 September 1985; Any resulting net capital gain is included in an investor’s assessable income. • are under a legal disability; Where the disposal results in a net capital loss and the investor has no remaining capital gains to offset, • are subject to the taxation of financial arrangement rules in Division 230 of the Tax Act in relation to gains and losses the capital loss is carried forward and may be available to be offset against capital gains in future years on their Webcentral Shares; or (subject to the satisfaction of any applicable loss recoupment rules). Capital losses cannot be used to reduce ordinary assessable income (only capital gains). • are non-resident shareholders who currently hold, or have held at any time, the Webcentral Shares through a permanent establishment in Australia. (ii) Scrip for scrip rollover relief Scrip for scrip rollover relief should be available if 5GN acquires at least 80% of the Webcentral Shares Webcentral Shareholders who are tax residents of a country other than Australia (whether or not they are also under the Offer. If, and to the extent that scrip for scrip rollover is available and chosen, then the capital residents, or are temporary residents, of Australia for tax purposes) should take into account the tax consequences of gain that would otherwise arise will be disregarded and effectively deferred until the disposal of 5GN acceptance the Offer under the laws of their country of residence, as well as under Australian law. Shares received under the Offer.
The information in this section 13is based upon the Australian law and administrative practice in effect as at the date CGT roll-over relief is only available to a Webcentral Shareholder: of this Bidder’s Statement, but it is general in nature and is not intended to be an authoritative or complete statement • of the laws applicable to the particular circumstances of every Webcentral Shareholder. Further, these comments Who will make a capital gain on the disposal of their Webcentral Shares; do not constitute financial product advice as define in the Corporations Act. Webcentral Shareholders should seek • In respect of any scrip consideration received under the Offer; and independent professional advice in relation to their own particular circumstances. • Where 5GN acquires at least an 80% ownership interest in Webcentral.
5GN will not make a choice under section 124-795(4) of the Tax Act to deny scrip for scrip rollover relief 13.1 AUSTRALIAN RESIDENT WEBCENTRAL SHAREHOLDERS (where it would otherwise be available).
(A) DISPOSAL OF WEBCENTRAL SHARES (C) IMPLICATIONS OF HOLDING 5GN SHARES
If the Offer becomes unconditional, acceptance of the Offer by a Webcentral Shareholder will involve the As a consequence of accepting the Offer, a Webcentral Shareholder will become a shareholder of 5GN. disposal of their Webcentral Shares to 5GN. This change of ownership of Webcentral Shares will constitute a CGT event for Australian income tax purposes. Dividends (and any attached franking credits) received by an Australian resident shareholder of 5GN would generally be required to be included in the assessable income of such a shareholder. A franking credit offset There will also be a CGT event on the disposal of the Webcentral Shares where these are compulsorily equal to any attached franking credits may also be available to the shareholder. acquired in accordance with Part 6A.1 of the Corporations Act. (D) CGT ON SUBSEQUENT DISPOSAL OF 5GN SHARES (C) CGT A subsequent disposal of 5GN Shares will generally result in Australian CGT implications as described (i) Calculation of capital gain or capital loss (apart from scrip for scrip rollover relief) above. These will differ depending upon whether or not, and the extent to which, scrip for scrip rollover Webcentral Shareholders will make a capital gain to the extent that the capital proceeds from relief was claimed in relation to the disposal of Webcentral Shares pursuant to the Offer.
For personal use only use personal For the disposal of their Webcentral Shares are more than the cost base of those Webcentral Shares. Conversely, Webcentral Shareholders will make a capital loss to the extent that the capital proceeds are (i) Where scrip for scrip rollover not claimed or available less than their reduced cost base of those Webcentral Shares. Where scrip for scrip rollover relief was not claimed or was not available in relation to the disposal of the Webcentral Shares, the cost base of the 5GN shares would be the relevant market value of the Broadly, the cost base of the Webcentral Shares generally includes the purchase price paid for the 5GN shares at the time of the CGT event on the disposal of Webcentral Shares pursuant to the offer. shares and other incidental costs relating to their acquisition and disposal.
72 73 13. TAX CONSIDERATIONS 13. TAX CONSIDERATIONS
(ii) Where scrip for scrip rollover available Should 5GN not have sufficient information to determine whether a Webcentral Shareholder is a foreign resident, Where a Webcentral Shareholder chooses scrip for scrip rollover, the cost base of the 5GN shares will it may request a CGT Declaration from each Webcentral Shareholder. Obtaining a signed and completed be equal to the original cost base held in the Webcentral Shares exchanged for the 5GN shares. CGT Declaration from each vendor will ensure that no withholding takes place provided that the Webcentral Shareholder has declared that it is either: A Webcentral Shareholder will be taken to have acquired the 5GN shares at the time the Webcentral • Shares exchanged for them were originally acquired for CGT purposes. An Australia resident for tax purposes; • A foreign resident for tax purposes that is not disposing of an ‘indirect Australian real property interests’. 13.2 FOREIGN RESIDENT WEBCENTRAL SHAREHOLDERS The CGT Declaration is contained in the Acceptance Form, accompanying this Bidder’s Statement. Generally, for Australian income tax purposes, non-resident shareholders can disregard the capital gain or capital A Webcentral Shareholder who believes the disposal of their Webcentral Shares may result in a foreign resident loss arising from the disposal of shares in Australian resident companies under Division 855 of the Tax Act. CGT withholding tax liability should obtain independent professional advice. Notwithstanding the above comments, certain non-resident shareholders will still be subject to Australian CGT where the Shares constitute Taxable Australian Property (“TAP”). Broadly, the Shares should only constitute TAP 13.4 GST if both of the following requirements are satisfied: Webcentral Shareholders should not be liable to GST in respect of the acceptance of the Offer. • The non-resident Webcentral Shareholder together with its associates hold 10% or more of the Webcentral Shares at the time of disposal or for any continuous 12 month period within two years preceding the disposal Webcentral Shareholders should seek their own advice to determine whether any GST incurred on costs in (referred to as a “non-portfolio interest” in Webcentral); and relation to the sale of their Webcentral Shares is recoverable.
• More than 50% of the market value of Webcentral’s total assets is attributable to direct or indirect interests in ‘taxable Australian real property’ (as defined in the Tax Act) (“principal asset test”).
Non-resident Webcentral Shareholders should obtain independent professional advice as to the tax implications of a disposal of their Webcentral Shares.
Note that Webcentral Shareholders who are non-resident shareholders will not be entitled to receive 5GN Shares as consideration for their Webcentral Shares pursuant to the Offer. Accordingly, scrip for scrip rollover will not be available for non-resident Webcentral Shareholders.
13.3 FOREIGN RESIDENT CGT WITHHOLDING TAX RULES
The foreign resident CGT withholding tax rules impose a 12.5% non-final withholding obligation on the purchasers of certain Australian assets where they acquire the asset from a relevant foreign resident. Further, there are a number of exceptions to these withholding tax rules applying. The most relevant exceptions are:
• Where the market value of the CGT asset acquired is less than $750,000; or • Where the transaction to acquire the CGT asset occurs on an approved stock exchange.
In accordance with the above, 5GN may be required to remit to the Commissioner of Taxation an amount equal to 12.5% of the capital proceeds provided for the acquisition of Webcentral Shares from certain Webcentral Shareholders. 5G may be required to make such withholdings where:
• Webcentral satisfies the principal asset test, as described above;
• A Webcentral Shareholder has a non-portfolio interest in Webcentral as described above; and
For personal use only use personal For • 5GN knows or reasonably believes that the relevant Webcentral Shareholder is a foreign resident or 5GN does not reasonably believe that the Webcentral Shareholder is an Australian resident, and either: • The Webcentral Shareholder has an address outside of Australia; or • 5GN is authorised to provide a related financial benefit to a place outside of Australia (whether to the Webcentral Shareholder or anyone else).
74 75 14. ADDITIONAL INFORMATION 14. ADDITIONAL INFORMATION
14.1 BID IMPLEMENTATION DEED (F) BOARD CHANGES AFTER CHANGE OF CONTROL (CLAUSE 3.6)
(A) INTRODUCTION As soon as reasonably practicable after 5GN has issued the consideration under the Offer for, and becomes the registered holder of, at least 50.1% of all, Webcentral Shares, if requested to do so in writing by 5GN, On 17 September 2020, Webcentral and 5GN entered into a Bid Implementation Deed (BID). A full copy Webcentral must use its best endeavours to procure: of the BID was attached to 5GN’s announcement to the ASX relating to the Offer dated 17 September 2020. • the appointment of directors to the Webcentral Board (subject to each proposed appointee having A copy of the BID can be obtained from the ASX website (www.asx.com.au). A summary of the BID is set provided a consent to act as a director), such that a majority of the directors on the Webcentral Board are out in this section 14.1. directors nominated by 5GN in writing; and (B) MAKING THE OFFER AND ANNOUNCEMENTS (CLAUSES 2.1 AND 2.2) • that any persons nominated by 5GN by written notice to Webcentral resign from the Webcentral Board and the boards of the other members of the Webcentral Group, with such written notice of resignation to 5GN agrees to make the Offer and each of 5GN and Webcentral agree to make public announcements provide that the outgoing director: concerning the Offer immediately after execution of the Bid Implementation Deed • has no claim outstanding against the relevant Webcentral Group Member; and (C) CONSIDERATION • irrevocably releases the Webcentral Group for any claims they may have against the Webcentral Group, The consideration under the Offer for every 12 Webcentral Shares will be 1 5GN Share. in each case for loss of office, remuneration or otherwise in respect of their holding of office as a director of (D) BID CONDITIONS (CLAUSE 3.6 AND 4.2 AND SCHEDULE 2) the relevant member of the Webcentral Group.
The Bid Conditions are the same conditions set out in section 15.8 of this Bidder’s Statement. Both 5GN (G) CONDUCT OF BUSINESS (CLAUSE 3.4) and Webcentral agree not to do, or omit to do, anything which will, or is likely to, result in any of the Bid Conditions being breached. In general terms, during the period between signing the BID and the end of the Offer Period, Webcentral must conduct its businesses and operations in the ordinary and usual course, and must, and must cause 5GN agrees that it will declare the Offer wholly unconditional as soon as possible (and in any event within each of its subsidiaries to: one Business Day) after it obtains a relevant interest in at least 50.1% of the Webcentral Shares, unless any • Bid Condition has been breached prior to the date on which 5GN obtains such a relevant interest. not enter into, dispose of or acquire new lines of business; • ensure no Prescribed Occurrence occurs; (E) WEBCENTRAL DIRECTORS’ RECOMMENDATION AND ACCEPTANCE (CLAUSE 2.3) • use reasonable endeavours to avoid events within its control that may constitute a Material Adverse Change; Webcentral represents and warrants to 5GN that each member of the Webcentral Board in office as at • the date of the BID has confirmed by way of resolution of the Webcentral Board or by separate written comply in all material respects with all applicable laws, the Listing Rules, contracts and authorisations; confirmation that (and Webcentral must use its best endeavours to procure that), they each: • make all reasonable efforts, and procure that each other Webcentral Group Member makes all reasonable efforts, to (i) maintain and preserve the business and assets of the Webcentral Group; • recommend that Webcentral Shareholders accept the Offer to be made to them; and (ii) keep available the services of key persons of the Webcentral Group; and (iii) maintain and preserve • intend to accept, or procure the acceptance of, the Offer in respect of all Webcentral Shares in which relationships with Government Agencies, customers, landlords, suppliers and others having business they have a relevant interest, dealings with any Webcentral Group Member; in each case, in the absence of a Superior Proposal. • make all reasonable efforts to manage the working capital of the Webcentral Group in the ordinary course of business. During the Offer Period, Webcentral will use its best endeavours to procure that the Webcentral Board, and each Webcentral Director, does not adversely change, withdraw, adversely modify or adversely qualify its or Additionally, Webcentral has agreed that it will not, and will procure its subsidiaries will not, take certain his recommendation to accept the Offer in the absence of a Superior Proposal unless: actions, such as enter into or incur significant new contracts or capital expenditure, acquire or dispose of material assets, materially alter current employment arrangements and change existing constitutional • Webcentral has received a Competing Proposal and the Webcentral Board determines, after all of 5GN’s documents, accounting policies and insurances. matching rights under the Bid Implementation Deed have been exhausted, that the Competing Proposal constitutes a Superior Proposal; or Webcentral will, however, be permitted to take any actions: • in relation to the recommendation to accept the Offer (but not the acceptance intention statement), • to reasonably and prudently respond to an emergency or disaster (including, among other things, an
the Webcentral Board has reasonably determined, after receiving written legal advice from its external epidemic or pandemic or the impact thereof (which impact is outside the ordinary course of business and For personal use only use personal For legal advisers, that the Webcentral Board collectively, and the Webcentral Board Members individually, does not result from general fluctuations on economic activity)); by virtue of the directors’ duties of the Webcentral Board Members, is required to abstain from making • expressly required, expressly permitted or expressly contemplated by the BID; or withdraw its or his or her recommendation so as to not make any recommendation, because of an interest a Webcentral Board Member has in the Offer. • agreed to in writing by 5GN or requested in writing by 5GN; • required or permitted by law, regulation, contract or a Government Agency; or • fairly disclosed in any due diligence disclosure materials given to 5GN by Webcentral or in an announcement made by Webcentral to ASX in the 12 months prior to the date of the BID.
76 77 14. ADDITIONAL INFORMATION 14. ADDITIONAL INFORMATION
(H) INTEGRATION COMMITTEE (CLAUSE 3.9) (K) REIMBURSEMENT FEES (CLAUSE 8)
Webcentral and 5GN will establish an integration committee to, among other things, seek to determine The BID contains a Reimbursement Fee of $200,000 payable by Webcentral to 5GN, which will be triggered if: how to best integrate the Webcentral Group’s business into the operations of 5GN implement plans for • any Webcentral Board Member withdraws or adversely changes or adversely qualifies his the carrying on of the businesses of the Webcentral Group following implementation of the Offer. recommendation of the Offer, or fails to recommend the Offer, or recommends a Competing Proposal, in each case unless: (I) REPRESENTATIONS AND WARRANTIES (CLAUSE 5) • there has been a failure of a Bid Condition; or Webcentral gives a number of representations and warranties to 5GN, including that: • Webcentral is entitled to terminate the BID for material breach or breach of a 5GN representation or warranty, and has provided a termination notice to 5GN; • its capital structure, including all issued securities as at the date of the BID, is 122,131,124 Webcentral Shares, and it has not issued or granted (or agreed to issue or grant) any other securities, options, • a Competing Proposal is announced during the Exclusivity Period and completes within 12 months of warrants, performance rights or other instruments which are still outstanding and may convert into such announcement; or Webcentral Shares (whether or not subject to conditions) other than as set out in the BID; and • 5GN has terminated the BID following a material breach by Webcentral or breach of a Webcentral • as at the date of the BID, Webcentral is in compliance with its continuous disclosure obligations under representation or warranty. Listing Rule 3.1 and, other than for the Offer and the Scheme, it is not relying on the carve-out in Listing Rule 3.1A to withhold any material information from public disclosure. A Reverse Reimbursement Fee of $200,000 will be payable by 5GN to Webcentral if Webcentral has terminated the BID due to a material breach by 5GN, 5GN withdrawing the Offer, or a breach of a 5GN 5GN gives a limited number of representations and warranties to Webcentral, including that: representation or warranty. • its capital structure, including all issued securities as at the date of the BID, is as set out in the BID The Reimbursement Fee and Reverse Reimbursement Fee are each payable within 10 Business Days of the and it has not issued or granted (or agreed to issue or grant) any other securities, options, warrants, relevant trigger event occurring and a demand for payment being received. performance rights or other instruments which are still outstanding and may convert into 5GN Shares (whether or not subject to conditions) other than as set out in the BID; (L) WEBCENTRAL DIRECTORS AND OFFICERS, DEEDS OF INDEMNITY AND INSURANCE • as at the date of the BID, 5GN is in compliance with its continuous disclosure obligations under Listing (CLAUSES 6.1 AND 6.3) Rule 3.1 and, other than for the Offer, it is not relying on the carve-out in Listing Rule 3.1A to withhold any material information from public disclosure; 5GN releases its rights and agrees that it will not make, and that after the Control Date, it will procure that each Webcentral Group Member does not make, any claim against Webcentral, its subsidiaries and their • it does not require approval from its shareholders to undertake or complete the Offer; and respective directors, officers and employees, in connection with any breach of representations, covenants • loan arrangements: and warranties, any false or misleading disclosures whether in content or by omission or any failure to • Reimbursement Fee Loan Agreement: it has unconditionally available to it sufficient cash reserves to provide information (in each case except in the case of wilful misconduct, wilful concealment or fraud). satisfy its obligation to extend $500,000 to Webcentral in accordance with its obligations under the On and from the Control Date, 5GN must: Reimbursement Fee Loan Agreement; and • ensure that the constitutions of Webcentral Group Members continue to contain rules for the • Facility Agreement: it has unconditionally available to it sufficient cash reserves and available indemnification of directors and officers against liability; and drawdown under its loan facilities to satisfy its obligation to extend any amounts required in accordance with its obligations under this deed and the Facility Agreement so as to provide • procure that deeds of indemnity, access and insurance are complied with and that run-off directors’ Webcentral with sufficient funds to ensure the full and final payment or repayment by Webcentral and officers’ insurance cover is maintained for 7 years from the retirement date of each director and officer. to the Existing Financiers of all amounts payable to the Existing Financiers under the Existing Debt Facilities (including any interest, break costs or fees associated with such payments) and so as to 14.2 STATUS OF DEFEATING CONDITIONS provide Webcentral with funds for working capital. The Offer is subject to a number of conditions set out in section 15.8. 5GN will provide updates on any material developments relating to the status of these conditions through announcements to the ASX. (J) EXCLUSIVITY (CLAUSE 7) The date for giving the notice on the status of the conditions required by section 630(1) of the Corporations Act The BID contains the following customary exclusivity provisions: is Friday, 9 October 2020 (subject to extension in accordance with section 630(2) of the Corporations Act if the • no shop; Offer Period is extended). • no talk (subject to a fiduciary out); For personal use only use personal For 14.3 DATE FOR DETERMINING HOLDERS OF SHARES • notification right for 5GN if Webcentral is approached in relation to a Competing Proposal (subject to a fiduciary out); and For the purposes of section 633 of the Corporations Act, the date for determining the people to whom • a 5-Business Day matching right period. information is to be sent under items 6 and 12 of section 633(1) is the Register Date.
78 79 14. ADDITIONAL INFORMATION 14. ADDITIONAL INFORMATION
14.4 CONSENTS A Webcentral Shareholder is a Small Parcel Shareholder if the total number of shares held by it is less than a Small Parcel. Cornwalls has given, and not withdrawn before the lodgement of this Bidder’s Statement with ASIC, its written consent to be named in this Bidder’s Statement as 5GN’s legal adviser in the form and context in which it The 5GN Shares which would otherwise have been issued to Foreign Shareholders and Small Parcel is so named. Cornwalls has not caused or authorised the issue of this Bidder’s Statement, does not make Shareholders will instead be issued to a nominee approved by ASIC, who will sell these shares. The net or purport to make any statement in this Bidder’s Statement or any statement on which a statement in this proceeds of the sale of such shares will then be remitted to the relevant Foreign Shareholders and Small Parcel Bidder’s Statement is based and takes no responsibility for any part of this Bidder’s Statement other than any Shareholders. See section 15.7 for further details. reference to its name. 14.6 SOCIAL SECURITY AND SUPERANNUATION IMPLICATIONS OF OFFER Grant Thornton has given, and not withdrawn before the lodgement of this Bidder’s Statement with ASIC, its written consent to be named in this Bidder’s Statement as 5GN’s financial adviser in the form and context Acceptance of the Offer may have implications under your superannuation arrangements or on your social in which it is so named. Grant Thornton has not caused or authorised the issue of this Bidder’s Statement, security entitlements. If in any doubt, you should seek specialist advice. does not make or purport to make any statement in this Bidder’s Statement or any statement on which a statement in this Bidder’s Statement is based and takes no responsibility for any part of this Bidder’s 14.7 DISCLOSURE OF INTERESTS OF CERTAIN PERSONS Statement other than any reference to its name. Other than as set out below or elsewhere in this Bidder’s Statement no: Link Market Services has given, and not withdrawn before the lodgement of this Bidder’s Statement with ASIC, • director or proposed director of 5GN; its written consent to be named in this Bidder’s Statement as share registrar in the form and context in which it is so named. Link Market Services has not caused or authorised the issue of this Bidder’s Statement, does not • person named in this Bidder’s Statement as performing a function in a professional, advisory or other capacity make or purport to make any statement in this Bidder’s Statement and takes no responsibility for any part of this in connection with the preparation or distribution of this Bidder’s Statement; Bidder’s Statement other than any reference to its name. • promoter of 5GN; or
This Bidder’s Statement includes statements which are made in, or based on statements made in, documents • Underwriter to the issue of 5GN Shares or financial services licensee named in this Bidder’s Statement as lodged with ASIC or given to ASX. Under the terms of ASIC Class Order 13/521, the parties making those being involved in the issue of 5GN Shares, statements are not required to consent to, and have not consented to, inclusion of those statements in this (together, the Interested Persons) holds at the date of this Bidder’s Statement or held at any time during the last Bidder’s Statement. If you would like to receive a copy of any of those documents, or the relevant parts of two years, any interest in the documents containing the statements, (free of charge), during the bid period, please contact the Offer Information Line on 1800 606 866 (within Australia) or +61 1800 606 866 (outside Australia). For legal reasons, • the formation or promotion of 5GN; calls to this number will be recorded. • property acquired or proposed to be acquired by 5GN in connection with its formation or promotion, or the offer of 5GN Shares under the Offer; or As permitted by ASIC Corporations (Consents to Statements) Instrument 2016/72 (Corporations Instrument 2016/72), this Bidder’s Statement may include or be accompanied by certain statements: • the offer of 5GN Shares under the Offer.
• which fairly represent what purports to be a statement by an official person; 14.8 DISCLOSURE OF FEES AND BENEFITS RECEIVED BY CERTAIN PERSONS • which are a correct and fair copy of, or extract from, what purports to be a public official document; or Other than as set out below or elsewhere in this Bidder’s Statement, no amounts have been paid or agreed to be • which are a correct and fair copy of, or extract from, a statement which has already been published in a book, paid and no benefits have been given or agreed to be given: journal or comparable publication. • to a director or proposed director of 5GN to induce them to become, or to qualify as, a director of 5GN; or In addition, as permitted by Corporations Instrument 2016/72, this Bidder’s Statement contains trading data • for services provided by an Interested Person in connection with the formation or promotion of 5GN or the sourced from IRESS and FactSet provided without their consent. offer of 5GN Shares under the Offer.
14.5 FOREIGN SHAREHOLDERS AND SMALL PARCEL SHAREHOLDERS The persons named in this Bidder’s Statement as performing a function in a professional or advisory capacity in connection with the Offer and with the preparation of the Bidder’s Statement on behalf of 5GN are Grant Webcentral Shareholders who are Foreign Shareholders or Small Parcel Shareholders will not be entitled Thornton as financial adviser and Cornwalls as legal adviser. to receive 5GN Shares as consideration for their Webcentral Shares pursuant to the Offer, unless 5GN otherwise determines. The fee for professional services paid or payable to Wilsons Corporate Finance Limited (ABN 65 057 547 323) (Wilsons) as financial adviser to 5GN is an acquisition advisory fee of $1,000,000 payable 80% in cash and 20% A Webcentral Shareholder is a Foreign Shareholder for the purposes of the Offer if their address as shown
For personal use only use personal For in 5GN shares issued at the implied bid price. The fee for professional services paid or payable to Cornwalls as in the register of members of Webcentral is in a jurisdiction other than Australia or its external territories or legal adviser to date is approximately $55,000. New Zealand. However, such a person will not be a Foreign Shareholder if 5GN is satisfied that it is not legally or practically constrained from making the Offer to a Webcentral Shareholder in the relevant jurisdiction and to issue 5GN Shares to such a shareholder on acceptance of the Offer, and that it is lawful for the shareholder to accept the Offer in such circumstances in the relevant jurisdiction. Notwithstanding anything else in this Bidder’s Statement, 5GN is not under any obligation to spend any money, or undertake any action, in order to satisfy itself concerning any of these matters.
80 81 14. ADDITIONAL INFORMATION 15. THE TERMS AND CONDITIONS OF THE OFFER
14.9 DISCLOSURE OF INTERESTS OF DIRECTORS 15.1 OFFER
(A) INTERESTS IN 5GN SHARES (a) 5GN offers to acquire all of Your Shares on and subject to the terms and conditions set out in this section 15.
As at the date of this Bidder’s Statement, the directors of 5GN had the following relevant interests in (b) The consideration under the Offer is 1 5GN Share for every 12 of your Webcentral Shares. If this calculation 5GN securities: results in an entitlement to a fraction of a 5GN Share, that fraction will be rounded down to the next whole number of 5GN Shares. Director Interest in 5GN Shares (c) If, at the time this Offer is made to you, you are a Foreign Shareholder or a Small Parcel Shareholder, you will Albert Cheok 3,082,356 not receive 5GN Shares. Instead, you are offered and will be paid the net proceeds determined in accordance with section 15.7. Joseph Demase 16,381,208 (d) The 5GN Shares to be issued are ordinary shares in 5GN and will be credited to the subregister from which Joseph Gangi 1,493,729 your Webcentral Shares were acquired as fully paid and have the rights summarised in section 6.4. Jason Ashton 188,762 (e) By accepting this Offer, you undertake to transfer to 5GN not only the Shares to which the Offer relates, but also all Rights attached to those Shares (see section 15.5(c)(vi) and section 15.6(c)). (B) INTERESTS IN WEBCENTRAL SHARES (f) This Offer is being made to each person registered as the holder of Shares in the register of Webcentral As at the date of this Bidder’s Statement, no director of 5GN had an interest in Webcentral securities. Shareholders on the Register Date. It also extends to:
(C) INDEMNITY AND INSURANCE (i) holders of securities that come to be Webcentral Shares during the period from the Register Date to the end of the Offer Period due to the conversion of, or exercise of rights conferred by, such securities and The constitution of 5GN permits the grant of an indemnity (to the maximum extent permitted by law) in which are on issue as at the Register Date; and favour of each director, the company secretary, past directors and secretaries and all past and present executive officers. (ii) any person who becomes registered as the holder of Your Shares during the Offer Period.
5GN has entered into deeds of indemnity and access with all of the current directors. This indemnity is (g) If, at the time the Offer is made to you, or at any time during the Offer Period, another person is registered as against liability to third parties by such officers unless the liability arises out of conduct involving a lack of the holder of some or all of Your Shares, then: good faith. The indemnity also covers costs or expenses incurred by an officer in unsuccessfully defending (i) a corresponding offer on the same terms and conditions as this Offer will be deemed to have been proceedings relating to that person’s position. made to that other person in respect of those Shares; 5GN maintains an insurance policy in respect of certain present and future officers against certain liability (ii) a corresponding offer on the same terms and conditions as this Offer will be deemed to have been incurred in that capacity. made to you in respect of any other Shares you hold to which the Offer relates; and (iii) this Offer will be deemed to have been withdrawn immediately at that time. 14.10 EXPIRY DATE
No securities will be issued on the basis of this Bidder’s Statement after the date which is 13 months after the (h) If at any time during the Offer Period, you are registered as the holder of one or more parcels of Shares as date of this Bidder’s Statement. trustee or nominee for, or otherwise on account of, another person, you may accept as if a separate and distinct offer on the same terms and conditions as this Offer had been made in relation to each of those 14.11 OTHER MATERIAL INFORMATION distinct parcels and any distinct parcel you hold in your own right. To validly accept the Offer for each parcel, you must comply with the procedure in section 653B(3) of the Corporations Act and, if you are a CHESS Except as disclosed elsewhere in this Bidder’s Statement, there is no other information that is: holder, your Controlling Participant will need to organise acceptance in the manner described in the CHESS procedure guidelines. If, for the purposes of complying with that procedure, you require additional copies of • material to the making of a decision by a Webcentral Shareholder whether or not to accept the Offer; and this Bidder’s Statement and/or the Acceptance Form, please call the Offer Information Line on 1800 606 866 • known to 5GN, (within Australia) or +61 1800 606 866 (outside Australia) to request those additional copies.
which has not previously been disclosed to Webcentral Shareholders. (i) If Your Shares are registered in the name of a broker, investment dealer, bank, trust company or other nominee you should contact that nominee for assistance in accepting the Offer.
For personal use only use personal For (j) The Offer is dated Friday, 18 September 2020.
82 83 15. THE TERMS AND CONDITIONS OF THE OFFER 15. THE TERMS AND CONDITIONS OF THE OFFER
15.2 OFFER PERIOD (iv) If Your Shares are held in your name in a CHESS Holding (in which case your Holder Identification Number will be prefixed with ‘X’), you must comply with any other applicable ASX Settlement (a) Unless withdrawn, the Offer will remain open for acceptance during the period commencing on the date of Operating Rules. this Offer and ending on the Closing Date being 7.00 pm (Sydney time) on the later of: (D) ACCEPTANCE FORM AND OTHER DOCUMENTS (i) Tuesday 20 October 2020; and (ii) any date to which the Offer Period is extended. To accept this Offer for Shares which are not held in your name, but of which you are entitled to be registered as holder, you must: (b) 5GN reserves the right, exercisable in its sole discretion, to extend the Offer Period in accordance with the Corporations Act. (i) The Acceptance Form forms part of the Offer. (ii) If your Acceptance Form (including any documents required by the terms of this Offer or the (c) If, within the last 7 days of the Offer Period, either of the following events occurs: instructions on the Acceptance Form) is returned by post, for your acceptance to be valid, you must (i) the Offer is varied to improve the consideration offered; or ensure that they are posted or delivered in sufficient time for them to be received by 5GN at the (ii) 5GN’s voting power in Webcentral increases to more than 50%, address shown on the Acceptance Form before the end of the Offer Period. then the Offer Period will be automatically extended so that it ends 14 days after the relevant event in (iii) When using the Acceptance Form to accept this Offer in respect of Shares in a CHESS Holding, you accordance with section 624(2) of the Corporations Act (subject to any further permitted extension). must ensure that the Acceptance Form (and any documents required by the terms of this Offer or the instructions on the Acceptance Form) are received by 5GN in time for 5GN to instruct your Controlling 15.3 HOW TO ACCEPT THIS OFFER Participant to initiate acceptance of this Offer on your behalf in accordance with rule 14.14 of the ASX Settlement Operating Rules before the end of the Offer Period. (A) GENERAL (iv) The postage and transmission of the Acceptance Form and other documents is at your own risk. (i) Subject to section 15.1(g) and section 15.1(h), you may only accept this Offer for all of Your Shares. (ii) You may accept this Offer at any time during the Offer Period. 15.4 VALIDITY OF ACCEPTANCES (iii) If some of Your Shares are in different holdings, your acceptance of this Offer will require action under (a) Subject to this section 15.4, your acceptance of the Offer will not be valid unless it is made in accordance section 15.3(b) or section 15.3(c) in relation to each of your holdings. with the procedures set out in section 15.3. (B) SHARES HELD IN YOUR NAME ON WEBCENTRAL’S ISSUER SPONSORED SUB-REGISTER (b) 5GN will determine, in its sole discretion, all questions as to the form of documents, eligibility to accept the To accept this Offer for Shares held in your name on Webcentral’s issuer sponsored sub-register (in which Offer and time of receipt of an acceptance of the Offer. 5GN is not required to communicate with you prior to case your Securityholder Reference Number will commence with ‘I’), you must: or after making this determination. The determination of 5GN will be final and binding on all parties.
(i) complete and sign the Acceptance Form in accordance with the terms of this Offer and the (c) Notwithstanding sections 15.3(b), 15.3(c) and 15.3(d), 5GN may, in its sole discretion, at any time and without instructions on the Acceptance Form; and further communication to you, deem any Acceptance Form it receives to be a valid acceptance in respect (ii) ensure that the Acceptance Form (including any documents required by the terms of this Offer or the of Your Shares, even if a requirement for acceptance has not been complied with but the payment of the instructions on the Acceptance Form) is received before the end of the Offer Period at the address consideration in accordance with this Offer may be delayed until any irregularity has been resolved or waived shown on the Acceptance Form. and any other documents required to procure registration have been received by 5GN.
(C) SHARES HELD IN YOUR NAME IN A CHESS HOLDING (d) Where you have satisfied the requirements for acceptance in respect of only some of Your Shares, 5GN may, in its sole discretion, regard the Offer to be accepted in respect of those of Your Shares but (i) If Your Shares are held in your name in a CHESS Holding (in which case your Holder Identification not the remainder. Number will be prefixed with ‘X’) and you are not a Participant, you should instruct your Controlling Participant (normally your stockbroker) to initiate acceptance of this Offer on your behalf in accordance (e) 5GN will provide the consideration to you in accordance with section 15.6, in respect of any part of an with rule 14.14 of the ASX Settlement Operating Rules in sufficient time for this Offer to be accepted acceptance determined by 5GN to be valid. before the end of the Offer Period.
(ii) If Your Shares are held in your name in a CHESS Holding (in which case your Holder Identification 15.5 THE EFFECT OF ACCEPTANCE Number will be prefixed with ‘X’) and you are a Participant, you should initiate acceptance of this Offer in accordance with rule 14.14 of the ASX Settlement Operating Rules in sufficient time for this Offer to (a) Once you have accepted this Offer, you will be unable to revoke your acceptance. The contract resulting from For personal use only use personal For be accepted before the end of the Offer Period. your acceptance will be binding on you and you will be unable to withdraw Your Shares from the Offer or otherwise dispose of Your Shares, except as follows: (iii) Alternatively, to accept this Offer for Shares held in your name in a CHESS Holding (in which case your Holder Identification Number will be prefixed with ‘X’), you may sign and complete the Acceptance (i) if, by the relevant times specified in section 15.5(b), the conditions in section 15.8 have not all been Form in accordance with the terms of this Offer and the instructions on the Acceptance Form and fulfilled or freed, this Offer will automatically terminate and Your Shares will be returned to you; or ensure that it (including any documents required by the terms of this Offer or the instructions on the (ii) if the Offer Period is extended for more than one month and the obligations of 5GN to deliver the Acceptance Form) is received at the address shown on the Acceptance Form in sufficient time to consideration are postponed for more than one month and, at the time, this Offer is subject to one or enable 5GN or its share r-registry to request your Controlling Participant to accept the Offer on your more of the conditions in section 15.8, you may be able to withdraw your acceptance and Your Shares behalf before the end of the Offer Period. in accordance with section 650E of the Corporations Act. A notice will be sent to you at the time explaining your rights in this regard.
84 85 15. THE TERMS AND CONDITIONS OF THE OFFER 15. THE TERMS AND CONDITIONS OF THE OFFER
(b) The relevant times for the purposes of section 15.5(a)(i)(a)(i) are: (ix) with effect from the date on which all the conditions to this Offer in section 15.8 have been fulfilled or freed, agreed not to attend or vote in person, by proxy or by body corporate representative at any (i) In relation to the condition in section 15.8(c) the end of the third Business Day after the end of the general meeting or any court-convened meeting of Webcentral or to exercise or purport to exercise Offer Period; and any of the powers and rights conferred on 5GN (and its directors, secretaries and nominees) in section (ii) in relation to all other conditions in section 15.8, the end of the Offer Period. 15.5(c)(viii);
(x) agreed that in exercising the powers and rights conferred by the powers of attorney granted under (c) By signing and returning the Acceptance Form, or otherwise accepting this Offer pursuant to section 15.3, section 15.5(c)(viii), the attorney will be entitled to act in the interests of 5GN as the beneficial owner you will be deemed to have: and intended registered holder of Your Shares;
(i) Accepted this Offer (and any variation of it) in respect of, and, subject to all of the conditions to this (xi) agreed to do all such acts, matters and things that 5GN may require to give effect to the matters, Offer in section 15.8 being fulfilled or freed, agreed to transfer to 5GN Your Shares (even if the number the subject of this section 15.5(c) (including the execution of a written form of proxy to the same effect of Shares specified on the Acceptance Form differs from the number of Your Shares), subject to as this section 15.5(c) which complies in all respects with the requirements of the constitution of section 15.1(g) and section 15.1(h); Webcentral) if requested by 5GN;
(ii) represented and warranted to 5GN, as a fundamental condition going to the root of the contract (xii) agreed to indemnify 5GN in respect of any claim or action against it or any loss, damage or liability resulting from your acceptance, that at the time of acceptance, and the time the transfer of Your Shares whatsoever incurred by it as a result of you not producing your Holder Identification Number (including any Rights) to 5GN is registered, that all Your Shares are and will be free from all mortgages, or Securityholder Reference Number or in consequence of the transfer of Your Shares to 5GN charges, liens, encumbrances, Security Interests and adverse interests of any nature (whether legal or being registered by Webcentral without production of your Holder Identification Number or your otherwise) and free from restrictions on transfer of any nature (whether legal or otherwise), that you have Securityholder Reference Number for Your Shares; full power and capacity to accept this Offer and to sell and transfer the legal and beneficial ownership in Your Shares (including any Rights) to 5GN, and that you have paid to Webcentral all amounts which at (xiii) represented and warranted to 5GN that, unless you have notified it in accordance with section 15.1(h), the time of acceptance have fallen due for payment to Webcentral in respect of Your Shares; Your Shares do not consist of separate parcels of Shares;
(iii) irrevocably authorised 5GN (and any director, secretary, nominee or agent of 5GN) to alter the (xiv) irrevocably authorised 5GN (and any nominee) to transmit a message in accordance with rule 14.17 Acceptance Form on your behalf by inserting correct details relating to Your Shares, filling in any of the ASX Settlement Operating Rules to transfer Your Shares to 5GN’s Takeover Transferee Holding, blanks remaining on the form and rectifying any errors or omissions as may be considered necessary or acquire your Issued Sponsored holding regardless of whether it has paid the consideration due to or desirable by 5GN to make it an effective acceptance of this Offer or to enable registration of Your you under this Offer; Shares in the name of 5GN; (xv) agreed, subject to the conditions of this Offer in section 15.8 being fulfilled or freed, to execute all such (iv) if you signed the Acceptance Form in respect of Shares which are held in a CHESS Holding, irrevocably documents, transfers and assurances, and do all such acts, matters and things that 5GN may consider authorised 5GN (or any director, secretary, nominee or agent of 5GN) to request your Controlling necessary or desirable to transfer or otherwise convey Your Shares registered in your name and Rights Participant to initiate acceptance of this Offer in respect of Your Shares in accordance with rule 14.14 to 5GN; and of the ASX Settlement Operating Rules; (xvi) agreed to become a member of 5GN and to accept the 5GN Shares to which you have become entitled (v) if you signed the Acceptance Form in respect of Shares which are held in a CHESS Holding, irrevocably by acceptance of this Offer, subject to the constitution of 5GN (which you agree to be bound by) and authorised 5GN (or any director, secretary, nominee or agent of 5GN) to give any other instructions in have authorised 5GN to enter your name in its register of shareholders in respect of those 5GN Shares. relation to Your Shares to your Controlling Participant, as determined by 5GN acting in its own interests as a beneficial owner and intended registered holder of those Shares; (d) The undertakings and authorities referred to in section 15.5(c) will remain in force after you receive the consideration for Your Shares and after 5GN becomes registered as the holder of Your Shares. (vi) irrevocably authorised and directed Webcentral to pay to 5GN, or to account to 5GN for, all Rights in respect of Your Shares, subject, if this Offer is withdrawn, to 5GN accounting to you for any such Rights 15.6 PAYMENT OF CONSIDERATION received by 5GN;
(vii) irrevocably authorised 5GN to notify Webcentral on your behalf that your place of address for the (a) Subject to section 15.4(b), this section 15.6 and section 15.7 and the Corporations Act, 5GN will provide the purpose of serving notices upon you in respect of Your Shares is the address specified by 5GN in the consideration due to you for Your Shares on or before the earlier of: notification; (i) one month after the date of your acceptance or, if this Offer is subject to a defeating condition when (viii) with effect from the time and date on which all the conditions to this Offer in section 15.8 have been you accept this Offer, within one month after this Offer becomes unconditional; and fulfilled or freed, irrevocably appointed 5GN (and any director, secretary or nominee of 5GN) severally (ii) 21 days after the end of the Offer Period.
For personal use only use personal For from time to time as your true and lawful attorney to exercise all your powers and rights in relation to Your Shares, including (without limitation) powers and rights to requisition, convene, attend and vote in person, by proxy or by body corporate representative, at all general meetings and all court-convened (b) Where the Acceptance Form requires an additional document to be delivered with your Acceptance Form meetings of Webcentral and to request Webcentral to register, in the name of 5GN or its nominee, Your (such as a power of attorney): Shares, as appropriate, with full power of substitution (such power of attorney, being coupled with an (i) if that document is given with your Acceptance Form, 5GN will provide the consideration in accordance interest, being irrevocable); with section 15.6(a);
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(ii) if that document is given after your Acceptance Form and before the end of the Offer Period while (h) If 5GN determines, acting reasonably and in good faith (after receiving professional advice) that it is required this Offer is subject to a defeating condition, 5GN will provide the consideration due to you on or to pay an amount to the Commissioner of Taxation pursuant to Subdivision 14-D of Schedule 1 to the before the earlier of one month after this Offer becomes unconditional and 21 days after the end of Taxation Administration Act 1953 (Cth) (TAA) with respect to the acquisition of Webcentral Shares from the Offer Period; a Webcentral Shareholder, 5GN will, for any such Webcentral Shareholder:
(iii) if that document is given after your Acceptance Form and before the end of the Offer Period while this (i) determine the amount required to be paid to the Commissioner of Taxation (Payment Amount); Offer is not subject to a defeating condition, 5GN will provide the consideration due to you on or before (ii) remit the Payment Amount to the Commissioner of Taxation within the time required under the TAA, and, the earlier of one month after that document is given and 21 days after the end of the Offer Period; and if requested in writing by the relevant Webcentral Shareholder, provide or procure notification of such (iv) if that document is given after the end of the Offer Period, and the Offer is not subject to a defeating payment to the relevant Webcentral Shareholder; and condition, 5GN will provide the consideration within 21 days after that document is given. However, if (iii) after deduction of the Payment Amount, provide the net amount of the Offer consideration due to that at the time the document is given, the Offer is still subject to a defeating condition that relates only to Webcentral Shareholder (including, where applicable, the requisite net number of 5GN Shares after an the happening of an event or circumstance referred to in section 652C(1) or (2) of the Corporations Act, adjustment in respect of deduction on account of the Payment Amount to reduce the number of 5GN 5GN will provide the consideration due to you within 21 days after the Offer becomes unconditional. Shares provided), to that Webcentral Shareholder for the purposes of this Offer.
(c) If you accept this Offer, 5GN is entitled to all Rights in respect of Your Shares. 5GN may require you to For the avoidance of doubt, where the conditions in this section 15.6(h) are satisfied, 5GN will, for the provide all documents necessary to vest title to those Rights in 5GN, or otherwise to give it the benefit or purposes of this Offer, be deemed to have satisfied its obligations to provide the Offer consideration to a value of those Rights. If you do not give those documents to 5GN, or if you have (or any previous owner of Webcentral Shareholder if the amount or value of the net proceeds provided to the Webcentral Shareholder Your Shares has) received the benefit of those Rights, 5GN will deduct from the consideration otherwise due are equal to the amount or value of the Offer consideration that would have otherwise been provided to the to you the amount (or value, as reasonably assessed by 5GN) of those Rights. However, no amount will be Webcentral Shareholder pursuant to the Offer, less the Payment Amount for that Webcentral Shareholder. deducted in respect of the franking credits (if any) attached to the Rights. 15.7 FOREIGN SHAREHOLDERS AND SMALL PARCEL SHAREHOLDERS (d) If you have accepted the Offer and you are a Foreign Shareholder or a Small Parcel Shareholder, you will receive your share of the proceeds from the sale of the 5GN Shares in accordance with section 15.7. (a) If you are a Foreign Shareholder or a Small Parcel Shareholder, you will not be entitled to receive 5GN Shares as the consideration for Your Shares as a result of accepting this Offer, and 5GN will:
(e) Payment of any cash amount to which you are entitled under the Offer (Foreign Shareholders and Small (i) arrange for the issue to a nominee approved by ASIC (the Nominee) of the number of 5GN Shares to Parcel Shareholders) will be made by cheque in Australian currency. Cheques will be posted to you at your which you and all other Foreign Shareholders and Small Parcel Shareholders would have otherwise been risk by ordinary mail (or, in the case of overseas shareholders, by airmail) to the address as shown on the entitled in that tranche or batch but for section 15.1(c) and the equivalent provision in each other offer register copy supplied by Webcentral to 5GN from time to time. under the Offer;
(ii) cause the tranche or batch of 5GN Shares so issued to be offered for sale by the Nominee on ASX as soon (f) The obligation of 5GN to issue and allot any 5GN Shares to which you are entitled will be satisfied by 5GN: as practicable and otherwise in the manner, at the price and on such other terms and conditions as are (i) entering your name on the register of members of 5GN; and determined by the Nominee (at the risk of the Foreign Shareholders and Small Parcel Shareholders); and
(ii) dispatching or procuring the dispatch to you of an uncertificated holding statement in your name by (iii) cause the Nominee to pay to you the amount ascertained in accordance with the formula (for the pre-paid post to your address recorded in Webcentral’s register of members last notified to 5GN. avoidance of doubt, subject to adjustment under section 15.6(h), if applicable): If Your Shares are held in a joint name, an uncertificated holding statement will be issued in the name of, and forwarded to, the holder whose name appears first in Webcentral’s register of members last N x YS notified to 5GN. TS
(g) If at the time you accept the Offer, any authority, clearance or approval is required for you to receive any where: consideration for Your Shares, including (but not limited to) any authority, clearance or approval of: ‘N’ is the amount which is received by the Nominee upon the sale of all 5GN Shares in your tranche or (i) the Reserve Bank of Australia (whether under the Banking (Foreign Exchange) Regulations 1959 (Cth) or batch under this section 15.7 less brokerage and sale expenses; otherwise); ‘YS’ is the number of 5GN Shares which would, but for section 15.1(c), otherwise have been allotted to (ii) the Minister for Foreign Affairs (whether under the Charter of the United Nations Act 1945 (Cth), the you; and
Charter of the United Nations (Dealing with Assets) Regulations 2008 (Cth) or any other regulations For personal use only use personal For made thereunder), or otherwise; ‘TS’ is the total number of 5GN Shares issued to the Nominee in your tranche or batch under this section 15.7. (iii) the Commissioner of Taxation; or
(iv) any otherperson as required by any other law of Australia that would make it unlawful for 5GN to provide (b) You will be paid your share of the proceeds of the sale of 5GN Shares by the Nominee in your tranche or any consideration for Your Shares, batch, calculated in accordance with section 15.7(a), in Australian currency. then you will not be entitled to receive any consideration for Your Shares until all requisite authorities, clearances or approvals have been received by 5GN.
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(c) Payment will be made by cheque posted to you at your risk by ordinary mail (or in the case of overseas (v) agreed to in writing, or requested in writing, by 5GN; shareholders, by airmail) to the address as shown on the register copy supplied by Webcentral to 5GN from (vi) directly relating to costs and expenses incurred by Webcentral associated with the Offer or the Web. time to time within the period required by the Corporations Act. com Scheme, including all fees payable to external advisers of Webcentral, in each case to the extent such cost and expense arrangements are in place on the Announcement Date; (d) Under no circumstances will interest be paid on your share of the proceeds of the sale of 5GN Shares by the Nominee, regardless of any delay in remitting these proceeds to you. (vii) arising as a result of any generally applicable change in law (including subordinate legislation), regulation, orders, accounting standards or governmental policy; (e) The Nominee may sell the 5GN Shares in such manner, at such price or prices and on such terms as (viii) arising from changes that affect the domain and hosting industry generally, provided that such the Nominee determines, and at the risk of the Foreign Shareholders and Small Parcel Shareholders. changes do not have a materially disproportionate effect on Webcentral relative to other participants in The Nominee intends to sell the 5GN Shares on ASX following the issue of those shares to it. that industry;
(f) As the market price of 5GN Shares will be subject to change from time to time, the sale price of the 5GN Shares (ix) arising from changes in economic, business, industry or political conditions that impact on Webcentral sold by the Nominee and the proceeds of those sales cannot be guaranteed. Neither 5GN nor the Nominee and its competitors in a similar manner (including interest rates, general economic, political or business gives any assurance as to the price that will be achieved for the sale of the 5GN Shares by the Nominee. conditions, including material adverse changes or major disruptions to, or fluctuations in, domestic or international financial markets); (g) The Nominee will be appointed by, and will provide the Nominee services to, 5GN. In acting as Nominee, (x) arising from any act of terrorism, outbreak or escalation of war (whether or not declared), major the Nominee will not be acting as agent or sub-agent of any Foreign Shareholder or Small Parcel Shareholder, hostilities, civil unrest or outbreak or escalation of any disease epidemic or pandemic (including the does not have duties or obligations (fiduciary or otherwise) to any Foreign Shareholder or Small Parcel outbreak, escalation or any impact of, or recovery from, the Coronavirus or COVID-19 pandemic); Shareholder and does not underwrite the sale of the 5GN Shares. (xi) arising from any act of God, natural disaster, lightning, storm flood, bushfire, earthquake, explosion, 15.8 CONDITIONS OF THIS OFFER cyclone, tidal wave, landslide, on or after the Announcement Date;
Subject to section 15.9, the completion of this Offer and any contract that results from an acceptance of this (xii) that Webcentral fairly disclosed in an announcement made by Webcentral to ASX in the 5 years prior Offer, are subject to the fulfilment of the conditions set out below: to the Announcement Date; (xiii) directly relating to any write down of trade receivables in connection with any settlement of any (A) MINIMUM ACCEPTANCE litigation; or
At the end of the Offer Period, 5GN has relevant interests in at least 50.1% of Webcentral Shares (on a fully (xiv) any write down of goodwill in connection with or as a result of the terms of the Offer as proposed diluted basis). by 5GN.
(B) NO MATERIAL ADVERSE CHANGE (C) NO PRESCRIBED OCCURRENCES Between the Announcement Date and the end of the Offer Period, no ‘Material Adverse Change’ occurs. Between the Announcement Date and the date 3 Business Days after the end of the Offer Period, none of A Material Adverse Change is an event, change, condition, matter, circumstance or thing occurring after the the following prescribed occurrences (being the occurrences listed in section 652C of the Corporations Announcement Date (Specified Event) which, whether individually or when aggregated with all such events, Act) happens: changes, conditions, matters, circumstances or things of a like kind that have occurred or are reasonably (i) Webcentral converting all or any of the Webcentral Shares into a larger or smaller number of shares likely to occur has had or would be considered reasonably likely to have the effect of diminishing the value of: under section 254H of the Corporations Act; (i) the consolidated net assets of the Webcentral Group by at least $3,000,000 against what it would reasonably have been expected to have been but for such Specified Event (calculated in accordance (ii) Webcentral or a subsidiary of Webcentral resolving to reduce its share capital in any way; with the accounting policies and practices applied by Webcentral in respect of the financial year ended (iii) Webcentral or a subsidiary of Webcentral entering into a buyback agreement or resolving to approve 31 December 2019); or the terms of a buyback agreement under section 257C(1) or 257D(1) of the Corporations Act;
(ii) the revenue from the continuing operations of Webcentral’s business division known as SMB Direct (iv) Webcentral or a subsidiary of Webcentral making an issue of shares or granting an option over its (core) by at least $3,000,000 in the current financial year against what it would reasonably have been shares or agreeing to make such an issue or grant such an option; expected to have been but for such Specified Event (calculated in accordance with the accounting policies and practices applied by Webcentral in respect of the financial year ended 31 December 2019), (v) Webcentral or a subsidiary of Webcentral issuing, or agreeing to issue, convertible notes;
For personal use only use personal For (vi) Webcentral or a subsidiary of Webcentral disposing, or agreeing to dispose, of the whole, or a other than those events, changes, conditions, matters, circumstances or things: substantial part, of its business or property; (iii) required under, or expressly permitted by, the Bid Implementation Deed, the Reimbursement Fee Loan (vii) Webcentral or a subsidiary of Webcentral granting, or agreeing to grant, a Security Interest in the Agreement or the Loan Implementation Deed or the transactions contemplated by any of them; whole, or a substantial part, of its business or property other than as contemplated by the Loan (iv) to the extent that they were fairly disclosed in any disclosure materials; Implementation Deed;
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(viii) Webcentral or a subsidiary of Webcentral resolving that it be wound up; 15.11 OFFICIAL QUOTATION OF 5GN SHARES
(ix) the appointment of a liquidator or provisional liquidator of Webcentral or a subsidiary of Webcentral; (a) 5GN has been admitted to the official list of ASX. Shares of the same class as those to be issued as (x) the making of an order by a court for the winding up of Webcentral or a subsidiary of Webcentral; consideration have been granted official quotation by ASX.
(xi) an administrator of Webcentral or a subsidiary of Webcentral being appointed under section 436A, (b) An application will be made within 7 days after the start of the bid period to ASX for the granting of official 436B or 436C of the Corporations Act; quotation of the 5GN Shares to be issued in accordance with the Offer. However, official quotation is not (xii) Webcentral or a subsidiary of Webcentral executing a deed of company arrangement; or granted automatically on application.
(xiii) the appointment of a receiver, receiver and manager, other controller (as defined in the Corporations (c) Pursuant to the Corporations Act, this Offer and any contract that results from your acceptance of it are Act) or similar official in relation to the whole, or a substantial part, of the property of Webcentral or a subject to a condition that permission for admission to official quotation by ASX of the 5GN Shares to subsidiary of Webcentral. be issued pursuant to the Offer being granted no later than 7 days after the end of the bid period. If this condition is not fulfilled, all contracts resulting from the acceptance of the Offers will be automatically void. 15.9 NATURE AND BENEFIT OF CONDITIONS 15.12 WITHDRAWAL OF THIS OFFER (a) The conditions in section 15.8 are conditions subsequent. The non-fulfilment of any condition subsequent does not, until the end of the Offer Period (or in the case of the conditions in section 15.8(c), until the end of (a) This Offer may be withdrawn with the consent in writing of ASIC, which consent may be subject to the third Business Day after the end of the Offer Period), prevent a contract to sell Your Shares from arising, conditions. If ASIC gives such consent, 5GN will give notice of the withdrawal to ASX and to Webcentral and but non-fulfilment of any of those conditions will have the consequences set out in section 15.10(b). will comply with any other conditions imposed by ASIC.
(b) Subject to the Corporations Act, 5GN alone is entitled to the benefit of the conditions in section 15.8, or to (b) If, at the time this Offer is withdrawn, all the conditions in section 15.8 have been freed, all contracts arising rely on any non-fulfilment of any of them. from acceptance of the Offer before it was withdrawn will remain enforceable.
(c) Each condition in section 15.8 is a separate, several and distinct condition. No condition will be taken to limit (c) If, at the time this Offer is withdrawn, the Offer remains subject to one or more of the conditions in section the meaning or effect of any other condition. 15.8, all contracts arising from its acceptance will become void (whether or not the events referred to in the relevant conditions have occurred). 15.10 FREEING THE OFFER OF CONDITIONS (d) A withdrawal pursuant to this section 15.12 will be deemed to take effect: (a) 5GN may free this Offer, and any contract resulting from its acceptance, from all or any of the conditions (i) if the withdrawal is not subject to conditions imposed by ASIC, on and after the date on which that subsequent in section 15.8, either generally or by reference to a particular fact, matter, event, occurrence or consent in writing is given by ASIC; or circumstance (or class thereof), by giving a notice to Webcentral and to ASX declaring this Offer to be free from the relevant condition or conditions specified, in accordance with section 650F of the Corporations Act. (ii) if the withdrawal is subject to conditions imposed by ASIC, on and after the date on which those This notice may be given: conditions are satisfied.
• in the case of the condition in section 15.8(c), not later than 3 Business Days after the end of the Offer 15.13 VARIATION OF THIS OFFER Period; and • in the case of all the other conditions in section 15.8, not less than 7 days before the end of the Offer Period. 5GN may vary this Offer in accordance with the Corporations Act.
(b) If, at the end of the Offer Period (or, in the case of the conditions in section 15.8(c), at the end of the third 15.14 NO STAMP DUTY Business Day after the end of the Offer Period), the conditions in section 15.8 have not been fulfilled and 5GN 5GN will pay any stamp duty on the transfer of Your Shares to it. has not declared the Offer (or it has not become) free from those conditions, all contracts resulting from the acceptance of the Offer will be automatically void. 15.15 GOVERNING LAWS (c) 5GN must free this Offer, and any contract resulting from its acceptance, from all of the conditions This Offer and any contract that results from your acceptance of it are to be governed by the laws in force in subsequent in section 15.8 as soon as possible (and, in any event, within one Business Day) after it obtains Victoria, Australia a relevant interest in at least 50.1% of the Webcentral Shares, unless any Bid Condition has been breached
prior to the date on which 5GN obtains such a relevant interest. For personal use only use personal For
92 93 16. COMPANY DIRECTORY 17. APPROVAL OF BIDDER’S STATEMENT
16.1 5GN This Bidder’s Statement has been approved under section 637(1) (a) (ii) of the Corporations Act by a unanimous resolution passed by all of the directors of 5GN. 5G Networks Limited Level 8, 99 William Street, Melbourne, VIC 3000 Dated: 18 September 2020 16.2 FINANCIAL ADVISORS Signed for and on behalf of 5G Networks Limited Wilsons Corporate Finance Limited Level 32, Governor Macquarie Tower, 1 Farrer Place Sydney NSW 2000
Grant Thornton (Financial and Tax Due Diligence) Joe Demase, Managing Director Collins Square, Tower 5, 727 Collins Street, Melbourne VIC 3008
16.3 SHARE REGISTRY
Link Market Services Tower 4, 727 Collins Street, Melbourne VIC 3000
16.4 LEGAL ADVISORS
Cornwalls Level 10, 114 William Street, Melbourne, VIC 3000
16.5 5GN OFFER INFORMATION LINE
1800 606 866 For personal use only use personal For
94 95 18. GLOSSARY 18. GLOSSARY
In this Bidder’s Statement and in the Acceptance Form unless the context otherwise requires, the following terms have the meanings shown below. Term Meaning
Corporations Act The Corporations Act 2001 (Cth). Term Meaning Corporations ASIC Corporations (Consents to Statements) Instrument 2016/72. $ or A$ or AUD Australian dollars, the lawful currency of the Commonwealth of Australia. Instrument 2016/72
5GN 5G Networks Limited ACN 163 312 025. EIP Employee Incentive Plan.
5GN Board The board of directors of 5GN. ESP Employee Share Plan.
5GN Group 5GN and each of its subsidiaries, and a reference to an ‘5GN Group Member’ is to Existing Debt Facilities each of the: 5GN or any of its subsidiaries. 1) A$ facilities advanced, and bank guarantees issued, pursuant to a facilities agreement originally dated 28 June 2018 between, among others, Australia and Fully paid ordinary shares in the capital of 5GN. 5GN Shares New Zealand Banking Group Limited and Webcentral (as amended from time to Acceptance Form The acceptance form enclosed with this Bidder’s Statement. time including on or about 30 May 2019 and 23 December 2019); and 2) A$ facilities advanced, and bank guarantees issued, pursuant to a facilities AISC The all-in sustaining cost measure. agreement originally dated 28 June 2018, between, among others, National Australia Bank Limited and Webcentral (as amended from time to time including on Announcement Date The date of the announcement of the Offer by 5GN, being 17 September 2020. or about 30 May 2019 and 23 December 2019).
ASIC The Australian Securities and Investments Commission. Existing Financiers 1) 1 Australia and New Zealand Banking Group Limited; and 2) 2 National Australia Bank Limited. ASX ASX Settlement Pty Limited ABN 49 008 504 532. Foreign Shareholder A Webcentral Shareholder whose address as shown in the register of members Assessment Date The date that is 6 weeks after the Announcement Date. of Webcentral is in a jurisdiction other than Australia or its external territories or ASX Settlement ASX Settlement Pty Limited ABN 49 008 504 532. New Zealand, unless 5GN otherwise determines (in its absolute discretion) after being satisfied that it is not unlawful, not unduly onerous and not unduly impracticable to ASX Settlement The operating rules of the ASX Settlement which govern the administration of the make the Offer to a Webcentral Shareholder in the relevant jurisdiction and to issue Operating Rules Clearing House Electronic Sub register System. 5GN Shares to such a Webcentral Shareholder on acceptance of the Offer, and that it is not unlawful for such a Webcentral Shareholder to accept the Offer in such Bid Implementation The Bid Implementation Deed executed by 5GN and Webcentral on 17 September circumstances in the relevant jurisdiction. Deed or BID 2020. See section 14.1. FY A financial year ending 30 June. Bidder’s Statement This document, being the statement of 5GN under Part 6.5 Division 2 of the Corporations Act relating to the Offer. Government Agencies Has the meaning given to it in the Bid Implementation Deed.
Business Day A day on which banks are open for business in Perth, Western Australia, excluding a GST Goods and services tax. Saturday, Sunday or public holiday. Holder Identification Has the same meaning given to it in the ASX Settlement Operating Rules. Board or Webcentral The board of directors of Webcentral. Number Board Interested Person Has the meaning given to it in section 14.7. CGT Capital gains tax. Issuer Sponsored A holding of Shares on Webcentral issuer sponsored subregister. CHESS Holding A number of Shares which are registered on Webcentral’s share register being Holdings a register administered by the ASX Settlement and which records uncertificated holdings of shares. Listing Rules The Official Listing Rules of ASX, as amended and waived by ASX from time to time.
Closingonly use personal For Date 7.00 pm (Sydney time) on Tuesday 20 October 2020, unless the Offer is extended Loan Implementation Has the meaning given to it in the Bid Implementation Deed. under the Corporations Act. Deed
Commissioner of Has the meaning given in the Taxation Administration Act 1953 (Cth). Material Adverse Has the meaning given to it in the Bid Implementation Deed or in section 15.8(b) (as Taxation Change the case requires).
Controlling Participant In relation to Your Shares, has the same meaning as in the ASX Settlement Merged Group The group of companies resulting from the combination of the 5GN Group and Operating Rules. Webcentral Group should the Offer be successful.
96 97 18. GLOSSARY 18. GLOSSARY
Term Meaning Term Meaning
Net Leverage Ratio As at the relevant test date, the ratio of A to B, where: Security Interest Has the same meaning as in section 51A of the Corporations Act. A = the sum of the financial indebtedness of the Webcentral Group less cash and cash equivalents held by the Webcentral Group; and SID The scheme implementation deed dated 12 July 2020 between Webcentral and Web. B = the sum of the consolidated EBITDA of the Webcentral Group for the preceding com Group, Inc. relating to the implementation of the Scheme. 12 month period. Small Parcel A parcel of 5GN Shares having a value of less than $500 based on 5GN’s VWAP for Nominee The nominee appointed by 5GN and approved by ASIC in accordance with section 15.7. the 2 trading days prior to the date of this Bidder’s Statement, being 287 5GN Shares (and equivalent to 3,448 Webcentral Shares). Offer The offer for Webcentral Shares under the terms and conditions contained in section 15. Small Parcel A Webcentral Shareholder who would be entitled to receive a total number of 5GN Offer Consideration 1 5GN Share for every 12 Webcentral Shares held by a Webcentral Shareholder (other Shareholder Shares as consideration under the Offer which constitute a Small Parcel. than a Foreign Shareholder or a Small Parcel Shareholder). Superior Proposal Has the meaning given to it in the Bid Implementation Deed. Offer Period The period during which the Offer will remain open for acceptance in accordance with section 15.2. TAA Taxation Administration Act 1953 (Cth).
Participant An entity admitted to participate in the Clearing House Electronic Sub register System Takeover Transferee Has the same meaning as in the ASX Settlement Operating Rules. under rules 4.3.1 and 4.4.1 of the ASX Settlement Operating Rules. Holding
Prescribed Occurrence Has the meaning given to it in the Bid Implementation Deed or section 15.8(c) (as the Tax Act Income Tax Assessment Act 1936 (Cth), Income Tax Assessment Act 1997 (Cth) and case requires). TAA, as the case requires.
Public Authority Any government or any governmental, semi-governmental, statutory or judicial entity, VWAP Volume weighted average price. agency or authority, whether in Australia or elsewhere, including (without limitation) Webcentral or WCG Webcentral Group Limited ACN 073 716 793. any self-regulatory organisation established under statute or otherwise discharging substantially public or regulatory functions, and ASX or any other stock exchange. Webcentral Director A director of Webcentral.
Register Date The date set by 5GN under section 633(2) of the Corporations Act, being Webcentral Group or Webcentral and each of its subsidiaries and a reference to “Webcentral or WCG 18 September 2020. WCG Group Group Member” is to Webcentral or any of its subsidiaries.
Reimbursement Fee Has the meaning given to it in the Bid Implementation Deed, being the sum of Webcentral Shareholder A person who is registered as the holder of a Webcentral Share in the Webcentral $200,000. or WCG Shareholder share register.
Reimbursement Fee Has the meaning given to it in the Bid Implementation Deed. Webcentral Shares or Fully paid ordinary shares in the capital of Webcentral, including those shares on Loan Agreement WCG Shares or Shares issue at the end of the Offer Period.
Reverse Has the meaning given to it in the Bid Implementation Deed, being the sum of Web.com Scheme The Webcentral scheme of arrangement involving Web.com Group, Inc. that was Reimbursement Fee $200,000. announced to the ASX by Webcentral on 13 July 2020.
Has the meaning given to it in the Corporations Act. Relevant Interest Your Shares subject to section 15.1(g) and section 15.1(h), the Shares (a) in respect of which you are registered, or entitled to be registered, as holder in the register of members of Rights All accreditations, rights or benefits of whatever kind attaching or arising from Shares directly or indirectly at or after the Announcement Date (including, but not limited to, Webcentral on the Register Date, or (b) to which you are able to give good title at the all dividends or other distributions and all rights to receive them or rights to receive time you accept the Offer during the Offer Period. or subscribe for shares, notes, bonds, options or other securities declared, paid or issued by Webcentral or any of its subsidiaries).
Schemeonly use personal For Booklet The scheme booklet prepared by Webcentral in respect of the Scheme and dated 21 August 2020.
Securities Act The United States Securities Act of 1933.
Securityholder Has the same meaning as in the ASX Settlement Operating Rules. Reference Number or SRN
98 99 5G Networks Level 8, 99 William Street, Melbourne VIC 3000 www.5gnetworks.com.au
+61 1300 10 11 12 For personal use only use personal For
100 Need help? Contact 5GN Offer Information Line Phone 1800 606 866 (from within Australia) 5G NETWORKS LIMITED Phone +61 1800 606 866 (from outside Australia) ABN 30 163 312 025
A Your name Your holding
Securityholder Reference Number: I12345678910 Webcentral Group Limited (WCG) Shares SAMPLE NAME 1 held as at Register Date 99,999,999 SAMPLE NAME 2 If your holding has changed between Register Date and time of
CONTROLLING PARTICIPANT’S NAME Broker’s Name printed here
Transfer and Acceptance Form – CHESS Subregister
This is a personalised form for the sole use of the holder and holding recorded above.
B You must give your instructions to your controlling participant to accept the Offer
If you correctly sign and return this form you will be deemed to have accepted the Offer in respect of ALL of your Webcentral Shares. Offer Consideration – 1 5GN Share for every 12 Webcentral Shares
To accept the Offer you may either: • directly instruct your Controlling Participant to accept the Offer on your behalf; or • sign and return this Transfer and Acceptance Form to the address shown overleaf so 5GN can contact your Controlling Participant on your behalf and relay your instructions. If your Controlling Participant acts on your instruction CHESS will send you a confirmation notice.
Non-Withholding Declaration Unless I/we notify 5GN otherwise in writing, by submitting this Acceptance Form or otherwise accepting the Offer, I/we declare that either: • I/we am/are Australian tax resident(s); or • I/we am/are not Australian tax resident(s) and the Webcentral Shares I/we, together with my/our ‘associates’, hold are ‘membership interests’ but not ‘indirect Australian real property interests’ (as those terms are defined in the Tax Act). C Contact details
Please provide your contact name and telephone number in case we need to speak to you about this Acceptance Form.
Telephone Number where you can be contacted during business hours Contact Name (PRINT) ( )
D You must sign this form for your instructions in this Transfer and Acceptance Form to be executed
I/We, the person(s) named above, accept the Offer in respect of all my/our Webcentral Shares and hereby agree to transfer to 5GN all my/our Webcentral Shares for the consideration specified in the Offer, and on the terms and conditions of the Offer as set out in the Bidder’s Statement. *WCGZ TKO002*
Shareholder 1 (Individual) Shareholder 2 (Individual) Shareholder 3 (Individual) For personal use only use personal For
Sole Director & Sole Company Secretary Secretary/Director (delete one) Director
Please refer overleaf for further important instructions
REGISTRY USE ONLY *I99999999999* *XXX* *XXX* HIN Broker PID Holding WCGZ TKO002 Further Important Instructions Your Webcentral Shares are in a CHESS Holding, you do not need to complete and return this Acceptance Form to the registry to accept the Offer. You can instead contact your Controlling Participant and instruct them to accept the Offer on your behalf in sufficient time before the end of the Offer Period to enable your Controlling Participant to give effect to your acceptance of the Offer on CHESS during business hours. If you decide to use this Acceptance Form to authorise us to contact your Controlling Participant on your behalf, follow the instructions below. You should allow Link Market Services Limited (“Link”) sufficient time for the delivery of the Acceptance Form to your Controlling Participant on your behalf. Neither 5GN, nor Link will be responsible for any delays incurred by this process. Please refer to the Bidder’s Statement dated 18 September 2020 which accompanies this Transfer and Acceptance Form. Terms are defined in the Bidder’s Statement and have the same meaning in this Transfer and Acceptance Form.
Completion instructions
A • Please check the front page to ensure that your name and address are correct. If incorrect, please write your correct details and initial the amendments. Amendments to your name or address can only be processed by your Controlling Participant. • Please note your consideration will be issued in the names as they appear on the Webcentral register. D • Please sign this Acceptance Form in the places for signature(s) set out on the front page and in accordance with the following instructions: – Joint Shareholders: If your Webcentral Shares are held in the names of more than one person, all of those persons must sign this Acceptance Form. – Corporations: This Acceptance Form must be signed by either two directors or a director and a company secretary. Alternatively, where the company has a sole director and, pursuant to the Corporations Act, there is no company secretary, or where the sole director is also the sole company secretary, that director may sign alone. Alternatively, a duly appointed attorney may sign. – Powers of attorney: If this Acceptance Form is signed under a power of attorney, please attach a certified copy of the power of attorney to this Acceptance Form when you return it. If this Acceptance Form is signed under Power of Attorney, the attorney declares that he/she has no notice of revocation of the Power of Attorney. – Deceased Estates: All the executors and administrators must sign this Acceptance Form. When you return this Acceptance Form, please attach it to a certified copy of probate, letters of administration or certificate of grant accompanied (where required by law for the purpose of transfer) by a certificate of payment of death or succession duties and (if necessary) a statement in terms of Section 1071B(9)(b)(iii) of the Corporations Act.
Personal Information Collection Notification Statement: Personal information about you is held on the public register in accordance with Chapter 2C of the Corporations Act 2001. For details about Link Group’s personal information handling practices including collection, use and disclosure, how you may access and correct your personal information and raise privacy concerns, visit our website at www.linkmarketservices.com.au for a copy of the Link Group condensed privacy statement, or contact us by phone on +61 1800 502 355 (free call within Australia) 9am–5pm (Sydney time) Monday to Friday (excluding public holidays) to request a copy of our complete privacy policy.
Lodgement instructions
• Mail or deliver completed Acceptance Form(s) and any other documents required by the above instructions to: Mailing Address or Hand Delivery Link Market Services Limited Link Market Services Limited Webcentral Group Takeover Webcentral Group Takeover Locked Bag A14 1A Homebush Bay Drive SYDNEY SOUTH NSW 1235 RHODES NSW 2138
• A reply paid envelope is enclosed for use within Australia. For personal use only use personal For Your acceptance must be received by no later than the end of the Offer Period, which is 7:00pm (Melbourne Time) on the last day of the Offer Period.
If you have any questions about the terms of the Offer or how to accept, please call the 5GN Offer Information Line on the following numbers: within Australia: 1800 606 866 outside Australia: +61 1800 606 866 Need help? Contact 5GN Offer Information Line Phone 1800 606 866 (from within Australia) 5G NETWORKS LIMITED Phone +61 1800 606 866 (from outside Australia) ABN 30 163 312 025
A Your name Your holding
Securityholder Reference Number: I12345678910 Webcentral Group Limited (WCG) Shares SAMPLE NAME 1 held as at Register Date 99,999,999 SAMPLE NAME 2 If your holding has changed between Register Date and time of
Transfer and Acceptance Form – Issuer Sponsored Subregister
This is a personalised form for the sole use of the holder and holding recorded above.
B You must give your instructions to accept the Offer
If you correctly sign and return this form you will be deemed to have accepted the Offer in respect of ALL of your Webcentral Shares.
Offer Consideration – 1 5GN Share for every 12 Webcentral Shares
Non-Withholding Declaration Unless I/we notify 5GN otherwise in writing, by submitting this Acceptance Form or otherwise accepting the Offer, I/we declare that either: • I/we am/are Australian tax resident(s); or • I/we am/are not Australian tax resident(s) and the Webcentral Shares I/we, together with my/our ‘associates’, hold are ‘membership interests’ but not ‘indirect Australian real property interests’ (as those terms are defined in the Tax Act).
C Contact details
Please provide your contact name and telephone number in case we need to speak to you about this Transfer and Acceptance Form.
Telephone Number where you can be contacted during business hours Contact Name (PRINT) ( )
D You must sign this form for your instructions in this Transfer and Acceptance Form to be executed I/We, the person(s) named above, accept the Offer in respect of all my/our Webcentral Shares and hereby agree to transfer to 5GN all my/our Webcentral Shares for the consideration specified in the Offer, and on the terms and conditions of the Offer as set out in the Bidder’s Statement. *WCGZ TKO001*
Shareholder 1 (Individual) Shareholder 2 (Individual) Shareholder 3 (Individual) For personal use only use personal For
Sole Director & Sole Company Secretary Secretary/Director (delete one) Director
Please refer overleaf for further important instructions
REGISTRY USE ONLY *I99999999999* *XXX* SRN Holding WCGZ TKO001 Further Important Instructions Your Webcentral Shares are in an Issuer Sponsored Holding. To accept the Offer, you must complete and return this Transfer and Acceptance Form in accordance with the instructions below. Please refer to the Bidder’s Statement dated 18 September 2020 which accompanies this Transfer and Acceptance Form. Terms are defined in the Bidder’s Statement and have the same meaning in this Transfer and Acceptance Form.
Completion instructions
A • Please check the front page to ensure that your name and address are correct. If incorrect, please write your correct details and initial the amendments. Amendments to your name can only be processed by your Webcentral Registry. • Please note your consideration will be issued in the names as they appear on the Webcentral register. D • Please sign this Acceptance Form in the places for signature(s) set out on the front page and in accordance with the following instructions: – Joint Shareholders: If your Webcentral Shares are held in the names of more than one person, all of those persons must sign this Acceptance Form. – Corporations: This Acceptance Form must be signed by either two directors or a director and a company secretary. Alternatively, where the company has a sole director and, pursuant to the Corporations Act, there is no company secretary, or where the sole director is also the sole company secretary, that director may sign alone. Alternatively, a duly appointed attorney may sign. – Powers of attorney: If this Acceptance Form is signed under a power of attorney, please attach a certified copy of the power of attorney to this Acceptance Form when you return it. If this Acceptance Form is signed under Power of Attorney, the attorney declares that he/she has no notice of revocation of the Power of Attorney. – Deceased Estates: All the executors and administrators must sign this Acceptance Form. When you return this Acceptance Form, please attach it to a certified copy of probate, letters of administration or certificate of grant accompanied (where required by law for the purpose of transfer) by a certificate of payment of death or succession duties and (if necessary) a statement in terms of Section 1071B(9)(b)(iii) of the Corporations Act.
Personal Information Collection Notification Statement: Personal information about you is held on the public register in accordance with Chapter 2C of the Corporations Act 2001. For details about Link Group’s personal information handling practices including collection, use and disclosure, how you may access and correct your personal information and raise privacy concerns, visit our website at www.linkmarketservices.com.au for a copy of the Link Group condensed privacy statement, or contact us by phone on +61 1800 502 355 (free call within Australia) 9am–5pm (Sydney time) Monday to Friday (excluding public holidays) to request a copy of our complete privacy policy.
Lodgement instructions
• Mail or deliver completed Transfer and Acceptance Form(s) and any other documents required by the above instructions to:
Mailing Address or Hand Delivery Link Market Services Limited Link Market Services Limited Webcentral Group Takeover Webcentral Group Takeover Locked Bag A14 1A Homebush Bay Drive SYDNEY SOUTH NSW 1235 RHODES NSW 2138
• A reply paid envelope is enclosed for use within Australia.
Your acceptance must be received by no later than the end of the Offer Period, which is For personal use only use personal For 7:00pm (Melbourne Time) on the last day of the Offer Period.
If you have any questions about the terms of the Offer or how to accept, please call the 5GN Offer Information Line on the following numbers: within Australia: 1800 606 866 outside Australia: +61 1800 606 866