Explanatory Memorandum Is Important and Requires Immediate Attention
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For personal use only Important notices This Explanatory Memorandum is important and requires immediate attention. It should be read in its entirety before making a decision on how to vote on the Resolutions. In particular, it is important that you consider the disadvantages and potential risks of the Proposed Transaction and Constitution Amendment set out in section 1.6 and section 7 and the views of the Independent Expert set out in the Independent Expert's Report contained in Appendix A. Purpose of this Explanatory Memorandum This Explanatory Memorandum has been prepared for MRN Shareholders in connection with the Extraordinary General Meeting to be held on 25 March 2015. The purpose of this Explanatory Memorandum is to provide MRN Shareholders with information that the Directors believe to be material to deciding whether or not to approve the Resolutions detailed in the Notice of Meeting set out in Appendix B. No investment advice This Explanatory Memorandum has been prepared without reference to the investment objectives, financial situation or particular needs of any security holder or any other person. The information contained in this Explanatory Memorandum does not constitute financial product advice. If you are in doubt as to the course you should follow, you should consult your stockbroker, accountant, lawyer or investment, taxation or other professional adviser without delay. Responsibility for information Other than the FRN Information and the Independent Expert's Report, the information contained in this Explanatory Memorandum has been provided by MRN and is its responsibility alone. No member of the Fairfax Group nor any of their respective directors, officers, employees or advisers assumes any responsibility for the accuracy or completeness of the information provided by MRN. Fairfax Media Limited ACN 008 663 161 has prepared, consented to the inclusion of, and is responsible for, the FRN Information. To the maximum extent permitted by law, none of MRN nor its Directors, officers, employees or advisers assume any responsibility for the accuracy or completeness of the FRN Information. The information about FRN that appears in this Explanatory Memorandum is based upon the FRN Information and from limited unaudited financial information and other information made available by or on behalf of Fairfax during the due diligence process conducted by MRN in connection with the Proposed Transaction. There is no assurance that this due diligence was conclusive and that all material issues and risks in relation to the Proposed Transaction and FRN have been identified. To the extent that this information is incomplete, incorrect, inaccurate or misleading, there is a risk that the profitability and future results of the operations of the Combined Group may differ (including in a materially adverse way) from MRN's expectations as reflected in this Explanatory Memorandum, or that additional liabilities may emerge. Grant Thornton Corporate Finance Pty Ltd has provided and is responsible for the information contained in the Independent Expert's Report. No member of the MRN Group, the Fairfax Group nor any of their For personal use only respective directors, officers, employees or advisers assumes any responsibility for the accuracy or completeness of the information contained in the Independent Expert's Report. Macquarie Radio Network Limited Notice of meeting and explanatory memorandum | page 2 Future performance and forward-looking statements Certain statements in this Explanatory Memorandum relate to the future. Forward-looking statements in the Explanatory Memorandum are not based on historical fact but rather reflect the current expectations of MRN or Fairfax (as the case may be) in relation to future results and events. These statements may be identified by the use of forward looking words or phrases such as 'believe', 'aim', 'expect', 'anticipate', 'intend', 'foresee', 'likely', 'should', 'plan', 'estimate', 'potential' or other similar words and phrases. These forward-looking statements are not guarantees of future performance. You should be aware that known and unknown risks, uncertainties and other important factors could cause the actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such statements. Such risks, uncertainties and other important factors include, among other things, the risks associated with the Proposed Transaction as set out in section 7. Shareholders are cautioned not to place undue reliance on such forward looking statements. Deviations as to future results, performance and achievement are both normal and expected. Any discrepancies between totals and sums of components in tables and figures contained in this Explanatory Memorandum are due to rounding. Financial information Readers should be aware that certain financial data included in this Explanatory Memorandum is 'non- IFRS' under ASIC Regulatory Guide 230 'Disclosing non-IFRS financial information' published by ASIC. MRN and Fairfax believe this non-IFRS financial information provides useful information to readers in measuring the financial performance and condition of MRN, FRN and the Combined Group. The non- IFRS financial information does not have standardised meanings prescribed by Australian Accounting Standards and, therefore, may not be comparable to similarly titled measures presented by other entities, nor should they be construed as an alternative to other financial information determined in accordance with Australian Accounting Standards. Readers are cautioned, therefore, not to place undue reliance on any non-IFRS financial information or ratio included in this Explanatory Memorandum. Financial and non-financial data is as at 31 December 2014, unless otherwise stated or implied. Not an offer document This document is not intended to be an offer for subscription, invitation, recommendation or sale with respect to any MRN securities in any jurisdiction. Neither ASIC, ASX nor any of their respective officers takes any responsibility for the contents of this Explanatory Memorandum. Defined words and expressions Some words and expressions used in this Explanatory Memorandum have defined meanings, which are explained in the Glossary of this Explanatory Memorandum. A reference to dates and time in this Explanatory Memorandum is to the date or time in Sydney, Australia unless otherwise stated. All financial amounts in this Explanatory Memorandum are expressed in Australian currency unless otherwise stated. Enquiries For personal use only If you have any questions in relation to the subject matter of this Explanatory Memorandum, please contact your stockbroker, accountant, lawyer or investment, taxation or other professional adviser. If you have questions in relation to how to vote, please call the Share Registry on a phone number set out below: Within Australia (toll-free): 1300 850 505 Outside Australia: +61 3 9415 4000. Macquarie Radio Network Limited Notice of meeting and explanatory memorandum | page 3 Table of contents Important notices ................................................................................................................. Inside front cover Key dates ............................................................................................................................. 5 Chairman's letter .................................................................................................................. 6 Questions and answers ........................................................................................................ 9 Section 1. Advantages, disadvantages and other relevant considerations .......................... 15 Section 2. Summary of the Proposed Transaction .............................................................. 21 Section 3. Overview of the Australian commercial radio industry .................................... 24 Section 4. Information on MRN's existing business ........................................................... 28 Section 5. Information on FRN .......................................................................................... 33 Section 6. Information on the Combined Group ................................................................. 38 Section 7. Risk factors associated with the Proposed Transaction ..................................... 46 Section 8. Additional information ...................................................................................... 52 Appendix A Independent Expert's Report ........................................................................... 63 Appendix B Notice of Extraordinary General Meeting ...................................................... 152 Appendix C Explanation of Resolutions ............................................................................. 154 Appendix D Meeting and notes on voting .......................................................................... 159 Glossary ............................................................................................................................... 161 Corporate directory.............................................................................................................. 169 For personal use only Macquarie Radio Network Limited Notice of meeting and explanatory memorandum | page 4 Key dates The timetable below is indicative only and subject to change. MRN, subject to the Corporations Act, ASX Listing Rules and other applicable laws, reserves