Sour grapes?
Whatever it is, the dispute over the Lane Cove Tunnel purchase and funding by Transurban, and two failed takeover offers, is becoming a soap opera.
Frustrated Transurban shareholder, Sydney fund manager, CP2, is trying to rewind the toll roads group’s recent equity issue that created some fuss.
CP2 was revealed yesterday as having asked the Takeovers Panel to block the $447 million rights issue by Transurban that is financing much of the $630 million purchase price for the Lane Cove Tunnel in Sydney.
It failed in its first attempt to get an interim order blocking the issue.
CP2’s moves came after Transurban rejected a buyout offer from a consortium of CP2, the Canadian Pension Plan Investment Board and the Ontario Teachers Pension Plan, and decided to go ahead with the share sale to fund an acquisition.
The takeover panel said no decision has been made on CPS’s application, but the President declined to issue interim orders as sought by CP2.
The statement from the Takeovers Panel said CP2 is seeking final orders from the Takeovers Panel that Transurban be ‘‘restrained from proceeding with the rights issue in its current form’’ and was also seeking orders that the rights issue be made subject to the approval of security holders by ordinary resolution.
CP2 was also seeking orders that should any rights issue be permitted to proceed, ‘‘the institutional entitlement offer be reopened and clear disclosure be made in relation to the current status of offers for securities in Transurban’’.
CP2’s application to the Takeover’s panel included submissions that ‘‘Transurban’s action to proceed with the rights issue constitutes frustrating action’’.
Also, CP2 said, ‘‘disclosure of the control effects of the rights issue and the consortium’s control proposals in Transurban’s announcements were either inadequate or misleading and the rights issue was conducted in a misinformed market’’.
"The timing and conduct of the rights issue precluded the consortium and offshore institutional investors from participating," CP2 said.
News of the challenge saw Transurban’s securities lose 11c to $4.30, or 2.5%, as it outperformed the weaker market.
The rights issue was a $542 million fully underwritten accelerated renounceable one-for-11 capital raising that Transurban announced on May 10 to fund the purchase of the Lane Cove Tunnel and upgrades to the M2 and M5 tollways.
A day after the issue and tunnel deal were announced, the three shareholders offered $5.57 in cash, less the anticipated second half distribution of 12 cents per security, for each Transurban security that the bidders did not already own.
They owned around 42% of TCL’s issued securities and wanted the deal to be mostly financed by debt.
They also objected to the issue reducing their combined and individual stakes.
This offer was subject to the condition that Transurban discontinue with the capital raising.
Then on May 12, the trio altered the offer to $5.42 per security, less the 12-cent second half distribution, but it wasn’t conditional on the capital raising not proceeding.
Transurban rejected both bids and went ahead with the issue.
The two Canadian holders had already offered $5.25 back in November for TCL securities, but had been rejected.
What’s odd about the application is that it has come well after the event and that TCL has raised the institutional element, with other big holders apparently having no difficulty in subscribing.
The Takeovers Panel will rule on the CPS request for final orders within the next two weeks.
