Irish Continental Group plc (“ICG”)
Moonduster Limited (“Moonduster”)
1. This is notice of the giving of a censure under section 10(2) of the Irish Takeover Panel Act 1997 (“Act”) of Moonduster, One Fifty One Capital Limited and Doyle Group Limited in respect of their conduct in relation to certain breaches of the Rules arising from an agreement entered into by Moonduster to purchase ICG Units.
2. On 1 October 2007 Moonduster announced that it had entered into an agreement on 21 September with Octavian Master Fund, L.P. and Octavian Special Master Fund, L.P. (“Octavian”) to acquire 500,793 ICG Units (“Agreement”). Under the terms of the Agreement the consideration payable to Octavian comprised €25.20 in cash together with an undertaking from Moonduster to pay to Octavian additional consideration.
The additional consideration comprises the greater of (i) 100 per cent. of the excess of the highest price per ICG Unit paid or offered to be paid by Moonduster over €25.20 within 18 months of the date of the Agreement and (ii) in the event that Moonduster disposes of the ICG Units acquired from Octavian at a price in excess of €25.20 per ICG unit within 18 months of the date of the Agreement, 60 per cent. of the excess over €25.20 per ICG Unit (“Additional Consideration”)
The Panel has considered whether the Agreement is in breach of Rule 16 and whether certain other applicable Rules, including the relevant disclosure Rules, have been breached. The Panel has also conducted an enquiry under section 10(1) of the Act into the conduct of Moonduster, One Fifty One Capital Limited and Doyle Group Limited for the purposes of considering whether to administer any of the sanctions under section 10(2) of the Act.
3. The relevant General Principle and Rules are as follows:
General Principle 1 / Rule 16
General Principle 1 states inter alia that all holders of the securities of an offeree of the same class must be afforded equivalent treatment. Rule 16, which deals with special arrangements with favourable terms, states that neither an offeror nor any person acting in concert with it may during an offer period make any arrangement with any offeree shareholder which involves a dealing in, or acceptance of an offer for, or otherwise relates to, offeree shares, if there would be attached to such arrangement a term favourable to such shareholder which is not being extended under the offer to all offeree shareholders. Note 1 on Rule 16 states that an arrangement to deal with favourable terms attached includes any arrangement where there is a promise to make good to a vendor of shares any excess of the price of any subsequent successful offer over the sale price.
Rule 7.1
The Rule requires an offeror to immediately make an appropriate announcement if, by reason of that offeror or any person acting in concert with it having acquired offeree securities, the offeror becomes obliged under the Rules to revise its offer price. This announcement is required to include inter alia details of any arrangement to which Rule 8.7 applies (see below).
Rule 8.7
If an arrangement to which Rule 8.7 applies exists with any offeror in relation to relevant securities, the offeror is required to disclose publicly, not later than 12.00 noon on the business day following the date of the transaction, the details of such arrangement and the parties thereto. An arrangement to which Rule 8.7 applies means any indemnity or option arrangement, and any agreement or understanding, formal or informal, of whatever nature between two or more persons, relating to relevant securities which is or may be an inducement to one or more of such persons to deal or refrain from dealing in such securities.
Any disclosure by an offeror pursuant to Rule 8.1 is also required to disclose details of any arrangement to which Rule 8.7 applies.
Rule 20.1(b)
The Rule requires that any meetings during an offer period between inter alia the offeror and offeree shareholders shall be attended by a representative of the financial adviser to the offeror. Following any such meetings the financial adviser is required to confirm in writing to the Panel, not later than 12.00 noon on the business day following the date of such meetings, that no material new information was disclosed and no significant new opinion was expressed at such meetings.
4. On 11 October, the Panel ruled that the Agreement is in breach of Rule 16 as it involves an arrangement with favourable terms which could not be extended to all shareholders under any offer which Moonduster may make to ICG shareholders . Consequently, the Panel has given a direction pursuant to section 9(2)(a) of the Act to Moonduster prohibiting it from paying the Additional Consideration. The Panel noted that Moonduster was advised against agreeing to the Additional Consideration arrangement and notwithstanding this advice, Moonduster executed the Agreement.
The Panel ruled that the Agreement was an arrangement to which Rule 8.7 applies. As details of the Agreement were not disclosed under Rule 8.7 by 12.00 noon on 24 September, the Panel ruled that Rule 8.7 had been breached.
On 24 September Moonduster made an announcement pursuant to Rule 7 in relation to inter alia the ICG Units acquired from Octavian. However, as that announcement did not disclose details of the Agreement, the Panel ruled that Rule 7.1 had been breached.
The Rule 8.1 disclosure made by Moonduster on 25 September, disclosing inter alia details of the ICG Units acquired from Octavian, did not contain the relevant details of the Agreement as required under Rule 8.6. As such, the Panel ruled that Rule 8.1 was also breached.
As the Panel did not receive any confirmatory letters pursuant to Rule 20.1(b) in connection with the discussions between Moonduster and Octavian in relation to the Agreement, the Panel ruled that there had also been a breach of Rule 20.1(b). The advisers to Moonduster have confirmed to the Panel that they only became aware of the Agreement on the evening of 28 September following receipt of correspondence from a third party who had become aware that Moonduster may have entered into an agreement in breach of Rule 16.
5. Following the Panel’s enquiry under section 10(1) of the Act Moonduster, One Fifty One Capital Limited and Doyle Group Limited were censured by the Panel under section 10(2) of the Act for their conduct in relation to the matters set out in this announcement.
12 October 2007
