Broadspectrum’s (BRS) board last night changed horses and urged shareholders to accept the $1.50 bid from Spanish group, Ferrovial.
Citing the increased uncertainty about the contract to manage the Manus Island detention centre, the board said offer “provides certainty to shareholders” in the light of the PNG Government’s decision to close the Manus Island centre after the PNG Supreme Court ruled the 800 to 900 people were being detained illegally.
Broadspectrum shares were placed into a trading halt yesterday morning after rebounding in early trading, jumping 6 cents, or 6%, to $1.11. The move was made at the company’s request and a statement was promised before trading started today.
The statement to the ASX came aft 7.30 last night. In it the company said:
"The Board has advised that the impact of the Supreme Court’s decision and the subsequent statement by the Prime Minister of Papua New Guinea has increased the level of near-term uncertainty to its contract with the Department of Immigration and Border Protection (DIBP), and future earnings that may be derived from it
"Whilst the Board considers it likely that there will be changes to its current operations on Manus Province, with the current information available, it is not possible to definitively determine either (1) the nature, scope and timing of any changes or (2) any resulting impact to Broadspectrum, including whether the changes will be positive, negative or neutral from the Company’s perspective.
"It is unlikely that the Company will have certainty as to the potential impacts before the current scheduled closing date for the Offer Period on 2 May 2016. Broadspectrum considers that this matter could have a material impact on its future earnings, either positive or negative,“ the statement said.
The suspension and statement was after the flow of acceptances into the offer reversed dramatically in 24 hours, jumping to nearly 24% in the wake of the PNG Government’s decision.
Ferrovial said yesterday morning that 23.74% of Broadspectrum’s shares had been tendered in favour of the $1.50-per-share offer, a sharp turnaround from Wednesday, when they had dropped to less than 14%.
The key to Ferrovial’s success rests with Allan Gray, Broadspectrum’s largest shareholder with a near 19% holding.
Allan Gray has so far backed the rejection of the Ferrovial offer, but it can be assumed that it has changed its mind after the events in PNG
Broadspectrum warned on Wednesday that there may be a “shortfall” in earnings from its infrastructure business in the second half of the year, but reaffirmed its full year earnings guidance, and said it would update the market on the impact of PNG’s decision when it had more information.
