Bidder's Statement Offer
For personal use only For personal use only For personal use only
BIDDER'S STATEMENT OFFER
by
Prime Media Broadcasting Services Pty Limited ACN 123 563 495
a wholly owned Subsidiary of
Prime Media Group Limited ABN 97 000 764 867
to purchase all of your ordinary shares in
Broadcast Production Services Limited (formerly Becker Group Limited) ABN 32 000 713 422
For each BPSL Share you will receive
0.257 New Prime Media Shares
This is an important document and requires your immediate attention. If you are in doubt as to how to deal with this document you should consult your financial or other professional adviser
Financial adviser to Prime: Legal adviser to Prime:
For personal use only use personal For
Bidder's Statement - Offer For personal use only
Important Information
Offer Information Line
For information regarding your BPSL Shares, the Prime Offer or how to accept the Prime Offer please read this Bidder's Statement. If you still need assistance please contact Prime Offer Information Line on:
For Australian callers: 1800 770 850 (toll free) For international callers: +61 2 8280 7714
The Prime Offer Information Line is available Monday to Friday between 8.30 am and 5.30 pm (Sydney time).
Key Dates
Bidder's Statement lodged with ASIC 24 October 2008
Offer opens (date of Offer) 28 October 2008
Offer closes (unless extended) 7.00pm (Sydney time) 1 December 2008
This Bidder's Statement is dated 24 October 2008.
This Bidder's Statement is given by Prime Media Broadcasting Services Pty Limited ACN 123 563 495 (Prime) to Broadcast Production Services Limited ABN 32 000 713 422 under Part 6.5 of the Corporations Act. This Bidder's Statement includes an offer dated 28 October 2008 to acquire your BPSL Shares and also sets out certain disclosures required by the Corporations Act. You should read this Bidder's Statement in its entirety.
A copy of this Bidder's Statement was lodged with the Australian Securities and Investments Commission (ASIC) on 24 October 2008. ASIC takes no responsibility for the contents of this Bidder's Statement.
A number of defined terms are used in this Bidder's Statement. These terms are defined in section 12.
Investment decisions
This Bidder's Statement does not take into account the investment objectives, financial situation and particular needs of any person. Before deciding whether or not to accept the Prime Offer you may wish to seek independent financial and taxation advice.
Forward looking statements
This Bidder's Statement contains forward looking statements. Forward looking statements are not based on historical facts, but are based on current expectations of future results or events. These forward looking statements are subject to risks, uncertainties and assumptions which could cause actual results or events to differ materially from the expectations described in such forward looking statements. While Prime believes that the expectations reflected in the forward looking statements in this document are reasonable, no assurance can be given that such expectations will prove to be correct. The risk factors set out in section 8 of this Bidder's Statement, as well as other matters as yet not known to Prime or not currently considered material by Prime, may cause actual results or events to be materially different from those expressed, implied or projected in any forward looking statements. Any forward looking statement contained in this document is qualified by this cautionary statement.
For personal use only use personal For None of Prime or its related body corporate, any of their officers, or any person named in this Bidder's Statement with their consent or any person involved in the preparation of Bidder's Statement makes any representation or warranty (either express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statements, or any events, express or implied in any forward looking statement. You are cautioned not to place undue reliance on these statements.
Bidder's Statement - Offer
Prime has assumed for the purpose of preparing this Bidder's Statement that the information in the Target's Statement prepared by BPSL is correct. However, in making that assumption, neither Prime nor its directors (other than Mr Peter Evans and Mr Warwick Syphers, who only take responsibility for the Target's Statement in their capacity as directors of BPSL) take any responsibility whatsoever for the contents of the Target's Statement or anything prepared or distributed by BPSL, nor any part of any document in which this Bidder's Statement is included, other than this Bidder's Statement itself and statements based upon statements in this Bidder's Statement.
Offers outside Australia
Shareholders should note that the consideration under the Prime Offer is securities of Prime Media, an Australian public company listed on ASX. The Prime Offer is subject to disclosure requirements in Australia which are different from those applicable in other countries. Shareholders whose address in the BPSL register of members is not in Australia or New Zealand (Foreign Shareholders) will not be entitled to receive New Prime Media Shares on acceptance of the Prime Offer (unless Prime determines otherwise). Foreign Shareholders who accept the Prime Offer will receive a cash amount calculated in accordance with section 11.18 of this Bidder's Statement. This Bidder's Statement does not constitute an offer to issue or sell, or the soliciting of an offer to buy, any securities referred to in this Bidder's Statement in any jurisdiction in which the issue of such securities would be unlawful.
Privacy collection statement
Personal information relating to your shareholding in BPSL has been obtained by Prime or its agents from BPSL in accordance with its rights under the Corporations Act. Prime will share this information with its related bodies corporate, advisers and agents where necessary for the purposes of the Prime Offer. Prime, its related bodies corporate, advisers and agents will use this information solely for purposes relating to the Prime Offer. If you would like details of your personal information held by Prime or its agents please contact the Prime Offer Information Line on 1800 770 850 (within Australia and toll free) or +61 2 8280 7714 (outside Australia) which is available Monday to Friday between 8.30 am and 5.30 pm (Sydney time).
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Bidder's Statement - Offer
Contents
1. SUMMARY OF THE PRIME OFFER 13
2. INFORMATION ON PRIME AND PRIME MEDIA 15
2.1 Prime 15 2.2 Prime Media Group Limited 15 2.3 Prime Media financial highlights 16 2.4 Financial performance of Prime Media 16 2.5 Directors of Prime Media 16 2.6 Prime Media is a disclosing entity 18 2.7 Disclosure of interests and benefits 20
3. INFORMATION ABOUT PRIME MEDIA'S SECURITIES 21
3.1 Prime Media issued securities 21 3.2 Substantial shareholders 22 3.3 Directors' interests in Prime Media 22 3.4 Recent trading of Prime Media's securities 23 3.5 Rights attaching to New Prime Media Shares 24 3.6 ASX listing of New Prime Media Shares 27
4. INFORMATION ON BPSL AND BPSL SHARES 28
4.1 Source of information on BPSL 28 4.2 Overview of BPSL 28 4.3 Financial performance of BPSL 28 4.4 Directors of BPSL 28 4.5 Publicly available information 28 4.6 Capital Structure of BPSL 29 4.7 Prime's relevant interest in BPSL securities 30 4.8 Prime's voting power in BPSL 30 4.9 Prime Directors' interests in BPSL 30 4.10 Prime Media directors' interests in BPSL 30 4.11 Acquisition by Prime of BPSL Shares during previous 4 months 30 4.12 Inducing benefits given by Prime during previous 4 months 31
5. PRIME'S INTENTIONS 32
5.1 Overview 32 5.2 Compulsory acquisition of BPSL Shares 32 5.3 Intentions for BPSL as a wholly owned subsidiary 32 5.4 Other intentions 32
6. PROFILE OF THE MERGED ENTITY 33
6.1 Overview of the Merged Entity 33 6.2 Strategic benefits 33
For personal use only use personal For 6.3 Outlook for the Merged Entity 33
7. FINANCIAL INFORMATION 35
7.1 Introduction 35 7.2 The Merged Entity 35
Bidder's Statement - Offer
8. RISK FACTORS 37
8.1 Overview 37 8.2 Fluctuations in the market value of Prime Media Shares 37 8.3 Investment risk 37 8.4 Pricing pressure 37 8.5 Retention of key business relationships 38 8.6 Ability to attract personnel 38 8.7 Profitability 38 8.8 Economic risk and external market factors 38 8.9 War and terrorist attacks 38 8.10 Foreign currency exchange rate fluctuations 38 8.11 Risks specific to investment in Prime Media 38
9. TAXATION CONSIDERATIONS 40
9.1 Australian tax implications for BPSL Shareholders 40 9.2 Shareholders who are Australian residents 40 9.3 Shareholders who are not Australian residents 44 9.4 GST 45
10. OTHER MATERIAL INFORMATION 46
10.1 Adviser fees 46 10.2 Consents 46 10.3 Information for any overseas shareholders 46 10.4 Expiry Date 47 10.5 Approvals for issue of consideration 47 10.6 No other material information 47
11. THE PRIME OFFER TERMS 48
11.1 The Prime Offer 48 11.2 Foreign Shareholders 48 11.3 Rounding of New Prime Media Shares 48 11.4 Ranking of New Prime Media Shares 48 11.5 ASX listing of New Prime Media Shares 48 11.6 Offer Period 49 11.7 How to accept the Prime Offer 49 11.8 Effect of Acceptance Form 50 11.9 Your agreement 50 11.10 Powers of attorney 51 11.11 Validation of otherwise ineffective acceptances 51 11.12 Conditions of the Prime Offer 51 11.13 Statutory condition 51 11.14 No defeating conditions 52 11.15 Issue of consideration 52 11.16 Return of documents 53 11.17 Rights 53 11.18 Acceptance by Foreign Shareholders 53 11.19 Unmarketable parcels of New Prime Media Shares 54 11.20 Clearances for offshore residents and others 54 11.21 Costs and stamp duty 54 For personal use only use personal For 11.22 Offerees 54 11.23 Variation and withdrawal of Offer 55 11.24 Governing law 55
Bidder's Statement - Offer
12. DEFINITIONS AND INTERPRETATION 56
12.1 Definitions 56 12.2 Interpretation 58
Annexure
A PRIME MEDIA ANNOUNCEMENTS SINCE 1 JULY 2008
B BPSL ANNOUNCEMENTS SINCE 1 JULY 2007
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Bidder's Statement - Offer For personal use only
Chairman's letter
24 October 2008
Dear BPSL Shareholder,
On behalf of the Director's of Prime Media Broadcasting Services Pty Limited (Prime)(a wholly owned subsidiary of Prime Media Group Limited (Prime Media)), I am pleased to provide you with this Bidder's Statement detailing Prime's offer to acquire your BPSL Shares (Prime Offer).
As at 24 October 2008 Prime Media holds a relevant interest in 76.04% of BPSL's issued capital and 2,600,000 BPSL Executive Options pursuant to Prime's previous cash bid for BPSL in May 2007 and BPSL has appointed two nominees of Prime Media on the BPSL Board.
Prime is offering you 0.257 New Prime Media Shares for each BPSL Share (Prime Offer Consideration). The implied Prime Offer value of $0.55 represents a 17.0% premium to Prime's previous final cash bid for BPSL in 2007 and 83.3% premium to the latest closing market price for BPSL Shares. The Prime Offer provides an excellent opportunity for you to realise value from your investment in BPSL. Other than Prime Media's application to, and approval of, ASX for quotation of the New Prime Media shares on ASX, the Prime Offer is unconditional.
The Prime Directors believe that the Prime Offer is in the best interests of BPSL Shareholders because of:
the Independent Expert's opinion that the Prime Offer is fair and reasonable to BPSL Shareholders;
the trading history of BPSL Shares and the premium represented by the Prime Offer;
BPSL's recent profitability and lack of dividend payments;
BPSL's existing ownership structure and associated low trading liquidity; and
there being practically no prospect of a Superior Offer.
The Prime Media Directors believe the Prime Offer is compelling for BPSL Shareholders and look forward to welcoming you as a new shareholder of Prime Media.
The Prime Offer is currently scheduled to close at 7.00 pm (Sydney time) on 1 December 2008
unless extended. For personal use only use personal For The Prime Directors encourage you to read this Bidder's Statement carefully. To accept the Prime Offer, please follow the instructions on the enclosed Acceptance Form. If you require additional assistance, please contact the Prime Offer Information Line on 1800 770 850 (within Australia and
Bidder's Statement - Offer 1
toll free) or +61 2 8280 7714 (outside Australia), which is available Monday to Friday between 8.30 am and 5.30 pm (Sydney time).
Sincerely
Peter Evans
Chairman, Prime Media Broadcasting Services Pty Limited
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Bidder's Statement - Offer 2
Reasons why you should accept the Prime Offer
1. The implied value of the Prime Offer Consideration represents an attractive premium to the current trading price for your BPSL Shares.
2. The Prime Offer gives you the opportunity to become a shareholder in the ASX listed Prime Media, a leading free-to-air television broadcasting company with diversified operations in television, radio broadcasting, media sales, content production and new media services.
3. It may be difficult for you to sell your BPSL Shares on-market due to a lack of liquidity in BPSL Shares.
4. Prime Media Shares are actively traded on ASX and as such the New Prime Media Shares represent a more liquid and readily tradeable investment.
5. There are no competing proposals and Prime considers the likelihood of another bidder emerging is extremely unlikely given Prime Media currently holds a relevant interest in 76.04% of BPSL's issued capital.
6. You may benefit from the payment of regular fully franked dividends.
7. The Prime Offer has no defeating conditions.
8. The Prime Offer provides potential Australian Capital Gains Tax (CGT) roll-over relief.
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Bidder's Statement - Offer 3
Reasons why you should accept the Prime Offer
1. The Prime Offer Consideration represents an attractive premium for your BPSL Shares.
BPSL Shareholders are offered an attractive premium to recent trading levels.
Prime is offering 0.257 New Prime Media Shares for each BPSL Share.
The implied value of the Prime Offer is $0.551 based on the 10 trading days up to and including 23 October 2008 represents an attractive premium for your BPSL Shares. In particular, it represents a: 83.3% premium to the last traded price of BPSL Shares on the Australian Securities Exchange (ASX) as at 23 October 2008, being the last trading date prior to the announcement of the Prime Offer; 83.3% premium to the 10 day VWAP2 for the period to 23 October 2008; 83.3% premium to the one month VWAP2 for the period to 23 October 2008; 79.2% premium to the three month VWAP2 for the period to 23 October 2008; and 17.0% premium to the final cash bid under Prime’s previous final cash offer for BPSL in 2007.
0.60 $0.55
0.50 Premium
Premium Premium 0.40
0.30
0.20 2007 Cash Bid Price per Becker GroupPrice Share ($)
0.10 10 day VWAP Latest Trading Price
-
1 BPSL Shareholders accepting the Prime Offer will receive New Prime Media Shares in accordance with the terms of the Prime Offer. Any reference to the implied value of the Prime Offer Consideration should not be taken as an indication that BPSL Shareholders accepting the Prime Offer will receive cash. The implied value of the Prime For personal use only use personal For Offer Consideration is not fixed. As you are being offered New Prime Media Shares as consideration for your BPSL Shares, the implied value of the Prime Offer Consideration will vary with the market price of Prime Media Shares.
2 VWAP is an acronym for Volume Weighted Average Price, and is calculated as the ratio of the value traded to total volume traded (representing trades executed over the normal course of the trading day) over the stated number of trading days prior to 24 October 2008.
Bidder's Statement - Offer 4
2. The Prime Offer gives you the opportunity to become a shareholder in Prime Media, a leading free-to-air television broadcasting company with diversified operations in radio broadcasting, media sales, content production and new media services.
By accepting the Prime Offer, you will become a shareholder in an enlarged group with a strong market position and attractive future growth prospects.
Prime Media is a major free-to-air television broadcaster with diversified operations in radio broadcasting, media sales, content production and new media services in Australia, owning businesses with exposure to markets characterised by significant operational upside and continuing media development.
By accepting the Prime Offer you will benefit from access to Prime Media's diversified business, platforms and expertise that would not otherwise be available to BPSL without significant investment. In the context of a rapidly changing media landscape Prime is positioning itself to leverage its brand strength and audience reach into new media sectors. Prime Media is developing a diversified media portfolio to support sustainable business models in a changing media environment and BPSL Shareholders who accept the Prime Offer will also be able to benefit from this diversification.
By accepting the Prime Offer you will become a shareholder in a company with superior investment characteristics to that of BPSL in its current form. These attributes include:
Greater financial scale
Prime Media possesses scale and diversification that has resulted in earnings consistency and reduced concentration risk to specific end markets.
Greater operational scale and coverage
Prime Media broadcasts the Seven Network programming through regional New South Wales, Victoria and Western Australia and has secured those rights with the Seven Network until 2017.
Prime Media has a strong radio network with 10 stations stretching along the Queensland coast, including one of the fastest growing markets in Australia, the Sunshine Coast.
Prime Media has strategic investments in new media platforms to leverage advertiser relationships into proprietary on line business models (Prime Digitalworks) and out-of-home digital signage (Prime Digital Media).
The scale and depth of product coverage throughout Australia affords Prime Media a strong position in the broadcasting and media markets in which it operates.
Strong growth outlook
Television
Prime is poised to deliver a strong ratings performance in this period and to continue to capture a dominant revenue share in its markets notwithstanding a tightening in broader market conditions, For personal use only use personal For due to its very successful coverage of the Beijing Olympics and the launch of various new series on the Seven Network and continuing episodes. Prime has a program supply agreement with the Seven Network until 2017.
Bidder's Statement - Offer 5
Radio
The recent acquisition of the Sunshine Coast HOT FM and ZINC FM stations has provided Prime Media the basis for establishing an integrated network of radio stations covering the fast growing coastal markets from the Sunshine Coast to Cairns.
New Media
Prime Digital Media
Prime Digital Media is a market leading Out-of-Home Digital (OOHD) Signage business. Prime Media believes that the exclusive 3 year partnership to jointly pursue opportunities for OOHD media within the Australian marketplace through complementary product and service solutions will provide future revenue growth.
iPrime
Prime Digitalworks Pty Limited (a wholly owned Subsidiary of Prime Media) (iPrime) has entered into a letter of intent to form a strategic partnership with Yahoo!7, the essential elements of which provide that in consideration for the exchange of content elements iPrime and Yahoo!7 will combine sale and strategy initiatives to exploit the extended platform into Prime Media's broadcast markets, and this is expected to truncate losses incurred to date and provide a basis to achieve profitability in the near term.
destra
destra Corporation Limited (destra) is a publicly listed company on ASX. Over recent years, destra has made a number of acquisitions across a range of mainly small businesses to build a media and entertainment group spanning video, music, magazine, online community, media sales representation and brand funded content production activities. destra’s largest shareholder is Prime which holds 43.83% of the shares in destra. destra is undertaking a strategic review of its operations.
On 24 October 2008, destra announced that is has entered into a loan agreement with Prime Media to meet short term cash flow requirements. The loan is a short term facility of up to $2.2 million to provide working capital assistance for the destra group to 31 December 2008 and in the interim period, given the continuing deteriorating economic environment, the destra board of directors has expedited urgent discussions with destra's bank to determine the best course of action in the interest of all destra stakeholders.
3. It may be difficult for you to sell your BPSL Shares on-market due to a lack of liquidity in BPSL Shares.
For personal use only use personal For A total of 212,634 BPSL Shares have traded in the 12 months prior to the announcement of the Prime Offer which constitutes 0.3% of the total share capital of BPSL. This level of trading in BPSL is considered illiquid. As such it may be difficult for you to sell your BPSL Shares on-market due to the lack of liquidity in BPSL Shares.
Bidder's Statement - Offer 6
4. Prime Media Shares are actively traded on ASX and as such the New Prime Media Shares represent a more liquid and readily tradeable investment.
The average daily volume of trading in Prime Media Shares for the 6 months prior to the announcement of the Prime Offer was approximately 190,672. The total volume over this period constitutes 20% of the total share capital of Prime Media. This provides a level of liquidity such that owners of Prime Media Shares are able to sell those shares on-market as required.
5. There are no competing proposals and Prime considers the likelihood of another bidder emerging is extremely unlikely given Prime Media currently holds a relevant interest in 76.04% of BPSL's issued capital.
Up to the date of this Bidder’s Statement, to the knowledge of the Prime Directors, no other proposal or offer has been received by the BPSL Board. The Prime Offer presents an opportunity for all BPSL Shareholders to acquire shares in Prime Media.
It is considered unlikely that another bidder will emerge, as such a bidder will be unable to acquire a large enough stake to exert control or influence over the company without the acceptance into such an offer by Prime.
Unless Prime Media and Prime agree to sell into a rival bid for BPSL, their collective current shareholding precludes any other bidder from acquiring the 90% minimum ownership level required to proceed to compulsory acquisition under Australian takeover law.
In addition, Prime Media and Prime's shareholding prevents any other party from acquiring control of BPSL through a scheme of arrangement without Prime Media's and Prime's agreement.
6. You may benefit from the payment of regular fully franked dividends.
Prime Media has a track record of paying its shareholders regular fully franked dividends.
BPSL Shareholders who accept the Prime Offer and are issued with New Prime Media Shares may receive regular dividend payments in the future. In contrast, BPSL has not paid dividends since 2006 and the BPSL Board has not indicated when the payment of dividends will resume.
Prime Media Declared Dividends
Interim Final 0.20 0.18 0.16 0.14 0.090 0.12 0.090 0.080 0.10 0.08 0.06 Total Dividend Paid ($) Paid Dividend Total 0.04 0.085 0.065 0.075
For personal use only use personal For 0.02 - 2006 2007 2008 Financial Year
Bidder's Statement - Offer 7
Prime Media has demonstrated dividend payments in the last few years as shown above. BPSL Shareholders should not view this as a forecast that dividends will be paid in the future or that they will be at similar levels to prior periods.
Prime Media has no formal dividend policy and the Prime Media board of directors has consideration of all relevant circumstances including the prevailing economic climate. Prime Media has consistently paid a dividend in each of the past 15 financial years.
7. The Prime Offer has no defeating conditions.
The Prime Offer has no defeating conditions.
8. The Prime Offer provides potential Australian Capital Gains Tax (CGT) roll-over relief.
BPSL Shareholders accepting the Prime Offer may be eligible for scrip for scrip CGT roll- over relief in relation to Prime Offer Consideration they receive on disposing of their BPSL Shares, in exchange for New Prime Media Shares. Please see section 9 for further details.
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Bidder's Statement - Offer 8
Key questions
This section answers some key questions that you may have about the Prime Offer and should only be read in conjunction with the entire Bidder's Statement.
What is the Bidder's The Bidder's Statement sets out the terms of the Prime Offer and Statement? information relating to the Prime Offer and the consideration you will receive.
What is the Prime Offer? Prime is offering to buy your BPSL Shares by way of an off- market takeover offer.
The Prime Offer consideration is 0.257 New Prime Media Shares for each BPSL Share.
What is the implied value of Based on the 10 day volume weighted average price of a Prime the Prime Offer? Media Share on ASX on 23 October 2008 (the last trading day before the announcement of the Prime Offer) the implied value of the Prime Offer is $0.55 per BPSL Share.
The implied value of the Prime Offer will change as a consequence of changes in the market price of Prime Media Shares.
What are the tax Please consult your financial, tax or other professional adviser on consequences if I accept the tax implications of accepting the Prime Offer. However, a the Prime Offer? general summary of the likely Australian tax consequences is set out in section 9.
How do I accept the Prime To accept the Prime Offer you should follow the instructions set Offer? out in section 11.7.
What choices do I have as a You have the following choices available to you: BPSL Shareholder? ACCEPT the Prime Offer for all your BPSL Shares, in which case you should follow the instructions in the Acceptance Form enclosed with the Bidder's Statement;
REJECT the Prime Offer, in which case you do not need to do anything; or
SELL some or all of your BPSL Shares on ASX (unless you have previously accepted the Prime Offer for your BPSL Shares).
For personal use only use personal For Can I accept the Prime Offer No, you can only accept for all of your holding. Your acceptance for part of my holding? will be treated as being for all your BPSL Shares plus any additional BPSL Shares registered as held by you at the date your acceptance is processed.
Bidder's Statement - Offer 9
What happens if I do Subject to what is stated below, you will remain the holder of nothing in relation to the your BPSL Shares if you do not accept the Prime Offer. Prime Offer? If Prime acquires a relevant interest in at least 90% of the BPSL Shares (by number) and at least 75% or more of the BPSL Shares which are the subject of the Prime Offer, Prime intends to proceed to compulsorily acquire your BPSL Shares (see section 5.2). At the conclusion of the compulsory acquisition process, you will be issued with 0.257 New Prime Media Shares for each BPSL Share which is compulsorily acquired. You will receive consideration for your BPSL Shares sooner if you accept the Prime Offer.
If Prime has an interest in less than 90% of the BPSL Shares, Prime will not be able to proceed to compulsorily acquire your BPSL Shares.
Can I withdraw my As the Prime Offer has no defeating conditions, BPSL acceptance? Shareholders do not have any right to withdraw their acceptance of the Prime Offer.
When does the Prime Offer The Prime Offer is currently scheduled to close at 7.00 pm close? (Sydney time) on 1 December 2008, unless extended or withdrawn.
Can Prime extend the Offer Yes, the Prime Offer can be extended by Prime or otherwise in Period? accordance with the Corporations Act. You will receive written notice of any extension, as required by the Corporations Act.
Can I sell the shares I Yes. You will be able to sell on ASX the New Prime Media receive from accepting the Shares you receive. Prime Offer on the market?
What if I am a foreign Certain foreign holders of BPSL Shares will not be entitled to shareholder? receive New Prime Media Shares on accepting the Prime Offer. These foreign shareholders who accept the Prime Offer will receive the net cash sale proceeds of New Prime Media Shares which they would otherwise have received (see section 11.18). The foreign holders to which this applies are holders of BPSL Shares whose address as shown in the register of members of BPSL is in a jurisdiction other than Australia and its external territories or New Zealand.
If I accept the Prime Offer, If you accept the Prime Offer Prime will, in the usual course, when will I receive New issue you with New Prime Media Shares on or before the earlier Prime Media Shares? of:
(a) the day 1 month after you accept the Prime Offer; and For personal use only use personal For (b) the day 21 days after the end of the Offer Period.
Full details of when you will be receive New Prime Media Shares are set out in section 11.15.
Bidder's Statement - Offer 10
Will I need to pay brokerage You will not pay any stamp duty on accepting the Prime Offer. or stamp duty if I accept the Prime Offer? If your BPSL Shares are registered in an Issuer Sponsored Holding in your name and you deliver them directly to Prime, you will not incur any brokerage connected with you accepting the Prime Offer.
If your BPSL Shares are in a CHESS Holding or you hold your BPSL Shares through a bank, custodian or other nominee, you should ask your Controlling Participant (usually, your Broker or the bank, custodian or other nominee) whether it will charge any transaction fees or service charges connected with you accepting the Prime Offer.
What are the conditions to There are no defeating conditions to the Prime Offer. the Prime Offer? However, the Prime Offer is conditional upon permission for admission to quotation being granted by ASX no later than 7 days after the end of the Offer Period for the New Prime Media Shares to be issued under the Prime Offer.
This condition cannot be waived. If this condition is not fulfilled, all contracts resulting from the acceptance of the Prime Offer will be automatically void. This condition is set out in section 11.13.
Are there any risks in If you accept the Prime Offer you will become a shareholder in accepting the Prime Offer? Prime Media. There are risks in holding New Prime Media Shares and these are set out in section 8. You are already exposed to several of these risks, to varying degrees, as a result of holding BPSL Shares.
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Bidder's Statement - Offer 11
What you should do next
Step 1: Carefully read the entire Bidder's Statement and consider the information provided.
Step 2: Read the Target's Statement to be provided by BPSL.
Step 3: If you need advice, consult your Broker or your legal, financial or other professional adviser.
If you have any queries about this document, the Prime Offer or how to accept the Prime Offer, please contact the Prime Offer Information Line on:
For Australian callers: 1800 770 850 (toll free) For international callers: +61 2 8280 7714
The Prime Offer Information Line is available Monday to Friday between 8.30 am and 5.30 pm (Sydney time).
Step 4: If you wish to accept the Prime Offer follow the instructions below.
How to accept the Prime Offer
You should read section 11.7 for full details on how to accept the Prime Offer.
If your BPSL Shares are in a CHESS Holding, to accept you must either:
instruct your Controlling Participant to accept the Prime Offer on your behalf; or
complete, sign and return the enclosed Acceptance Form in accordance with the instructions on it.
If you are a Participant (as defined in the ASTC Settlement Rules) (typically, a stockbroker who is a participating organisation of ASTC), the above does not apply. To accept the Prime Offer you must initiate acceptance in accordance with the ASTC Settlement Rules.
If your BPSL Shares are in an Issuer Sponsored Holding or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of your BPSL Shares, to accept you must complete, sign and return the Acceptance Form in accordance with the instructions on it.
If your SRN/HIN begins with an "I", this typically indicates that your BPSL Shares are in an Issuer Sponsored Holding.
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Bidder's Statement - Offer 12
1. Summary of the Prime Offer
The Bidder Prime is the company making the Prime Offer.
The Prime Offer Prime offers to acquire all of your BPSL Shares.
Prime Offer You are offered 0.257 New Prime Media Shares for each of your BPSL Consideration Shares.
Closing date Unless withdrawn or extended the Prime Offer is open until 7.00 pm (Sydney time) on 1 December 2008.
Payment date If you accept the Prime Offer, Prime will issue you with New Prime Media Shares for your BPSL Shares to which Prime acquires good title on or before the earlier of:
(a) the day 1 month after you accept the Prime Offer; and
(b) the day 21 days after the end of the Offer Period.
Full details on when you will be paid are set out in section 11.15.
Conditions There are no conditions attached to the Prime Offer other than the statutory condition of permission for admission to quotation being granted by ASX no later than 7 days after the end of the Offer Period for the New Prime Media Shares to be issued under the Prime Offer.
How to accept CHESS Holdings
You should read section 11.7 for full details on how to accept the Prime Offer.
If your BPSL Shares are in a CHESS Holding, to accept you must either:
instruct your Controlling Participant (usually your Broker) to accept the Prime Offer for you; or
complete, sign and return the Acceptance Form.
Issuer Sponsored Holdings
If your BPSL Shares are in an Issuer Sponsored Holding or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of your BPSL Shares, to accept you must complete, sign and return the Acceptance Form.
Signed Acceptance Forms must be sent to:
Prime Takeover BPSL Offer C/- Link Market Services Limited
For personal use only use personal For Reply paid 1524 SYDNEY SOUTH NSW 1234
A self addressed reply paid envelope is enclosed.
Bidder's Statement - Offer 13
No stamp duty You will not pay any stamp duty on accepting the Prime Offer.
Further For questions about your BPSL Shares, the Prime Offer or how to accept information the Prime Offer please refer to the remainder of the Bidder's Statement. If you still need assistance, please call the Prime Offer Information Line on:
For Australian callers: 1800 770 850 (toll free) For international callers: +61 2 8280 7714
The Prime Offer Information Line is available Monday to Friday between
8.30 am and 5.30 pm (Sydney time). For personal use only use personal For
Bidder's Statement - Offer 14
2. Information on Prime and Prime Media
2.1 Prime
Prime is a direct wholly owned subsidiary of Prime Media Group Limited.
2.2 Prime Media Group Limited
Prime Media (formerly called Prime Television Limited) is a regional free-to-air television and radio broadcaster which is listed on ASX and has a market capitalisation of approximately $255 million as at 23 October 2008.
Television
Prime Media, a Seven Network affiliate, operates a television network in the regional areas of New South Wales, Victoria and Western Australia, and in the ACT. Its licensed viewing area has a potential audience of approximately 4.5 million people – nearly one quarter of the Australian population.
Prime Media's core television business has been strengthened by the resurgence of the Seven Network and in 2006, Prime Media extended its affiliation agreement for another 10 years.
In 2006, Prime Media also commenced a joint venture with the privately owned regional network WIN TV to provide a third commercial television service in Mildura, Victoria. During the next 12 months Prime Media will commence a similar joint venture service into Regional Western Australia.
Radio
Prime Media moved into the radio broadcasting industry in 2005 with the acquisition of six stations in the strong Queensland growth markets of Cairns, Townsville, Rockhampton, Gladstone and Mackay. Prime Media purchased a further four stations in regional Queensland during 2007. The Prime Media radio network now comprises 10 stations along the Queensland coast stretching from the Sunshine Coast to Cairns and its licensed listening areas have a potential audience of approximately one million people.
Digital and new media
Prime Media has recently expanded into the digital and new media sectors through a number of strategic investments:
(a) Prime Digital Media (PDM) – in store digital signage networks. PDM has major partnerships with Retravision, Boost Juice, Sigma Pharmaceuticals and recently formed a major partnership deal with Telstra.
(b) iPRIME – network of localised web sites covering the Prime Media television viewing areas.
(c) Yahoo!7 - in August 2008, iPrime entered into a letter of intent to form a strategic partnership with Yahoo!7 to share content in several areas including news feed.
For personal use only use personal For National presence
As part of its television and radio networks, Prime Media has 37 local sales offices throughout regional Australia. Prime Media also has national sales offices in Sydney, Melbourne, Brisbane and Perth. The most significant of Prime Media’s broadcasting
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facilities are located in Canberra, Wollongong, Maroochydore, Wagga Wagga, Orange, Tamworth, Albury and Bunbury.
Revenues
Prime Media’s revenues are sourced from the sale of advertising on its television and radio networks as well as the provision of television and broadcast production services.
Over the past four years Prime Media has consistently achieved above market revenue growth in its television and radio markets.
Positive trend
The embedded strength of the Seven Network programming – featuring ratings leaders in the current period such as coverage of the Beijing Olympics and the launch of new series on the Seven Network such as "Packed To The Rafters" and "Make Me a Supermodel" coupled with the coverage of the "AFL Final Series" and "Grand Final", Prime Media is poised to deliver strong ratings performance in the period ahead and to continue to capture a dominant revenue share in its markets notwithstanding a tightening in broader market conditions.
2.3 Prime Media financial highlights
Highlights of the result for the year ended 30 June 2008 include:
a net profit after tax from continuing operations (before significant items) of $31.4 million which represents an increase of 5% over the prior period;
pre-tax profit from continued operations (before significant items) rose 11.3%;
increase from continuing operations of 24.4% to $264.3 million; and
a final dividend of 9.0 cents per share fully franked, bringing the full years dividend to 17.5 cents, an increase of 6.1%.
Commenting on the result for the year ended 30 June 2008, Chief Executive Officer, Warwick Syphers concluded: "This is a strong result for the company's core operating business reflecting primarily the continued success of Seven Network programming across all our regional markets, and a continuing strong focus on achieving operating efficiencies in all areas of our businesses."
2.4 Financial performance of Prime Media
The Annual Report of Prime Media for the financial year ended 30 June 2008 was released to ASX on 22 October 2008. BPSL Shareholders should refer to this document for the latest results and commentary on the financial performance of Prime Media.
2.5 Directors of Prime Media
(a) Paul Joseph Ramsay AO (Non-executive Chairman)
Mr Ramsay is Chairman of the Paul Ramsay Group of companies, which have operated for more than 45 years in real estate, health care and communications. He is the Chairman and majority shareholder of Ramsay Health Care Limited. Mr
For personal use only use personal For Ramsay is also currently a director of the “George Gregan Foundation”, the “Youth Mental Health Advisory Board” and “The Australian Science Media Centre”. During the last three years Mr Ramsay has also served as a director of the following listed companies:
Bidder's Statement - Offer 16
Ramsay Health Care Limited (Current Chairman)
Broadcast Production Services Limited (ceased 26 May 2008)
(b) Michael Stanley Siddle (Non-Executive Deputy Chairman)
Mr Siddle has been Deputy Chairman of the Paul Ramsay Group since 1967. He is Deputy Chairman of Ramsay Health Care Limited and has been a Director of Prime Media since 1985. During the last three years Mr Siddle has also served as a director of the following listed company:
Ramsay Health Care Limited (Current Deputy Chairman)
(c) Peter John Evans FCA (Non-executive Director)
Mr Evans is a Chartered Accountant, and was in public practice for almost 20 years as a partner in an international accounting firm before becoming a sole practitioner. He has been a Director of the Paul Ramsay Group since 1987. During the last three years Mr Evans has also served as a director of the following listed companies:
Ramsay Health Care Limited (Current)
Broadcast Production Services Limited (Current Chairman, appointed 6 July 2007)
destra Corporation Limited (Current, appointed 22 April 2008)
(d) Patrick Terry Jackman AM (Non-executive Director)
Mr Jackman is due to retire by rotation at the annual general meeting of Prime Media on 27 November 2008 and he is not seeking re-election.
Mr Jackman has 40 years experience in the entertainment industry. He formerly held the positions of Managing Director of Hoyts Theatres Limited, Chief Executive of Birch, Carroll and Coyle Limited, and Chairman of Indycar Australia and Tourism Queensland. Mr Jackman is currently sole proprietor of Pacific Cinemas Pty Ltd, one of Australia’s largest privately owned cinema exhibition groups. During the last three years Mr Jackman has also served as a director of the following listed company:
Sunland Group Limited (Current Chairman)
(e) Alexander Andrew Hamill (Non-executive Director)
Mr Hamill has worked in marketing and advertising in Australia and globally for over 45 years. He is currently on the board of McGrath Real Estate. He is the Chairman of the John MacLean Foundation and patron of the Dymocks Literacy Foundation. Mr Hamill was the Media Director of the Australian Olympic Team in Sydney (2000), Athens (2004) and Beijing (2008). During the last three years Mr Hamill has not served as a director of any other listed companies.
(f) Ian Patrick Grier (Non-executive director)
For personal use only use personal For Mr Grier has been employed as an executive in the private health care industry for more than 20 years. In June 2008, he retired as Managing Director of Ramsay Health Care after joining the company in 1988 and serving at the helm since 1994.
Mr Grier has served as both President and Chairman of the Australian Private Hospitals Association and sits on a number of industry committees. Mr Grier has
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served as an Executive Director on the Ramsay Health Care Board for 12 years and from 1 July 2008 continues as a Non-executive Director of Ramsay Health Care. During the last three years Mr Grier has also served as a director of the following list company:
Ramsay Health Care Limited (Current)
(g) Ian Richard Neal (Non-executive director)
Mr Neal is the principal of Management Abroad Pty Limited. He is the Chairman for the Executive Connection and consults on business strategy and implementation from a perspective of maximising shareholder value. Prior to Management Abroad, Mr Neal was co-founder and Managing Director of Nanyang Venture Pty Limited from 1993-2004. Mr Neal has also served as a director of the following listed companies:
Intrapower Limited (Current)
Dyesol Limited (Current)
Arasor Limited (resigned 15 July 2008)
(h) Warwick David Syphers (Executive Director, Chief Executive Officer)
Mr Syphers was appointed Chief Executive Officer of Prime Media in August 2005. Mr Syphers has over 25 years industry experience having joined STW 9 in Perth in 1982 and has held senior management positions with Prime Media since joining the company in 1987. He was appointed Chief Financial Officer in March 2003 and Group General Manager in March 2004. He has been a Certified Practising Accountant for over 20 years. During the last three years Mr Syphers has also served as a director of the following listed companies:
destra Corporation Limited (Current, appointed 7 May 2007)
Broadcast Production Services Limited (Current, appointed 6 July 2007)
2.6 Prime Media is a disclosing entity
Due to the fact that Prime is offering (through its parent entity) New Prime Media Shares as consideration under the Prime Offer, the Corporations Act requires that this Bidder’s Statement include all information that would be required for a prospectus for an offer of New Prime Media Shares under sections 710 to 713 of the Corporations Act. Prime does not need to issue a prospectus for the Prime Offer of the New Prime Media Shares as the Prime Offer is occurring under a takeover bid.
Prime Media is a disclosing entity (as defined in section 111AC of the Corporations Act) for the purposes of section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, as a listed company Prime Media is subject to the ASX Listing Rules which require continuous disclosure of any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of Prime Media’s securities. Prime Media Shares have been quoted on ASX during the 12 months prior to the date of this Bidder’s Statement.
For this reason, Prime Media is only required to disclose information in this Bidder’s For personal use only use personal For Statement that would usually be required in "transaction specific prospectus".
In general terms, "transaction specific prospectuses" are only required to contain information in relation to the effect of the issue of securities on Prime Media and the rights and liabilities attaching to the Prime Media Shares. It is not necessary to include general
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information in relation to all the assets and liabilities, financial position and performance, profits and losses or prospects of the issuing company, unless such information has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules and it is information that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of such matters and the rights and liabilities attaching to Prime Media Shares.
Information that is already in the public domain has not been reported in this Bidder’s Statement other than that which is considered necessary to make this Bidders Statement complete.
Prime Media, as a disclosing entity under the Corporations Act, states that:
(a) it is subject to regular reporting and disclosure obligations;
(b) copies of documents lodged with ASIC in relation to Prime Media (not being documents referred to in section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, an ASIC office; and
(c) it will provide a copy of each of the following documents to any person who asks Prime for a copy of any of those documents during the Offer Period:
(i) the annual financial report most recently lodged with ASIC by Prime Media;
(ii) the half year financial report lodged with ASIC by Prime Media on 31 December 2007;
(iii) all continuous disclosure notices given by Prime Media after the lodgement of that annual financial report and before the lodgement of this document with ASIC.
Recipients of this Bidder's Statement who ask Prime for a copy of any of these documents during the Offer Period will be given copies free of charge. The contact for this purpose is Mr Andrew Cooper at 363 Antill Street, Watson, ACT, 2602 on +61 2 6242 3700. Copies of this information can also be accessed in electronic format free of charge at www.asx.com.au through the ASX Code "PRT".
For details of documents lodged with ASX since the financial year ended 30 June 2008, please refer to Annexure A.
Other than information contained in this Bidder’s Statement, there is no information which has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules and is information that a BPSL Shareholder or a professional adviser to a BPSL Shareholder would reasonably require for the purposes of making an informed assessment of:
(a) the assets and liabilities, financial position and performance, profits and losses and prospects of Prime Media; or
(b) the rights and liabilities attaching to the Prime Media Shares. For personal use only use personal For
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2.7 Disclosure of interests and benefits
(a) Interested Person
For the purposes of sections 2.7(b) and 2.7(c) an Interested Person is:
(i) a director or proposed director of Prime Media;
(ii) a person named in this Bidder's Statement as performing a function in a professional, advisory or other capacity in connection with preparing or distributing this Bidder's Statement;
(iii) a promoter of Prime Media; or
(iv) a broker or underwriter to the issue of New Prime Media Shares.
(b) Interests
Except as disclosed in this Bidder's Statement no Interested Person holds or held at any time during the 2 years before the date of this Bidder's Statement any interest in:
(i) forming or promoting Prime Media;
(ii) property acquired or proposed to be acquired by Prime Media in connection with:
(A) forming or promoting Prime Media; or
(B) the offer of New Prime Media Shares; or
(iii) the offer of New Prime Media Shares.
(c) Benefits
Except as disclosed in this Bidder's Statement no one has paid or agreed to pay fees or given or agreed to give any benefit to:
(i) a director or proposed director of Prime Media to induce that person to become or qualify as a director of Prime Media; or
(ii) any Interested Person for services provided by that person in connection with:
(A) forming or promoting Prime Media; or
(B) the offer of New Prime Media Shares under the Prime Offer. For personal use only use personal For
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3. Information about Prime Media's securities
3.1 Prime Media issued securities
(a) Ordinary shares
As at the date of this Bidder's Statement Prime Media has 127,466,237 fully paid ordinary shares which were held by 1408 shareholders.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders' meetings.
On 1 May 2008, Prime Media announced a share buy back program, which will enable it to make on-market purchases of up to 12,499,700 ordinary shares. The shares buy-back program is open for 12 months from 19 May 2008.
As at the date of this Bidder's Statement Prime Media has purchased a total of 972,062 ordinary shares in itself pursuant to the share buy back program. Since 30 June 2008, Prime Media has purchased 422,197 ordinary shares in itself for $1,042,209.34.
On 11 September 2008, Prime Media issued 98,551 ordinary shares in consideration of employee bonus and 259,939 ordinary shares in consideration for advisory services provided to the company for a total consideration of $1,190,000.
(b) Employee Share Option Scheme
As at the date of this Bidder's Statement Prime Media has 2,850,000 unlisted options to acquire fully paid Prime Media Shares at certain exercise prices in the future.
Option holders do not have any right, by virtue of the option, to participate in any share issue of the company or any related body corporate.
The Prime Media Group has in place an Executive Share Option Scheme. Participation in the Scheme is available to any director of Prime Media and any person who is in the employment of the Prime Media Group. Recommendations in respect of allocations of share options under the scheme are made by the Remuneration Committee, for approval by the Board. In accordance with the ASX Listing Rules, options proposed to be issued to executive directors are submitted for approval by shareholders in general meeting.
The total number of options on issue by Prime Media shall not at any time exceed 5% of Prime Media’s total number of ordinary shares on issue of which the total number of options on issue by Prime Media to directors of Prime Media shall not exceed 2.5% of the total number of ordinary shares on issue.
The weighted average exercise price of Executive Share Options granted:
prior to the beginning of the financial year ended 30 June 2008, is $3.31; and
For personal use only use personal For during the financial year ended 30 June 2008, is $3.65.
The Executive Share Options, are subject to specific conditions regulating their exercise which include phased vesting on an annual basis with full vesting after three years, and the requirements for Prime Media's share price to appreciate by
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at least 20% above the offering price (exercise price) of the options for a continuous period of at least three ASX trading days following the grant date, as a pre-condition to exercise.
BPSL Shareholders should refer to the Annual Report of Prime Media for the financial year ended 30 June 2008 for the latest information and commentary on Prime Media Group's Executive Share Option Scheme.
3.2 Substantial shareholders
As at the date of this Bidder's Statement, the following entities had notified Prime Media of a current substantial holding in Prime Media:
Investor Date of last notice Person's votes Voting power
Paradice Investment 12/09/2008 7,717,859 6.05% Management Pty Ltd
Paul Joseph Ramsay 16/09/2008 53,804,169 42.21%
Investors Mutual 25/09/2007 14,074,545 11.04% Limited
452 Capital Pty 04/06/2008 11,215,970 8.80% Limited
Perpetual Limited and 04/06/2008 16,762,475 13.15% subsidiaries
Commonwealth Bank 28/05/2008 13,106,239 10.28% Group
3.3 Directors' interests in Prime Media
As at the date of this Bidder's Statement, the following Prime Media directors have a relevant interest in Prime Media Shares and Prime Media executive share options for their own benefit or have an interest in holdings through a third party:
Prime Media Number of Prime Media Nature of holding director securities held
Paul Joseph Ramsay 53,804,169 Prime Media Direct and indirect (Non-executive Shares Chairman)
Michael Stanley 415,210 Prime Media Shares Direct and indirect Siddle (Non-executive Deputy Chairman)
Peter John Evans 5,000 Prime Media Shares Direct
For personal use only use personal For FCA (Non-executive director)
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Prime Media Number of Prime Media Nature of holding director securities held
Patrick Terry NIL NIL Jackman AM (Non- executive director)
Alexander Andrew NIL NIL Hamill (Non-executive director)
Ian Patrick Grier NIL NIL (Non-executive director) (Non- executive director)
Ian Richard Neal NIL NIL (Non-executive director)
Warwick David 500 Prime Media Shares Direct Syphers (Executive director) 5,000 Prime Media executive share options
1,500,000 Prime Media Indirect executive share options
3.4 Recent trading of Prime Media's securities
The last recorded closing sale price of Prime Media Shares on 23 October 2008 before the public announcement of the Prime Offer was $2.00.
The highest recorded daily closing price of Prime Media Shares on the ASX in the four months before the date of this Bidder's Statement was $2.70 on 4 July 2008.
The lowest recorded daily closing price of Prime Media Shares on the ASX in the four months before the date of this Bidder's Statement was $2.00 on 23 October 2008.
The following graph sets out the daily closing price and daily volume of Prime Media Shares traded on ASX from 24 October 2007 to 23 October 2008.
$4.50 7,000,000
$4.00 6,000,000
$3.50 5,000,000 $3.00
$2.50 4,000,000
$2.00 3,000,000 Volume
Share Price For personal use only use personal For $1.50 2,000,000 $1.00
1,000,000 $0.50
$0.00 0 Oct-07 Dec-07 Jan-08 Feb-08 Apr-08 May -08 Jul-08 Aug-08 Sep-08
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The volume weighted average share price of Prime Media Shares:
$2.30 over the three months to 23 October 2008;
$2.17 over the one month to 23 October 2008; and
$2.14 over the 10 days to 23 October 2008.
3.5 Rights attaching to New Prime Media Shares
(a) Ranking of New Prime Media Shares
The New Prime Media Shares to be issued under the Prime Offers will be issued fully paid, from the date of their issue, and will rank equally for dividends and other rights with existing Prime Media Shares.
The rights attaching to ownership of the Prime Media shares arise from a combination of the Prime Media constitution, statute, the ASX Listing Rules and general law.
(b) The constitution of Prime Media
Under section 140(1) of the Corporations Act, the constitution of Prime Media has effect as a contract between Prime Media and each member and between a member of Prime Media and each other member. Accordingly, if you accept New Prime Media Shares as consideration you will, as a result, become liable to comply with the constitution of Prime Media.
Since the New Prime Media Shares issued as consideration under the Prime Offers will be issued credited as fully paid, no monetary liability attaches to them.
The rights and restrictions attaching to the New Prime Media Shares that will be provided as consideration under the Prime Offer are set out in Prime Media's constitution and are subject to statutory, common law and ASX Listing Rules requirements.
Each recipient of this Bidder's Statement has a right to obtain a copy of the Prime Media constitution. Recipients of this Bidder's Statement who ask Prime for a copy of any of the Prime Media constitution will be given a copy free of charge. The contact for this purpose is Mr Andrew Cooper at 363 Antill Street, Watson, ACT, 2602 on +61 2 6242 3700.
(c) Summary of significant rights attaching to Prime Media shares
A summary of the significant rights attaching to the Prime Media shares is set out below. This summary does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of shareholders of Prime Media. Such rights involve complex questions of law arising from the interaction of the constitution and statutory and common law requirements. Shareholders should seek their own advice when trying to establish their rights in specific circumstances.
(i) Voting at a general meeting
Subject to the Corporations Act, ASX Listing Rules, votes of joint holders
For personal use only use personal For and the terms on which the New Prime Media Shares are issued:
(A) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote (unless a shareholder has appointed two proxies, in which case neither proxy may vote).
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(B) on a poll, every shareholder present has one vote for each fully paid share held and a fraction of a vote for each partly paid share. The fraction shall be equivalent to the proportion which the amount paid (not credited) bears to the total issue price of the share, excluding amounts paid in advance of a call.
Voting at any general meeting is by a show of hands unless a poll is demanded by at least five shareholders entitled to vote on the resolution, by shareholders entitled to cast at least 5% of the votes that may be cast on the resolution on a poll, or by the chairman.
(ii) Meetings of members
Each Prime Media shareholder is entitled to receive notice of, attend and vote at meetings of Prime Media. At least 28 days written notice of a general meeting must be given individually to each shareholder. However, if a Prime Media Shares is held jointly, Prime Media need only give notice to one member of the joint ownership.
A general meeting may be held in two or more places linked together by technology that allows shareholders a reasonably opportunity to participate in the meeting.
(iii) Dividends
Subject to the Corporations Act and the terms of issue of shares, the Prime Media directors may pay a dividend (whether interim, final or otherwise) out of the profits of the company, and fix the amount, time and method of payment. The methods of payment that the Prime Media Board may resolve to pay the dividend may include the payment of cash, the issue of securities or the transfer of assets.
Subject to the terms of issue of the shares and the right of person (if any) entitled to shares with special rights as to dividends, dividends are payable on all Prime Media Shares in proportion to the amount of the total issue price paid or payable (excluding amounts credited) for the Prime Media Shares.
Prime Media is not required to pay any interest on dividends.
(iv) Transfer of Prime Media shares
Subject to the Prime Media's constitution, a shareholder may transfer a Prime Media share by a written transfer which shows the jurisdiction of registration of Prime Media, relates only to shares of one class, and is a sufficient instrument of transfer of marketable securities under the Corporations Act or in any other form approved by the Prime Media Board or ASX.
A shareholder may also transfer Prime Media shares in accordance with the ASTC Settlement Rules and ASX requirements.
If any securities are classified as restricted securities under the ASX
Listing Rules, the shareholder may not dispose of them and Prime Media For personal use only use personal For must not register a transfer or otherwise acknowledge a disposal, during the escrow period set by the restriction agreement, except as permitted by the ASX Listing Rules or ASX.
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The Prime Media Board may refuse to register a transfer of Prime Media shares in circumstances permitted by the ASX Listing Rules or the ASTC Settlement Rules. The Prime Media Board must refuse to register a transfer of Prime Media shares where required to do so by the Corporations Act, the ASX Listing Rules or the ASTC Settlement Rules. If a transfer is refused, Prime Media must give the lodging party notice and reasons for refusal within five business days after the date on which the transfer was delivered.
Prime Media will not charge any fee for registering a transfer of Prime Media shares.
(v) Winding up
If Prime Media is wound up, the liquidator may, with the sanction of a special resolution, divide among the shareholders in specie or kind the whole or part of the assets of Prime Media, and for that purpose set such value of the assets and decide how the division is to be carried out as between the shareholders and different classes of shareholders. The liquidator may, with the sanction of a special resolution, also vest assets of Prime Media in trustees on any trusts for the benefit of the shareholders as the liquidator thinks fit.
(vi) Future issues
Subject to the Corporations Act, ASX Listing Rules and any special rights conferred on the holders of any existing securities or class of securities in Prime Media, Prime Media may issue Prime Media securities including shares and options over Prime Media Shares as and when the Prime Media Board determines and on such terms and conditions as the Prime Media Board considers appropriate.
(vii) Variation of class rights
Subject to the Corporations Act, rights attaching to a particular class of shares may be varied or abrogated by a special resolution passed at a separate meeting of the holders of the issued shares of that class or by the consent in writing of the holders of at least 75% of the issued shares of that class.
(viii) Dividend reinvestment plans
Prime Media’s constitution authorises the Prime Media directors to establish and maintain dividend reinvestment plans (whereby any member may elect that dividends payable by Prime Media be reinvested by way of subscription for shares in Prime Media).
(ix) Alteration of Prime Media's constitution
Prime Media's constitution can only be amended by special resolution passed by at least 75% of Prime Media shareholders present and voting at a general meeting of Prime Media. Prime Media must give at least 21 days written notice of its intention to propose a resolution as a special
For personal use only use personal For resolution.
Bidder's Statement - Offer 26
3.6 ASX listing of New Prime Media Shares
Prime Media will apply for official quotation on ASX of the New Prime Media Shares to be issued under the Takeover Bid. Quotation will not be automatic but will depend on ASX exercising its discretion. Prime Media has already been admitted to the official list of ASX and shares in Prime Media of the same class as those to be issued under the Takeover Bid are already quoted. But Prime Media cannot guarantee, and does not represent or
imply, that the New Prime Media Shares will be listed. For personal use only use personal For
Bidder's Statement - Offer 27
4. Information on BPSL and BPSL Shares
4.1 Source of information on BPSL
The information in this section concerning BPSL has been prepared by Prime using primarily publicly available information and has not been independently verified. Accordingly Prime does not make any representation or warranty, express or implied, as to the accuracy or completeness of this information, other than as required by the Corporations Act.
The information on BPSL should not be considered comprehensive. Further information relating to BPSL may be included in BPSL's Target Statement which will be sent to you by BPSL.
4.2 Overview of BPSL
The principal activities of BPSL are the provision of outside broadcasting facilities and services in New Zealand, Australia and internationally, the development and production of television programmes in Australia and Asia and the operation of the Moonlight outdoor cinemas in New South Wales, Victoria, Queensland, South Australia and Western Australia. In August 2008 On Site Broadcasting (NZ) Limited, a wholly owned subsidiary of BPSL, took delivery of a second high definition television outside broadcasting van to meet its obligations under the outside broadcasting television agreement with Sky Network Limited, the term of which was extended to 31 December 2016 in May 2008.
On 21 August 2008 On Site Broadcasting Pty Ltd (OSB), a wholly owned subsidiary of BPSL, completed the purchase of the zer01zer0 outside broadcasting business for a price of $6 million. As part of the transaction, OSB took over various equipment supply contracts relating principally to the construction and equipping of high definition television outside broadcasting vans to meet obligations under the contract with Fox Sports for A-League and other Australian football events during 2008 – 2013.
In September 2008, BPSL also sold its internet television Moonlight TV to Swish Group Limited.
4.3 Financial performance of BPSL
The financial statements and statutory information of BPSL for the financial year ended 30 June 2008 were released to ASX on 30 September 2008. BPSL Shareholders should refer to this document for the latest results and commentary on the financial performance of BPSL.
4.4 Directors of BPSL
Peter John Evans FCA
Warwick David Syphers
Phillip Brent Harman
4.5 Publicly available information
For personal use only use personal For BPSL is a company listed on ASX and is subject to the periodic and continuous disclosure requirements of the Corporations Act and ASX Listing Rules. For information concerning the financial position and affairs of BPSL, you should refer to the information that has been disclosed by BPSL in accordance with these obligations.
Bidder's Statement - Offer 28
The Annual Report for BPSL for the year ended 30 June 2007 was lodged with ASIC on 12 October 2007 and given to ASX on that date. The half year report for BPSL for the six months ended 31 December 2007 was lodged with ASIC on 25 February 2008 and given to ASX on that date. The Financial Statements and Statutory Information for BPSL for the year ended 30 June 2008 were given to ASX on 30 September 2008.
A list of announcements which have been lodged with ASX since the financial year ended 30 June 2007 is set out in Annexure B. This information may be relevant to your assessment of the Prime Offer. A copy of each of these announcements can be obtained from ASX. In addition, copies of other major announcements by BPSL can be obtained from BPSL's corporate website www.beckers.com.au.
In particular, Prime considers that the following information summarised from BPSL's Financial Statements and Statutory Information for BPSL for the year ended 30 June 2008 may be material to the making of a decision by an offeree whether or not to accept the Prime Offer:
(a) revenues of BPSL's continuing operations are down 10.3%;
(b) no dividend was paid for 2007 and BPSL does not intend to pay a dividend for the 2008 financial year;
(c) net profit after tax from continuing operations increased to $1,103,000; and
(d) net profit of BPSL for the period attributable to members increased to $1,369,000.
Other than the announcements referred to above or elsewhere in this Bidder's Statement, BPSL has not made any announcements to ASX since 30 June 2008 which Prime considers may be material to the making of a decision by an offeree whether or not to accept the Prime Offer
4.6 Capital Structure of BPSL
According to documents lodged by BPSL with ASX as at the date this Bidder's Statement is lodged with ASIC, the total number of securities in BPSL is as follows:
(a) 64,653,617 BPSL Shares; and
(b) 2,600,000 BPSL Executive Options, with exercise dates and exercise prices as set out below:
Number of BPSL Exercise Date Exercise Price Executive Options
200,000 7 March 2009 $0.15
2,000,000 24 August 2009 $0.34
400,000 6 July 2010 $0.20
For personal use only use personal For
Bidder's Statement - Offer 29
4.7 Prime's relevant interest in BPSL securities
The number of securities that Prime had a relevant interest in (as at the dates specified) is shown below:
Class At date of this Bidder's At date first Offer is sent Statement
BPSL Shares 49,164,287 49,164,287
BPSL Executive Options 2,600,000 2,600,000
4.8 Prime's voting power in BPSL
Prime's voting power in BPSL (as at the dates specified) is shown below:
At date of this Bidder's At date first Offer is sent Statement
voting power in BPSL 76.04% 76.04%
4.9 Prime Directors' interests in BPSL
As at the date of this Bidder's Statement, no Prime Directors have a relevant interest in BPSL Shares for their own benefit or have an interest in holdings through a third party.
4.10 Prime Media directors' interests in BPSL
As at the date of this Bidder's Statement, no Prime Media directors have a relevant interest in BPSL Shares for their own benefit or have an interest in holdings through a third party except as disclosed below:
Prime Media Number of BPSL Shares held Nature of holding director
Paul Joseph Ramsay 49,164,287 Indirect
4.11 Acquisition by Prime of BPSL Shares during previous 4 months
During the period beginning 4 months before the date on which this Bidder's Statement is lodged with ASIC and ending the day before the date of the Prime Offer, neither Prime nor any associate of Prime has provided, or agreed to provide, consideration for a BPSL
Share. For personal use only use personal For
Bidder's Statement - Offer 30
4.12 Inducing benefits given by Prime during previous 4 months
Except as set out in this Bidder's Statement, during the period beginning 4 months before the date on which this Bidder's Statement is lodged with ASIC and ending the day before the date of the Prime Offer, neither Prime nor any associate of Prime, gave, or offered to give or agreed to give a benefit to another person that is not available under the Prime Offers and was likely to induce the other person, or an associate of the other person, to:
(a) accept an Offer; or
(b) dispose of BPSL Shares. For personal use only use personal For
Bidder's Statement - Offer 31
5. Prime's intentions
5.1 Overview
In formulating the Prime Offers, Prime has considered and evaluated BPSL's assets, based on the information which was in the public domain and available to it Prime aims to obtain a relevant interest of 90% or more (by number) of the BPSL Shares and acquire 75% or more of the BPSL Shares for which it has made the Prime Offer.
Set out in this section 5 are Prime's intentions for BPSL. These intentions are based on the information concerning BPSL which is known to Prime and the existing circumstances affecting the business of BPSL, at the date of this Bidder's Statement.
5.2 Compulsory acquisition of BPSL Shares
If, as a result of the Prime Offers, Prime becomes entitled to compulsorily acquire outstanding BPSL Shares under Part 6A.1 of the Corporations Act, Prime presently intends to proceed with compulsory acquisition of those BPSL Shares.
5.3 Intentions for BPSL as a wholly owned subsidiary
The intentions of Prime if BPSL becomes a wholly owned subsidiary of Prime are set out in this section 5.3.
(a) BPSL Board
Prime intends that the BPSL Board, and the board of directors of any company in the BPSL, will comprise nominees of Prime Media.
(b) Removal of BPSL from ASX
Subject to any applicable ASX Listing Rules or provisions of the Corporations Act, Prime intends to take steps to remove BPSL from the official list of ASX.
(c) Impact on employees
Subject to a strategic review, Prime intends to review the positions of all BPSL employees with a view to integrating them into Prime Media's operations. As at the date of this Bidder's Statement no specific redundancies have been identified.
(d) BPSL Executive Options
Prime has not decided whether it will exercise the BPSL Executive Options.
5.4 Other intentions
Subject to the above it is the present intention of Prime, on the basis of the information concerning BPSL which is known to it and the existing circumstances affecting the business of BPSL, that:
(a) the business of BPSL will otherwise be continued in substantially the same manner as it is presently being conducted;
For personal use only use personal For (b) no other major changes will be made to the business of BPSL;
(c) there will not be any other redeployment of the fixed assets of BPSL; and
(d) the present employees of BPSL will otherwise continue to be employed by BPSL.
Bidder's Statement - Offer 32
6. Profile of the Merged Entity
6.1 Overview of the Merged Entity
The Merged Entity will be a leading free-to-air television Australian broadcasting company with diversified operations in outside broadcasting facilities and services in Australia, New Zealand and internationally, radio broadcasting, media sales and new media services in Australia, television program development and production in Australia and the Asia-Pacific region and the operation of outdoor cinemas in Australia.
6.2 Strategic benefits
The principal strategic benefits flowing from BPSL becoming a wholly owned subsidiary of Prime (and consequently, a fully integrated part of the Prime Media Group) are expected to be:
(a) the specific synergies between, and opportunities arising from, the current activities of Prime Media and those of BPSL, including opportunities for the outside broadcasting and television production businesses arising from Prime Media’s existing relationships with television broadcasters, and enhanced opportunities in media sales;
(b) the leverage offered by the substantial financial standing of Prime Media to support the expansion of the BPSL businesses; and
(c) the increased diversification of the Prime Media Group’s activities to include outside broadcasting facilities and services, television program development and production and outdoor cinemas.
6.3 Outlook for the Merged Entity
Prime Media will continue to seek growth in its existing and related businesses so as to optimise the returns to shareholders. The directors of Prime Media are hopeful that the 2009 financial year will see continued growth in its broadcasting operations.
Whilst maintaining its focus on its ‘traditional’ media assets, particularly its core business of free-to-air television, Prime Media will continue to consolidate and develop its diversified media asset portfolio underpinned by sustainable business models to position Prime Media to respond to changing media consumption and advertising trends driven by technological advances, including:
completion of the hub facility at Maroochydore to create an integrated network of radio stations in the fast growing Queensland coastal markets from the Sunshine Coast to Cairns;
ongoing development of Prime Media’s presence in both online proprietary websites and in the out-of-home digital media sector; and
maintaining an innovative and proactive approach to the needs and expectations of its clients.
For personal use only use personal For As part of its ongoing business strategy, Prime Media intends to successfully integrate the BPSL businesses into the Prime Media Group and promote the growth of those businesses with a view to increasing returns for shareholders through:
expansion of the outside broadcasting facilities and services business of On Site Broadcasting (NZ) Limited in New Zealand, strategic acquisitions, consolidation of
Bidder's Statement - Offer 33
resources and active pursuit of outside broadcasting opportunities in Australia by On Site Broadcasting Pty Ltd (including zer01zer0 HD Pty Limited and Broadcast Rentals Pty Ltd) and building on the existing international outside broadcasting activities of On Site Broadcasting Pty Ltd;
ongoing development and marketing of new television programmes for Australian and overseas consumption focusing on production of high quality factual television and other innovative television programs, and continued development and expansion of its Asian television production activities;
pursuit of opportunities to expand outdoor cinema venues and sponsor benefits and an ongoing review of programming and of audience preferences;
development of, and participation in, opportunities arising from new on-line technologies and delivery platforms; and
forming appropriate strategic alliances. For personal use only use personal For
Bidder's Statement - Offer 34
7. Financial information
7.1 Introduction
The Annual Report of Prime Media for the financial year ended 30 June 2008 (2008 Prime Media Annual Report) was released to ASX on 22 October 2008 and the financial statements and statutory information of BPSL for the financial year ended 30 June 2008 (2008 BPSL Financial Statements) were released to ASX on 30 September 2008. BPSL Shareholders should refer to this information for relevant financial details to consider when assessing the Prime Offer. The historical financial information in the 2008 Prime Media Annual Report and the 2008 BPSL Financial Statements should be read in conjunction with the risk factors set out in section 8, the accounting policies set out in the financial reports and other information contained within this Bidder's Statement.
7.2 The Merged Entity
(a) Introduction
Under current accounting standards, Prime Media fully consolidates the income statements and balance sheets of BPSL in determining the 2008 Prime Media Annual Report.
As such the financial statements for the Merged Entity will primarily be the same as those of Prime Media. Small adjustments will be evident in the results of Prime Media as set out in the abbreviated tables for the year ending 30 June 2008 as set out below.
This section should be read in conjunction with the underlying audited financial information from which it was extracted, the risk factors set out in section 8, the accounting policies of Prime Media as set out in the 2008 Prime Media Annual Report and other information contained within this Bidder's Statement.
The Merged Entity information presented below is in abbreviated form and does not contain all the disclosures usually provided in an annual report prepared in accordance with the Corporations Act.
(b) Merged Entity aggregated income statements
The Merged Entity aggregated income statements have been compiled based on the following:
(i) Prime Media and BPSL audited income statements for the year ended 30 June 2008; and
(ii) no other adjustments have been made to the aggregated numbers. For personal use only use personal For
Bidder's Statement - Offer 35
Merged Entity aggregated income statements
Prime Media Merged Entity $000 $000
Net Profit after Tax 14,532 14,532
Profit/(Losses) attributable to minority 491 - equity interests
Net Profit after Tax for the Period Attributable to Members of the Parent Entity 14,041 14,532
(c) Merged Entity pro forma balance sheets
The Merged Entity pro forma balance sheets as at 30 June 2008 have been compiled and based on the Prime Media audited balance sheets as at 30 June 2008.
Merged Entity pro forma balance sheets
Prime Media Merged Entity $000 $000
Net Assets 146,651 146,651
Equity
Contributed Equity 196,569 198,337
Reserves (1,233) (1,233)
(Accumulated losses)/ Retained profits (50,453) (50,453)
Parent Interests 144,883 146,651
Minority Interests 1,768 -
Total Equity 146,651 146,651 For personal use only use personal For
Bidder's Statement - Offer 36
8. Risk factors
8.1 Overview
BPSL Shareholders who accept the Prime Offer will become shareholders in Prime Media. The financial performance and operations of Prime Media's businesses, the price of Prime Media Shares and the amount and timing of any dividends that Prime Media pays will be influenced by a range of factors. Some of these factors can be mitigated by the use of safeguards and appropriate commercial action. However, many of these factors are beyond the control of Prime Media and the Prime Media board. Many of these factors also affect the businesses of other companies operating in the same industry.
Section 8 describes certain risk factors associated with an investment in Prime Media. BPSL Shareholders should consider carefully these risk factors and the other information contained in this Bidder's Statement.
8.2 Fluctuations in the market value of Prime Media Shares
BPSL Shareholders are being offered consideration under the Prime Offer that consists of a specified number of New Prime Media Shares (rather than a number of Prime Media Shares with a specified market value).
The market value of Prime Media Shares will fluctuate due to various factors, including general movements in the Australian and international equity markets, investor sentiment, worldwide and regional economic conditions, movements in interest rates, and factors which may affect Prime Media's financial position and earnings.
The market value of New Prime Media Shares at the time at which they are received by BPSL Shareholders may vary from their market value on the date that BPSL Shareholders accept the Offer.
There is a risk that market fluctuations could affect the value of the consideration paid (in the form of New Prime Media Shares) under the Prime Offer and the value of an accepting shareholder’s investment in Prime Media. Prime Media is not obliged to make any adjustment in the consideration payable under the Prime Offer if the value of Prime Media Shares changes during the Offer Period.
8.3 Investment risk
BPSL Shareholders should be aware that there are risks associated with investment in financial products quoted on a stock exchange. Share price movements could affect the value of consideration paid under the Prime Offer and the value of any investment in Prime Media. The value of Prime Media Shares can be expected to fluctuate depending on various factors including general worldwide economic conditions, changes in government policies, investor perceptions, movements in interest rates and stock markets, prices of Prime Media's services, variations in the operating costs and costs of capital replacement which Prime Media may in the future require.
Similarly, the level of dividends which will be paid in respect of Prime Media Shares can move either up or down and it is possible that Prime Media may not be able to pay any
dividends. For personal use only use personal For 8.4 Pricing pressure
Prime Media may not be able to compete successfully against current or future competitors where aggressive pricing policies are employed to capture market share. That competition
Bidder's Statement - Offer 37
could result in price reductions, reduced gross margins and loss of market share, any of which could materially adversely affect Prime Media's operating results.
8.5 Retention of key business relationships
Prime Media's business relies on a large number of individual contracts and business alliances, but also derives significant income and profit from a relatively small number of key long term clients and business relationships with a few organisations. Any circumstance which causes the early termination or non-renewal of one or more of these key business alliances or contracts, in particular Prime Media's program supply agreement with the Seven Network, could adversely impact Prime Media, its business, operating results and prospects.
8.6 Ability to attract personnel
Prime Media's success depends, in part, on its ability to identify, attract, motivate and retain additional suitably qualified management and sales personnel. Competition for qualified staff is strong. The inability to access and retain the services of a sufficient number of qualified staff could be disruptive to Prime Media's development efforts or business development and could materially adversely affect its operating results.
8.7 Profitability
Future operating results depend to a large extent on management's ability to manage expansion and growth successfully. This requires expansion of all aspects of the business operations, such as revenue forecasting, addressing new markets, controlling expenses, implementing infrastructure and systems and managing assets. Inability to control the costs and organisational impacts of business growth or an unpredicted decline in the growth rate of revenues without a corresponding and timely reduction in expense growth could materially adversely affect Prime Media's operating results.
8.8 Economic risk and external market factors
Factors, such as, but not limited to, political movements, stock market trends, changing customer preferences, interest rates, inflation levels, commodity prices, industrial disruption, environmental impacts, international competition, taxation changes and legislative or regulatory changes, may all have an adverse impact on Prime Media's operating costs, profit margins and share price. These factors are beyond the control of Prime Media and Prime Media cannot, to any degree of certainty, predict how they will impact on Prime Media.
8.9 War and terrorist attacks
War or terrorist attacks anywhere in the world could result in a decline in economic conditions worldwide or in a particular region. There could also be a resultant material adverse effect on the business, financial condition and financial performance of Prime Media.
8.10 Foreign currency exchange rate fluctuations
Some parts of Prime Media's business are conducted outside Australia and in currencies other than the Australian dollar. Accordingly, Prime Media's income from, and the value of, those businesses will be affected by fluctuations in the rates by which those currencies are
exchanged with Australian dollars. For personal use only use personal For 8.11 Risks specific to investment in Prime Media
It is believed that the most significant areas of risk to Prime Media Group are those which affect the free-to-air media industry as a whole. This includes the impact of government
Bidder's Statement - Offer 38
policies, changes in broadcasting technology, competitive entertainment mediums, relative ratings performance etc. The ability of Prime Media Group to monitor or participate in such changes is enhanced by its membership of industry bodies, which represent all free-to-air media broadcasters in formulation of industry views and positions.
Prime Media operates primarily in one industry, being free-to-air media broadcasting. In recent years Prime Media has diversified its operations within the general media industry which is leading to a changing risk profile for the Prime Media Group. These new business sectors are not as regulated as free-to-air broadcasting.
In relation to free-to-air broadcasting Prime Media operates solely within Australia. The industry within Australia is tightly regulated, and new licences can only be issued by the Commonwealth Government after extensive review. Audience habits tend to change relatively slowly, so that viewing and listening shares and hence advertising shares can be budgeted with a reasonable degree of accuracy in a given year.
Television and radio broadcasting is largely a fixed cost business, and variations in performance from time to time largely stem from the impact of economic activity on revenue. Prime Media Group has sophisticated revenue tracking systems, which enable management to track current and future revenues on a daily basis.
For personal use only use personal For
Bidder's Statement - Offer 39
9. Taxation considerations
9.1 Australian tax implications for BPSL Shareholders
The following is a general description of the Australian income and capital gains tax and goods and services tax (GST) consequences for BPSL Shareholders on disposing of their BPSL Shares, in exchange for Prime Media Shares.
The information is based upon taxation law and administrative practice in effect at the date of this Bidder's Statement. It is not intended to be an authoritative or comprehensive analysis of the taxation laws of Australia. The summary does not consider any specific facts or circumstances that may apply to particular shareholders. Further, it does not deal with the taxation consequences of disposing of shares issued under an employee share scheme, which may be subject to specific tax provisions.
You are advised to seek independent professional advice regarding the Australian tax consequences of disposing of your BPSL Shares according to your own particular circumstances.
The Australian tax consequences of disposing of your BPSL Shares will depend on a number of factors including: whether you are an Australian resident for tax purposes; whether you hold your BPSL Shares on capital or revenue account or as trading stock; when you acquired your BPSL Shares for tax purposes; whether you are an individual, company, trustee or a trustee of a complying superannuation entity; and whether scrip for scrip roll-over relief is available.
9.2 Shareholders who are Australian residents
(a) Disposal of BPSL Shares held on revenue account or as trading stock
If you hold your BPSL Shares as trading stock or as part of an income generating arrangement, such that your BPSL Shares are held as revenue assets (e.g. as a share trader, bank or insurance company) you will be required to either: if your BPSL Shares are trading stock - include the value of the consideration from the disposal of your BPSL Shares in your assessable income; or if your BPSL Shares are revenue assets – treat any gain or loss (worked out by reference to the cost of your BPSL Shares and the value of the Prime Media Shares you receive in exchange) arising on the disposal of your BPSL Shares as either assessable income or an allowable deduction.
(b) Disposal of BPSL Shares held on capital account
If you hold your BPSL Shares as a passive investment with a view of generating dividend income and long term capital growth, you may be considered to hold your
BPSL Shares on capital account. For personal use only use personal For The disposal of BPSL Shares which were acquired or taken to have been acquired on or after 20 September 1985 and which are held on capital account will generally have Australian CGT implications. The disposal of such BPSL Shares pursuant to
Bidder's Statement - Offer 40
acceptance of the Offer or the compulsory acquisition of your BPSL Shares will constitute a CGT event for CGT purposes.
The CGT implications of a disposal of your BPSL Shares will depend upon a number of factors, including: the date your BPSL Shares were acquired for CGT purposes; your taxpayer status; the length of time you have held your BPSL Shares; and whether or not you are entitled to scrip for scrip roll-over relief.
(i) BPSL Shares acquired, or taken to be acquired, on or after 20 September 1985
A capital gain or loss will arise depending on the difference between: the value of the capital proceeds (the value of the Prime Media Shares received); and the cost base of the BPSL Shares (which would generally include the amount paid to acquire the shares plus any incidental costs of acquisition, e.g. brokerage fees and stamp duty).
You will make a capital gain if the capital proceeds exceed the cost base of the BPSL Shares, or a capital loss if the value of the capital proceeds is less than the cost base.
The value of the Prime Media Shares should be their market value on the date when the contract for their disposal is entered into (which is the date your acceptance of the Offer is processed by Prime) or, if your BPSL Shares are compulsorily acquired, the date when the compulsory acquisition occurs.
Scrip for scrip roll-over relief
Scrip for scrip roll-over relief enables a shareholder to choose to disregard the capital gain they make from disposing of a share as part of a corporate takeover or merger, but only to the extent that the shareholder receives replacement shares.
You may be entitled to scrip for scrip roll-over relief if: your BPSL Shares were acquired, or taken to be acquired, on or after 20 September 1985 for CGT purposes; you accept the Offer or your BPSL Shares are compulsorily acquired; you would otherwise make a capital gain on the disposal of your BPSL Shares; and Prime and members of Prime Media's wholly-owned group obtain or increase their holdings so that, in aggregate, they hold at least 80% of the voting shares in BPSL as a result of the Takeover Bid.
Therefore, if Prime and members of Prime Media's wholly-owned group (which already hold 76.04% of the voting shares in BPSL) hold (in For personal use only use personal For aggregate) at least 80% of the voting shares in BPSL following the completion of the Takeover Bid, scrip for scrip roll-over will be available. If Prime and members of Prime Media's wholly-owned group hold less than 80% of the voting shares in BPSL following the completion of the Takeover Bid, scrip for scrip roll-over will not be available.
Bidder's Statement - Offer 41
Capital gain disregarded
If you choose to claim roll-over relief, the capital gain attributable to the exchange of your BPSL Shares for Prime Media Shares will be disregarded.
You do not need to document your choice to claim roll-over relief other than to complete your income tax return in a manner consistent with your choice.
Replacement Prime Media Shares
Cost base
The cost base of your replacement Prime Media Shares is worked out by attributing, on a reasonable basis, the existing cost base of the BPSL Shares you exchange.
Acquisition date
The acquisition date of your Prime Media Shares for CGT discount purposes is taken to be the date you acquired the corresponding BPSL Shares that were exchanged for the relevant Prime Media Shares.
No scrip for scrip roll-over
If you do not qualify for scrip for scrip roll-over or you choose not to apply the roll-over, the following will apply:
Capital gain
Indexation
If your BPSL Shares were acquired at or before 11.45 am (by legal time in the Australian Capital Territory) on 21 September 1999, for the purpose of calculating a capital gain (but not a capital loss), your cost base may be indexed for inflation to 30 September 1999 (which would only be of any practical effect if the shares were acquired prior to 1 July 1999).
If you are an individual, or a trustee (including of a complying superannuation entity) (Concessional Taxpayer), you may choose for indexation to apply. The choice must be made on or before the day you lodge your income tax return for the income year in which you dispose of your BPSL Shares. You do not need to document your choice to apply indexation other than to complete your income tax return in a manner consistent with your choice.
If you choose for indexation to apply, you will not be eligible for discount capital gain treatment. If you are another type of entity, indexation will apply by default.
Discount capital gain
If you are a Concessional Taxpayer and you have held your BPSL Shares
For personal use only use personal For for at least one year, and do not choose to apply indexation, the discount capital gain provisions may apply. This means that: if you are an individual or trustee, only one-half of the capital gain (without any allowance for indexation for inflation in the cost base of the shares) will be taxable;
Bidder's Statement - Offer 42
if you are a trustee of a complying superannuation entity, only two- thirds of the capital gain (without any allowance for indexation for inflation in the cost base of the shares) will be taxable; or if you are a beneficiary of a trust and are not a company, the discount capital gain provisions may also apply to a distribution of the capital gain to you.
Note that the discount capital gain provisions do not apply to shareholders and trust beneficiaries that are companies.
If you make a discount capital gain, any of your available capital losses will be applied to reduce the undiscounted capital gain before either the one- half or one-third (as applicable) discount is applied.
Capital loss
If you make a capital loss this may be used to offset capital gains you derive in the same or subsequent years of income (subject to satisfying certain conditions) but cannot be offset against ordinary income, nor carried back to offset net capital gains arising in earlier income years.
Replacement Prime Media Shares
Cost base
The cost base of the Prime Media Shares you receive should broadly be the market value of the BPSL Shares you exchange on the date when the contract for the acquisition of the Prime Media Shares is entered into (which is the date your acceptance of the Offer is processed by Prime) or, if your BPSL Shares are compulsorily acquired, the date when the Prime Media Shares are issued to you.
Acquisition date
The acquisition date of your Prime Media Shares for CGT purposes is the date when the contract for their acquisition is entered into (which is the date your acceptance of the Offer is processed by Prime) or, if your BPSL Shares are compulsorily acquired, the date when the Prime Media Shares are issued to you. This means that if you are a Concessional Taxpayer you will need to hold your Prime Media Shares for at least one year after that date before the CGT discount will apply on subsequent disposal of your Prime Media Shares.
(ii) BPSL Shares acquired, or taken to be acquired, before 20 September 1985
Capital gain or loss disregarded
There should be no CGT implications arising on disposal of your BPSL Shares, where they were acquired, or taken to have been acquired, before 20 September 1985 and are not taken to have been acquired on or after
that date. For personal use only use personal For
Bidder's Statement - Offer 43
Replacement Prime Media Shares
Cost base
The Prime Media Shares received in exchange will be subject to capital gains tax on any subsequent disposal and should have a cost base equal to their market value: on the date when the contract for their acquisition is entered into (which is the date your acceptance of the Offer is processed by Prime); or if your BPSL Shares are compulsorily acquired, on the date when the Prime Media Shares are issued to you.
Acquisition date
For CGT discount purposes you will be taken to have acquired your Prime Media Shares at the time the contract for their acquisition is entered into (which is the date your acceptance of the Offer is processed by Prime) or, if your BPSL Shares are compulsorily acquired, when the Prime Media Shares are issued to you. This means that if you are a Concessional Taxpayer you will need to hold your Prime Media Shares for at least one year after that date before the CGT discount will apply on a subsequent disposal of your Prime Media Shares.
9.3 Shareholders who are not Australian residents
(a) Disposal of BPSL Shares held as trading stock or on revenue account
If you are not a resident of Australia for tax purposes and your BPSL Shares were acquired as trading stock or otherwise on revenue account you should seek your own professional advice. The Australian tax treatment will depend on the source of any gain and whether a double tax agreement exists between your country of residence and Australia.
(b) Disposal of BPSL Shares held on capital account
If you are not a resident of Australia for tax purposes and hold your BPSL Shares on capital account you should generally not be subject to CGT on the disposal of your BPSL Shares unless: you used your BPSL Shares at any time in carrying on a business through a permanent establishment in Australia; or both of these conditions apply to you: you (and your associates) owned at least ten per cent of BPSL either at the time you sold your BPSL Shares or for at least twelve months during the 24 months before you sold your BPSL Shares; and 50% or more of the value of BPSL's assets is represented by real property in Australia.
Prime considers that you may be able to reasonably conclude that the value of real
property represents less than 50% by value of BPSL's total assets. For personal use only use personal For If you receive Prime Media Shares in exchange for your BPSL Shares and you are subject to CGT, scrip for scrip roll-over relief is generally not available to you except potentially where your BPSL Shares and the Prime Media Shares you receive in exchange are used in carrying on a business through a permanent establishment in Australia. In this case, you should seek your own professional
Bidder's Statement - Offer 44
advice as to the CGT consequences and the availability of scrip for scrip roll-over relief.
9.4 GST
No Australian GST should be payable on the transfer of BPSL Shares or the issue of New Prime Media Shares.
You may incur GST on any fees charged by your Controlling Participant in connection with acceptance of the Prime Offer. You should seek professional advice on the GST implications having regard to your particular circumstances.
For personal use only use personal For
Bidder's Statement - Offer 45
10. Other material information
10.1 Adviser fees
The fees paid in connection with the preparation and distribution of this Bidder's Statement and for services provided in connection with the Prime Offer, including legal, taxation and financial advisers and registry fees are expected to total approximately $300,000.
10.2 Consents
Each of the following persons has consented in writing to being named in this Bidder's Statement in the form and context in which they are named, and has not withdrawn that consent as at the date of this Bidder's Statement:
(a) Prime Media;
(b) Australian and New Zealand Banking Group Limited trading as ANZ Capital;
(c) Blake Dawson; and
(d) the Independent Expert.
Section 9 of this Bidder's Statement (Taxation Considerations) has been prepared by Blake Dawson. Blake Dawson has consented to the inclusion of section 9 in this Bidder's Statement, and to all references in this Bidder's Statement to that information, in the form and context in which they are included and had not withdrawn that consent as at the date of this Bidder's Statement.
This Bidder's Statement includes or is accompanied by statements which are made in or based on statements made in documents lodged with ASIC or on the company announcement platform of ASX. Under the terms of ASIC class order 01/1543, the parties making those statements are not required to consent to, and have not consented to, those statements being included in this Bidder's Statement. If you would like to receive a copy of any of these documents, free of charge, please contact Mr Andrew Cooper on +61 2 6242 3700.
10.3 Information for any overseas shareholders
BPSL Shareholders who are Foreign Shareholders will not be entitled to receive New Prime Media Shares as consideration for their BPSL Shares under the Prime Offer.
A BPSL Shareholder is a Foreign Shareholder for the purposes of the Prime Offer if their address is shown in the register of members of BPSL in a jurisdiction other than Australia and its external territories or New Zealand. However, such a person will not be a Foreign Shareholder if Prime is satisfied that it is not legally or practically constrained from making the Prime Offer to a BPSL Shareholder in the relevant jurisdiction and to issue New Prime Media Shares to such a shareholder on acceptance of the Prime Offer, and that it is lawful for the shareholder to accept the Prime Offer in such circumstances in the relevant jurisdiction. Notwithstanding anything else in this Bidder's Statement, Prime is not under any obligation to spend any money, or undertake any action, in order to satisfy itself concerning any of these matters.
For personal use only use personal For The New Prime Media Shares which would otherwise have been issued to any Foreign Shareholder will instead be issued to a nominee approved by ASIC, who will sell these shares. The net proceeds of the sale of such shares will then be remitted to the relevant Foreign Shareholders. See section 11.18 for further details.
Bidder's Statement - Offer 46
10.4 Expiry Date
No securities will be issued on the basis of this Bidder's Statement after the date which is 13 months after the date of this Bidder's Statement.
10.5 Approvals for issue of consideration
Prime Media is not aware of any BPSL Shareholder who requires any approval referred to in section 11.20 in order to be entitled to receive any consideration under the Prime Offer.
So far as Prime Media is aware, unless the Reserve Bank of Australia has given specific approval under the Banking (Foreign Exchange) Regulations 1959 (Cth), payments or transfers to or for the order of prescribed governments (and their statutory authorities, agencies and entities) and, in certain cases, nationals of prescribed countries are subject to certain limited exceptions, restrictions or prohibitions.
Based on Prime Media's searches, the prescribed governments, countries and entities are as follows:
(a) Burmese regime figures and supporters listed in the Annex to the direction dated 24 October 2007 relating to Burma;
(b) persons listed in the Annex to the direction dated 19 September 2006 relating to North Korea;
(c) supporters listed in the Annex to the direction dated 9 July 2008 relating to the former government of the Federal Republic of Yugoslavia; and
(d) ministers and senior officials of the Government of Zimbabwe and the persons listed in the Annex to the direction dated 20 June 2007.
The places to which and persons and entities to whom the Charter of the United Nations (Dealing with Assets) Regulations 2008 (Cth) (2008 Regulations) currently apply include Afghanistan, Côte d'Ivoire, Democratic People's Republic of Korea, Democratic Republic of the Congo, Iran, Iraq, Lebanon, Liberia and Sudan, and the Taliban, Usama bin Laden (also known as Osama bin Laden), a member of the Al-Qaida organisation (also known as the Al-Qaeda organisation), and any person or entity named on the consolidated list maintained by the Department of Foreign Affairs and Trade pursuant to regulation 40 of the 2008 Regulations.
The places to which and persons to whom the Charter of the United Nations (Sanctions – Afghanistan) Regulations 2001 (Cth) currently include a bin Laden Entity and a Taliban Entity (as those terms are defined in those regulations).
The Iraq (Reconstruction and Repeal of Sanctions) Regulations 2003 (Cth) apply in respect of members of the previous government of Iraq, its senior officials and their immediate families, and any entity owned or controlled by such persons.
10.6 No other material information
Except as set out in this Bidder's Statement, there is no information material to the making of a decision by an offeree whether or not to accept the Prime Offer, being information that
is known to Prime and has not previously been disclosed to the holders of BPSL Shares. For personal use only use personal For
Bidder's Statement - Offer 47
11. The Prime Offer terms
11.1 The Prime Offer
(a) Offer for your BPSL Shares
Prime offers to acquire all of your BPSL Shares on the terms set out in the Prime Offer.
(b) Prime Offer includes Rights
If Prime acquires your BPSL Shares under the Prime Offer, Prime is also entitled to any Rights attached to those BPSL Shares.
(c) Consideration
Prime offers 0.257 New Prime Media Shares for each of your BPSL Shares.
11.2 Foreign Shareholders
If you are a Foreign Shareholder then despite any other provision of the Prime Offer, you are offered and will receive for your BPSL Shares a cash amount calculated under section 11.18.
The Prime Offer is not registered in any jurisdiction outside Australia (unless an applicable foreign law treats it as registered as a result of the Bidder's Statement being lodged with ASIC). It is your sole responsibility to satisfy yourself that you are permitted by any foreign law applicable to you to accept the Prime Offer.
11.3 Rounding of New Prime Media Shares
You will only be entitled to receive a whole number of New Prime Media Shares. If you would otherwise become entitled to a fraction of a New Prime Media Share as a result of your acceptance, any such fractional entitlement will be rounded up to the nearest whole number.
11.4 Ranking of New Prime Media Shares
The New Prime Media Shares issued under the Prime Offer will be issued fully paid and will rank equally for dividends and other rights with existing Prime Media Shares except that they will not participate in any final dividend payable for the year ending 30 June 2008.
11.5 ASX listing of New Prime Media Shares
Prime Media will apply for official quotation of the New Prime Media Shares on ASX. Quotation will not be automatic but will depend on ASX exercising its discretion. Prime Media has already been admitted to the official list of ASX and shares in Prime Media of the same class as those to be issued under the Prime Offer are already quoted. But Prime cannot guarantee, and does not represent or imply, that the New Prime Media Shares will
be listed. For personal use only use personal For
Bidder's Statement - Offer 48
11.6 Offer Period
Unless withdrawn or extended under section 11.23, the Prime Offer is open during the period that begins on the date of the Prime Offer, being 28 October 2008, and ends at 7.00 pm (Sydney time) on 1 December 2008.
If, within the last 7 days of the Offer Period:
(a) Prime varies the Prime Offers to improve the consideration offered; or
(b) the consideration is taken to be increased under section 651A(2) of the Corporations Act because Prime purchases BPSL Shares outside the Takeover Bid for a cash price,
section 624(2) of the Corporations Act will apply to extend the Offer Period so that it ends 14 days after that event.
11.7 How to accept the Prime Offer
(a) Accept for all your BPSL Shares
You can only accept the Prime Offer during the Offer Period for all your BPSL Shares. You will be taken to have accepted the Prime Offer for all your BPSL Shares plus any additional BPSL Shares registered as held by you at the date your acceptance is processed (despite any difference between that number and the number of BPSL Shares specified when you accept the Prime Offer).
(b) CHESS Holdings
If your BPSL Shares are in a CHESS Holding, you must comply with the ASTC Settlement Rules. To accept the Prime Offer in accordance with those rules, you must:
(i) instruct your Controlling Participant to initiate acceptance of the Prime Offer under rule 14.14 of the ASTC Settlement Rules; or
(ii) if you are a Broker, yourself initiate acceptance under that rule; or
(iii) if you are not a Broker:
(A) complete and sign the Acceptance Form in accordance with the instructions on it; and
(B) return the Acceptance Form together with all other documents required by the instructions on it to the address specified on the form. This will authorise Prime to instruct your Controlling Participant to initiate acceptance of the Prime Offer on your behalf. For return of the Acceptance Form to be an effective acceptance of the Prime Offer, you must ensure it is received by Prime in time for Prime to give instructions to your Controlling Participant, and your Controlling Participant to carry out those instructions, before the end of the Offer Period.
(c) Issuer Sponsored Holdings and other holdings For personal use only use personal For If your BPSL Shares are held on BPSL's issuer sponsored subregister, or if at the time of your acceptance you are entitled to be (but are not yet) registered as the holder of, or are otherwise able to give good title to, your BPSL Shares, to accept the Prime Offer you must:
Bidder's Statement - Offer 49
(i) complete and sign the Acceptance Form in accordance with the instructions on it; and
(ii) return the Acceptance Form together with all other documents required by the instructions on it to the address specified on the form in the reply paid envelope provided so that they are received before the end of the Offer Period.
11.8 Effect of Acceptance Form
By completing, signing and returning the Acceptance Form in accordance with section 11.7(b) or section 11.7(c) as applicable, you:
(a) authorise Prime and each of its officers and agents to correct any errors in, or omissions from, the Acceptance Form necessary to:
(i) make it an effective acceptance of the Prime Offer for your BPSL Shares which are not in a CHESS Holding; and
(ii) enable the transfer of your BPSL Shares to Prime; and
(b) if any of your BPSL Shares are in a CHESS Holding, authorise Prime and each of its officers and agents to:
(i) instruct your Controlling Participant to effect your acceptance of the Prime Offer for those BPSL Shares under rule 14.14 of the ASTC Settlement Rules; and
(ii) give to your Controlling Participant on your behalf any other instructions in relation to those BPSL Shares which are contemplated by the sponsorship agreement between you and your Controlling Participant and are necessary or appropriate to facilitate your acceptance of the Prime Offer.
11.9 Your agreement
By carrying out the instructions in section 11.7 on how to accept the Prime Offer:
(a) you accept the Prime Offer (and any variation of it) irrevocably in accordance with its terms in respect of all your BPSL Shares detailed in your Acceptance Form;
(b) you represent and warrant to Prime that all your BPSL Shares will at the time of your acceptance of the Prime Offer and of transfer to Prime be fully paid up and that Prime will acquire good title to and beneficial ownership of them free from Encumbrances;
(c) you represent and warrant that you are not a Foreign Shareholder, unless otherwise indicated on the Acceptance Form, and acknowledge and agree that if you are a Foreign Shareholder, or Prime believes you are a Foreign Shareholder, section 11.18 applies to you;
(d) you transfer, or consent to the transfer in accordance with the ASTC Settlement Rules of, your BPSL Shares to Prime subject to the conditions of the constitution of BPSL on which they were held immediately before your acceptance of the Prime
Offer (and Prime agrees to take those BPSL Shares subject to those conditions); For personal use only use personal For (e) you irrevocably appoint Prime and each director of, and any nominee of, Prime as your attorney to:
(i) attend and vote in respect of your BPSL Shares at all general meetings of BPSL; and
Bidder's Statement - Offer 50
(ii) execute all forms, notices, documents (including a document appointing a director of Prime as a proxy for any of your BPSL Shares) and resolutions relating to your BPSL Shares and generally to exercise all powers and rights which you have as the registered holder of your BPSL Shares;
(f) you agree that in exercising the powers conferred by the power of attorney in section 11.9(e), Prime and each of its directors and its nominee is entitled to act in the interest of Prime;
(g) you agree not to attend or vote in person at any general meeting of BPSL or to exercise, or to purport to exercise, (in person, by proxy or otherwise) any of the powers conferred on the directors of Prime by section 11.9(e);
(h) if and when the contract resulting from your acceptance of the Prime Offer becomes unconditional (even though Prime has not yet paid or provided the consideration due to you), you authorise Prime to transmit a message to ASTC in accordance with rule 14.17.1 of the ASTC Settlement Rules so as to enter those of your BPSL Shares which are in a CHESS Holding into Prime's Takeover Transferee Holding; and
(i) (unless section 11.18 applies to you), you:
(i) agree to accept the New Prime Media Shares to which you become entitled by accepting the Prime Offer subject to the constitution of Prime Media and authorise Prime Media to place your name on its register of members for those New Prime Media Shares; and
(ii) instruct Prime Media to issue the New Prime Media Shares to which you became entitled by accepting the Prime Offer, if your BPSL Shares are in a CHESS Holding, with the same holder identification number as affects your BPSL Shares; and if your BPSL Shares are held on BPSL's issuer sponsored sub-register, on Prime Media's issuer sponsored sub-register.
11.10 Powers of attorney
f the Acceptance Form is signed under power of attorney, the attorney declares that the attorney has no notice of revocation of the power and is empowered to delegate powers under the power of attorney under section 11.8 and paragraphs (e) and (h) of section 11.9.
11.11 Validation of otherwise ineffective acceptances
Except for BPSL Shares in a CHESS Holding, Prime may treat the receipt by it of a signed Acceptance Form as a valid acceptance of the Prime Offer even though it does not receive the other documents required by the instructions on the Acceptance Form or there is not compliance with any one or more of the other requirements for acceptance. If Prime does treat such an Acceptance Form as valid, subject to section 11.12, Prime will not be obliged to give the consideration to you until Prime receives all those documents and all of the requirements for acceptance referred to in section 11.7(c) and in the Acceptance Form have been met.
11.12 Conditions of the Prime Offer
Subject to section 11.13, the Prime Offer and any contract which results from an
acceptance of the Prime Offer is unconditional. For personal use only use personal For 11.13 Statutory condition
The Prime Offer and any contract that results from your acceptance of the Prime Offer are subject to the condition that:
Bidder's Statement - Offer 51
(a) an application is made to ASX within 7 days of the start of the Offer Period for admission to official quotation by ASX of the New Prime Media Shares to be issued under the Prime Offer; and
(b) permission for admission to official quotation by ASX of the New Prime Media Shares to be issued under the Prime Offer which are accepted is granted no later than 7 days after the end of the Offer Period. If this condition is not fulfilled, all contracts resulting from acceptance of the Prime Offer will be automatically void.
This condition cannot be waived by Prime.
Prime Media has already been admitted to the official list of ASX and shares in Prime Media of the same class as those to be issued under the Prime Offer are already quoted. But Prime cannot guarantee, and does not represent or imply, that the New Prime Media Shares will be listed.
11.14 No defeating conditions
The completion of the Prime Offer, and any contract that results from an acceptance of the Prime Offer, is not subject to the fulfilment of any defeating conditions.
11.15 Issue of consideration
(a) When you will receive New Prime Media Shares
Subject to this section 11.15, section 11.13 and the Corporations Act, if you accept the Prime Offer Prime will issue you the consideration for your BPSL Shares to which Prime acquires good title on or before the earlier of:
(i) the day 1 month after you accept the Prime Offer; and
(ii) the day 21 days after the end of the Offer Period.
(b) Acceptance Form requires additional documents
Where documents are required to be given to Prime with your acceptance to enable Prime to become the holder of your BPSL Shares (such as a power of attorney):
(i) if the documents are given with your acceptance, Prime will issue you in accordance with section 11.15(a);
(ii) if the documents are given after your acceptance and before the end of the Offer Period, Prime will issue you the consideration by the end of whichever of the following periods ends first:
(A) 1 month after you accept the Prime Offer; and
(B) 21 days after the end of the Offer Period;
(iii) if the documents are given after the end of the Offer Period, Prime will issue you the consideration within 21 days after the documents are given.
(c) Delivery of consideration
For personal use only use personal For Subject to the Corporations Act, Prime will send a holding statement for the New Prime Media Shares due to you at your risk by pre-paid ordinary mail, or in the case of an address outside Australia by airmail, to the address shown in the Acceptance Form.
Bidder's Statement - Offer 52
(d) Registration of New Prime Media Shares
Prime Media has established a share register in Sydney, New South Wales. Unless you request otherwise the New Prime Media Shares issued to you will:
(i) if you already hold Prime Media Shares, be placed on the same register as the last Prime Media Shares registered in your name;
(ii) if you do not hold Prime Media Shares but reside in a country where Prime Media has established a register, be placed on the register in your country of residence; or
(iii) in all other cases, be placed on the Australian register.
11.16 Return of documents
If the statutory condition set out in section 11.13 is not satisfied or any contract arising from the Prime Offer is rescinded by Prime on the grounds of a breach of a condition of that contract, Prime will, at its election, either return by post to you at the address shown on the Acceptance Form any Acceptance Form and any other documents sent with it by you, or destroy those documents and notify the ASX of this.
11.17 Rights
If Prime becomes entitled to any Rights as a result of your acceptance of the Prime Offer, it may require you to give to Prime all documents necessary to vest title to those Rights in Prime. If you do not give those documents to Prime, or if you have received or are entitled to receive (or any previous holder of your BPSL Shares has received or is entitled to receive) the benefit of those Rights, you must pay the amount (or value as reasonably assessed by Prime) of such Rights to Prime.
11.18 Acceptance by Foreign Shareholders
If you are a Foreign Shareholder and you accept the Prime Offer you will not be entitled to receive New Prime Media Shares as consideration for your BPSL Shares. Instead Prime will:
(a) arrange for the issue to a nominee approved by ASIC of the number of New Prime Media Shares to which you and all other Foreign Shareholders would have been entitled but for this section and the equivalent section in each of the Prime Offers;
(b) cause those New Prime Media Shares to be offered for sale on ASX as soon as practicable after the end of the Offer Period and otherwise in such manner, at such price and on such terms as are determined by the nominee; and
(c) cause the amount ascertained in accordance with the formula below to be paid to you:
your New Prime Media Shares net proceeds of sale x total New Prime Media Shares
net proceeds of sale is the amount remaining after deducting the expenses of sale and of appointing the nominee from the total proceeds of sale of the New
Prime Media Shares issued to the nominee under this section and the equivalent For personal use only use personal For section in each of the Prime Offers;
your New Prime Media Shares is the number of New Prime Media Shares which would, but for this section, have been issued to you; and
Bidder's Statement - Offer 53
total New Prime Media Shares is the total number of New Prime Media Shares issued to the nominee under this section the equivalent section in each of the Prime Offers.
You will be paid by cheque in Australian currency. The cheque will be sent at your risk by pre-paid airmail to the address shown in the Acceptance Form.
11.19 Unmarketable parcels of New Prime Media Shares
If the total number of New Prime Media Shares you are entitled to receive as consideration under the Prime Offer is an unmarketable parcel and you return the Acceptance Form, you are offered and will receive a cash amount for your BPSL Shares calculated using the highest closing price for Prime Media Shares on ASX published during the Offer Period. You will receive this payment by cheque.
11.20 Clearances for offshore residents and others
If at the time you accept the Prime Offer or at the time the consideration is provided under it:
(a) any authority or clearance of the Reserve Bank of Australia or the Australian Tax Office is required for you to receive any consideration under the Prime Offer; or
(b) you are resident in or a resident of a place to which, or you are a person to whom any of the following applies:
(i) the Banking (Foreign Exchange) Regulations 1959 (Cth);
(ii) the Charter of the United Nations (Terrorism and Dealing with Assets) Regulations 2002 (Cth);
(iii) the Charter of the United Nations (Sanctions – Afghanistan) Regulations 2001 (Cth);
(iv) the Iraq (Reconstruction and Repeal Sanctions) Regulations 2006 (Cth); or
(v) any other law of Australia or elsewhere that would make it unlawful for Prime to provide consideration for your BPSL Shares,
then your acceptance of the Prime Offer does not create or transfer to you any right (contractual or contingent) to receive the consideration specified in the Prime Offer unless and until you obtain all requisite authorities or clearances.
11.21 Costs and stamp duty
Prime will pay all costs and expenses of the preparation and circulation of the Prime Offers and any stamp duty payable on the transfer of any BPSL Shares to Prime under the Prime Offer.
11.22 Offerees
(a) Registered holders
Prime is making an offer in the form of the Prime Offer to each holder of BPSL
Shares registered in the register of members of BPSL at the Register Date. For personal use only use personal For (b) Transferees
The Prime Offer extends to any person who is able during the Offer Period to give good title to a parcel of your BPSL Shares. That person may accept as if an Offer
Bidder's Statement - Offer 54
on terms identical to the Prime Offer had been made to them for those BPSL Shares.
(c) Trustees and nominees
If during the Offer Period and before you accept the Prime Offer your BPSL Shares consist of 2 or more separate parcels within the meaning of section 653B of the Corporations Act (for example, because you are a trustee or nominee for several distinct beneficial owners), section 653B of the Corporations Act will apply so that:
(i) Prime is taken to have made a separate Offer to you for each separate parcel of BPSL Shares; and
(ii) acceptance by you of the Prime Offer for any distinct parcel of BPSL Shares is ineffective unless:
(A) you give Prime notice in accordance with section 11.22(d) stating that your BPSL Shares consist of separate parcels; and
(B) your acceptance specifies the number of BPSL Shares in each separate parcel to which the acceptance relates.
(d) Notices by Trustees and Nominees
The notice required under section 11.22(c)(ii)(A):
(i) if it relates to BPSL Shares not in a CHESS Holding, must be in writing; or
(ii) if it relates to BPSL Shares in a CHESS Holding, must be in an electronic form approved under the ASTC Settlement Rules for the purposes of Part 6.8 of the Corporations Act.
11.23 Variation and withdrawal of Offer
(a) Variation
Prime may vary the Prime Offer in accordance with the Corporations Act.
(b) Withdrawal
In accordance with section 652B of the Corporations Act, Prime may withdraw the Prime Offer with the written consent of ASIC and subject to the conditions (if any) which apply to that consent.
11.24 Governing law
The Prime Offer and any contract resulting from acceptance of it are governed by the law
in force in New South Wales. For personal use only use personal For
Bidder's Statement - Offer 55
12. Definitions and interpretation
12.1 Definitions
The following definitions apply in interpreting this Bidder's Statement and the Acceptance Form, except where the context makes it clear that a definition is not intended to apply:
Acceptance Form means the form with that title that accompanies this Bidder's Statement.
Announcement means the announcement made by Prime in relation to the Prime Offer on 24 October 2008.
ASIC means the Australian Securities and Investments Commission.
ASTC means the ASX Settlement and Transfer Corporation Pty Limited ABN 49 008 504 532.
ASTC Settlement Rules means the operating rules of the settlement facility provided by ASTC.
ASX means ASX Limited.
ASX Listing Rules means the listing rules of ASX.
Bidder's Statement means this document, being the statement made by Prime under Part 6.5 Division 2 of the Corporations Act relating to the Takeover Bid.
BPSL means Broadcast Production Services Limited ABN 32 000 713 422 (formerly Becker Group Limited).
BPSL Board means the board of directors of BPSL.
BPSL Executive Options means each option to subscribe for a BPSL Share held by Prime (details of the BPSL Executive Options on issue are set out in section 4.6).
BPSL Shares means fully paid ordinary shares in BPSL.
BPSL Shareholder means the holder of a BPSL Share.
Broker means a person who is a share broker and participant in CHESS.
Business Day means a day (other than Saturday, Sunday or a public holiday) on which banks are open for general banking business in Sydney.
CHESS means the Clearing House Electronic Subregister System operated by ASTC, which provides for the electronic transfer, settlement and registration of securities.
CHESS Holding means a holding of shares on the CHESS Subregister of BPSL.
CHESS Subregister has the meaning set out in the ASTC Settlement Rules.
Controlling Participant means has the meaning set out in the ASTC Settlement Rules. For personal use only use personal For Corporations Act means the Corporations Act 2001 (Cth) as modified by any relevant exemption or declaration by ASIC.
Bidder's Statement - Offer 56
dispose has the meaning given to it in the ASX Listing Rules.
Encumbrance means:
(a) a mortgage, charge, pledge, lien, hypothecation or a title retention arrangement;
(b) a notice under section 255 of the Income Tax Assessment Act 1936 (Cth), subdivision 260-A in schedule 1 to the Taxation Administration Act 1953 (Cth) or any similar legislation;
(c) any other interest in or right over property (including a right to set off or withhold payment of a deposit or other money);
(d) any other thing that prevents, restricts or delays the exercise of a right over property, the use of property or the registration of an interest in or dealing with property; or
(e) an agreement to create anything referred to above or to allow any of them to exist.
foreign law means a law of a jurisdiction other than an Australian jurisdiction.
Foreign Shareholder means a person whose address as shown in the register of members of BPSL is in a jurisdiction other than Australia and its external territories or New Zealand, unless Prime determines otherwise, being satisfied by the law of that jurisdiction that it is lawful and not onerous to make the Prime Offer to that person and to issue them with New Prime Media Shares and that it is lawful for that person to accept the Prime Offer.
GST has the same meaning as in A New Tax System (Goods and Services Tax) Act 1999 (Cth).
Independent Expert means the independent expert appointed by BPSL to prepare a report for this Target's Statement in accordance with the Corporations Act and ASIC policy and practice, being WHK Howarth Corporate Finance Limited (ABN 95 001 508 363).
Issuer Sponsored Holding means a holding of BPSL Shares on BPSL's issuer sponsored subregister.
Merged Entity means Prime Media and its Subsidiaries after completion of the Prime Offer (when BPSL and its Subsidiaries will be wholly owned Subsidiaries of Prime Media).
New Prime Media Shares means the Prime Media Shares to be issued pursuant to the terms of the Prime Offer.
Offer Information Line means 1800 770 850 (within Australia and toll free) or +61 2 8280 7714 (outside Australia) available Monday to Friday between 8.30 am and 5.30 pm (Sydney time).
Offer Period means the period referred to in section 11.6 of this Bidder's Statement.
Offers means the Prime Offer and each of the other offers made in the same terms for BPSL Shares and includes a reference to those offers as varied in accordance with the Corporations Act.
Prime means Prime Media Broadcasting Services Pty Limited ACN 123 563 495.
For personal use only use personal For Prime Directors means the directors of Prime, being Warwick Syphers and Peter Evans.
Prime Media means Prime Media Group Limited ABN 97 000 764 867.
Prime Media Group means Prime Media and each of its wholly owned subsidiaries.
Bidder's Statement - Offer 57
Prime Media Shares means fully paid ordinary shares in Prime Media.
Prime Offer means the offer as set out in section 11 of this Bidder's Statement and includes a reference to that offer as varied in accordance with the Corporations Act.
Prime Offer Consideration means, subject to section 11.2, the offer consideration set out in section 11.1(c) of this Bidder's Statement.
Register Date means the date set by Prime under section 633(2) of the Corporations Act.
Rights means all accretions and rights attaching to BPSL Shares at or after 24 October 2008 (including all rights to receive dividends and other distributions declared or paid and to receive or subscribe for shares, notes or options issued by BPSL).
Subsidiary has the same meaning as in the Corporations Act.
Takeover Bid means the takeover bid constituted by the Prime Offers.
Takeover Transferee Holdings means the CHESS Holding to which BPSL Shares are to be transferred after acceptance of the Prime Offer.
Target's Statement means the target statement in response to the Takeover Bid which complies with Chapter 6 of the Corporations Act.
unmarketable parcel means a number of New Prime Media Shares which is less than a marketable parcel under the market rules of ASX. Currently, if the securities are quoted, this means a parcel of securities of less than $500 based on the closing price on SEATS on the last trading day before Prime must provide the consideration.
your BPSL Shares means, subject to section 11.22, the BPSL Shares:
(a) of which you are registered or entitled to be registered as the holder in the register of members of BPSL at the Register Date; and
(b) any other BPSL Shares, to which you are able to give good title at the time you accept the Prime Offer during the Offer Period.
12.2 Interpretation
(a) Words and phrases which are defined by the Corporations Act have the same meaning in this Bidder's Statement and the Acceptance Form and, if a special meaning is given for the purposes of Chapter 6 or 6A or a provision of Chapter 6 or 6A of the Corporations Act, have that special meaning.
(b) Headings are for convenience only, and do not affect interpretation.
(c) The following rules also apply in interpreting this Bidder's Statement and the Acceptance Form, except where the context makes it clear that a rule is not intended to apply:
(i) a singular word includes the plural, and vice versa;
(ii) a word which suggests 1 gender includes the other genders;
(iii) if a word is defined, another part of speech has a corresponding meaning; For personal use only use personal For (iv) unless otherwise stated references in this Bidder's Statement to sections, paragraphs and sub-paragraphs are to sections, paragraphs and sub- paragraphs of this Bidder's Statement;
Bidder's Statement - Offer 58
(v) a reference to a person includes a body corporate; and
(vi) a reference to $ is to the lawful currency in Australia unless otherwise stated; and
(vii) appendices to this Bidder's Statement form part of it.
Dated 24 October 2008
Signed on behalf of Prime Media Broadcasting Services Pty Limited by and being a director and company secretary of Prime who are authorised to sign by a resolution unanimously passed at a meeting of the directors of Prime.
Director
Company Secretary
For personal use only use personal For
Bidder's Statement - Offer 59
Annexure A
PRIME MEDIA ANNOUNCEMENTS SINCE 1 JULY 2008
Date Event
22 October 2008 Notice of Annual General Meeting
22 October 2008 Annual Report to shareholders
30 September 2008 Full Year Statutory Accounts
22 September 2008 Annual General Meeting - Change of Date
16 September 2008 Change of Director`s Interest Notice
16 September 2008 Appendix 3B
16 September 2008 Appendix 3B
15 September 2008 Change in substantial holding
10 September 2008 Annual General Meeting Date Notification
08 September 2008 SWG: ACQUIRES INDEPENDENT INTERNET TELEVISION NETWORK
26 August 2008 Preliminary Final Report
25 August 2008 Financial Results Release Date Change
21 August 2008 Impairment Charges for FY 2008-Destra Corporation
11 August 2008 Change of Director's Interest Notice
11 August 2008 ASIC Notification re Cancellation of Shares
05 August 2008 Daily share buy-back notice - Appendix 3E
04 August 2008 Prime forms strategic partnership with Yahoo!7
01 August 2008 Daily share buy-back notice - Appendix 3E
31 July 2008 Daily share buy-back notice - Appendix 3E
28 July 2008 Daily share buy-back notice - Appendix 3E
25 July 2008 Daily share buy-back notice - Appendix 3E
18 July 2008 Daily share buy-back notice - Appendix 3E
For personal use only use personal For 17 July 2008 Daily share buy-back notice - Appendix 3E
16 July 2008 Daily share buy-back notice - Appendix 3E
15 July 2008 30 June 2008 Results Release Date Notification
Bidder's Statement - Offer 60
Date Event
15 July 2008 Daily share buy-back notice - Appendix 3E
14 July 2008 Daily share buy-back notice - Appendix 3E
10 July 2008 Daily share buy-back notice - Appendix 3E
09 July 2008 Daily share buy-back notice - Appendix 3E
08 July 2008 ASIC Notification re Cancellation of Shares
07 July 2008 Initial Director`s Interest Notice
07 July 2008 Initial Director`s Interest Notice
04 July 2008 Daily share buy-back notice - Appendix 3E
04 July 2008 Change of Director`s Interest Notice
03 July 2008 Daily share buy-back notice - Appendix 3E
For personal use only use personal For
Bidder's Statement - Offer 61
Annexure B
BPSL ANNOUNCEMENTS SINCE 1 JULY 2007
Date Event
14 October 2008 Change Of Company Name
8 October 2008 Results of General Meeting held on 8 October 2008
1 October 2008 ASIC Form 388
1 October 2008 Full Year Statutory Accounts
25 September 2008 BGL AGM Notice and Change of Company Details
8 September 2008 Notice of General Meeting/Proxy Form
29 August 2008 2008 Becker Group Preliminary Final Report
13 August 2008 Becker Group Expansion of Outside Broadcasting Further Information
13 August 2008 Becker Group Expansion of Outside Broadcasting Business
30 June 2008 Initial Director's Interest Notice - Warwick David Syphers
30 June 2008 Final Director's Interest Notice - Timothy Garth Keen
30 June 2008 Final Director's Interest Notice - Paul Joseph Ramsay 26 May 2008 Becker Group Limited – Resignation of Director
23 May 2008 BGL – Extension of Contract with Sky Television
01 May 2008 Changes concerning CEO Director and Secretary
30 April 2008 PRT: BKR Completion of Sale of Dendy Cinema/Film Businesses
30 April 2008 BGL Completion of Sale of Dendy Cinema and Films Businesses
25 February 2008 Half Yearly Report and Accounts
22 February 2008 PRT: Becker Announces Sale of Dendy Cinema/Film Distribution
22 February 2008 Sale of Dendy Cinema and Film Distribution Businesses
29 January 2008 Becker Group Ltd – New Managing Director
30 November 2008 Becker Group Limited (BGL) – Results of Annual General Meeting
For personal use only use personal For 30 November 2007 Becker Group Limited (BKR) – Change of Auditor
12 October 2007 Notice of 2007 AGM, Proxy Form and 2007 Annual Report
28 September 2007 2007 Becker Group Limited Full Year Accounts
Bidder's Statement - Offer 62
Date Event 25 September 2007 Change of Director's Interest Notice
25 September 2007 Appendix 3Y Change of Directors Interest Notice
31 August 2007 Preliminary Final Report
30 August 2007 Distribution Schedule and Top 20 Shareholders
28 August 2007 Change in substantial holding from PRT 5
28 August 2007 PRT: Prime Offer for Becker Group Expires
21 August 2007 Change in substantial holding
02 August 2007 Supplementary Target's Statement
31 July 2007 Director Appointment/Resignation
31 July 2007 Initial Director's Interest Notice
31 July 2007 Final Director's Interest Notice
25 July 2007 4th Supplementary Bidder's Statement from PRT
23 July 2007 Change in substantial holding from PRT
20 July 2007 Director Appointment/Resignation
11 July 2007 PRT ann: Extension of offer Period/Third Supplementary Bidde
10 July 2007 Change in substantial holding
05 July 2007 Appointment of Directors
05 July 2007 Ceasing to be a substantial holder
04 July 2007 PRT: Becker Group Notice of Status of Defeating Conditions
04 July 2007 PRT: Placement of Magna Pacific (Holdings) Limited shares
03 July 2007 Second Supplementary Bidder's Statement
03 July 2007 Change in substantial holding
03 July 2007 Change in substantial holding
For personal use only use personal For
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