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NAMOI COTTON LIMITED (ASX: NAM) NAMOI COTTON ENTERS INTO SCHEME IMPLEMENTATION AGREEMENT WITH LOUIS DREYFUS COMPANY
Following the completion of due diligence1 , Namoi Cotton Limited (Namoi) has entered into a Scheme Implementation Agreement (SIA) with Louis Dreyfus Company Asia Pte. Ltd. (LDC) to acquire the remaining 83% of issued shares in Namoi that it does not currently own, by way of a scheme of arrangement (Scheme).
Under the Scheme, Namoi shareholders will receive a total cash consideration of $0.51 per share.
This total cash consideration includes Namoi paying a dividend of $0.01 per share to Namoi shareholders on the dividend record date after 1 April 2024 and prior to Scheme implementation2 .
The total cash consideration of $0.51 per share represents a premium of 44% to the closing share price of $0.355 per share and a premium of 37% to the three-month VWAP of $0.372 per share, in each case prior to the announcement of the NBIO on 28 November 20233 .
Namoi is also permitted to pay an additional dividend of $0.01 per share to Namoi shareholders (subject to customary practices) after 31 August 2024 in the event the implementation of the Scheme is delayed beyond that date.
This dividend payment, should it be declared, will be in addition to total cash consideration of $0.51 per share under the Scheme.
Tim Watson, Executive Chairman for Namoi, said: ‘Combining Namoi’s ginning business with LDC is designed to create a strengthened and sustainable business for our grower customers and staff and providing Namoi shareholders the opportunity to realise value for their shares at an attractive premium to the share price prior to the announcement of LDC’s indicative proposal.
‘The implementation of the Scheme is expected in mid-2024.
Until then the Namoi team will be focused on preparing for and delivering, business as usual, for the forthcoming ginning season to our grower customers.
We will also be progressing with the delivery of our obligations to construct and subsequently operate the new gin at Kununurra for the Kimberley Cotton Company4 .’ Joe Nicosia, LDC’s Head of Cotton, said: ‘Namoi’s network of cotton gins and the business relationships it has built over the past 62 years are complementary to LDC’s activities, and we strongly believe the move announced today will add value to both entities.
1 Refer to Namoi’s announcement to the ASX on 28 November 2023, in which it advised that it had received a non-binding, indicative and conditional offer (NBIO) from LDC.
2 Subject to a determination or declaration by the Namoi Board to pay the dividend.
3 Closing price and three-month VWAP as at 27 November 2023. 4 Kimberley Cotton Company Limited, of which Namoi has an interest. 2 | P a g e
‘We intend to retain the Namoi Cotton brand name, operate Namoi gins as in the normal course of business and maintain an office in Toowoomba, and look forward to continuing to deliver a competitive service to our grower customers, as we have done over the past 111 years in Australia.’ Independent Namoi directors’ recommendation and STAM intention Each director of Namoi (other than Sarah Scales who is abstaining5 ) (together, the Independent Directors) intends to recommend that Namoi shareholders vote in favour of the potential transaction, in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the potential transaction is in the best interests of Namoi shareholders.
Each Independent Director who holds Namoi shares, intends to vote his or her Namoi shares in favour of the Scheme at the Scheme Meeting (defined below), subject to the same qualification as above.
As announced on 28 November 2023, Samuel Terry Asset Management Pty Ltd (as trustee for Samuel Terry Absolute Return Group), with a 21.5% shareholding in Namoi, has indicated to Namoi that it intends to vote all of its shares in Namoi in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Namoi shareholders.
Overview of SIA The SIA contains customary terms and conditions in relation to the implementation of the Scheme.
The SIA provides that implementation of the Scheme is subject to a number of conditions which must be satisfied or, if applicable, waived before the Scheme can become effective (Conditions Precedent).
These Conditions Precedent are set out in full in the SIA and include:
• The Independent Expert concluding in the Independent Expert's Report (and continuing to conclude) that the Scheme is in the best interests of Namoi shareholders,
• Approval of the Scheme by Namoi shareholders at the meeting of Namoi shareholders ordered by the Court to be convened to consider the Scheme (Scheme Meeting),
• Regulatory approvals, including from the Australian Competition & Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB),
• No material adverse effect in respect of Namoi including a reduction in consolidated net assets or annual recurring EBITDA beyond specified thresholds prior to the second Scheme court date,
• No prescribed events in respect of Namoi prior to the second Scheme court date, and
• Court approval in respect of the Scheme.
The SIA contains the following customary arrangements:
Obligations in relation to the regulatory approval processes and the satisfaction of the relevant Conditions Precedent, Limited termination rights including that either party may terminate in the event of an unremedied material breach by the other party,
5 Sarah Scales, LDC’s appointed representative to the Namoi Board, will abstain from making a recommendation to shareholders due to her association with LDC. 3 | P a g e
Exclusivity obligations on Namoi, including ‘no shop’, ‘no talk’ and ‘no due diligence’ obligations (the latter two subject to a customary fiduciary exception) along with ‘notification’ and ‘matching right’ obligations, and
Circumstances in which Namoi may be required to pay a break fee to LDC and circumstances in which LDC may be required to pay a reverse break fee to Namoi.
The amount of each of the break fee and the reverse break fee, should either become payable under the SIA, is A$1.0 million.
The SIA contains arrangements for the conduct of business until the implementation of the Scheme, that include:
Operating and capital expenditure to manage the 2024 cotton season, and Delivering on the commitments to KCC for their new gin project at Kununurra.
A copy of the SIA (which sets out all of the Conditions Precedent and other terms relating to the Scheme and its implementation) is attached to this announcement. Scheme Booklet A Scheme Booklet containing important information in relation to the Scheme and the Scheme Meeting will be prepared by Namoi and sent to Namoi shareholders in due course.
The Scheme Booklet will include information in relation to:
The reasons for the Independent Directors’ recommendation in respect of the Scheme,
Copy of the report by the independent expert (BDO Australia Limited) appointed by Namoi in respect of the Scheme (Independent Expert), which will include the Independent Expert's opinion on whether the Scheme is in the best interests of Namoi shareholders (Independent Expert's Report), and
Notice of and information about the Scheme Meeting, including information about how to vote.
Indicative timetable At this stage Namoi shareholders do not need to take any action.
Namoi will continue to keep shareholders and the market informed of developments associated with the Scheme in accordance with its continuous disclosure obligations.
The target date for the implementation of the Scheme is mid-2024.
However, the timetable for the date of the Scheme Meeting and implementation of the Scheme will depend on the process for meeting the above Conditions Precedent, including obtaining the required regulatory approvals.
Blackpeak Capital is acting as financial advisor to Namoi. KWM is acting as legal advisor to Namoi.
This announcement was approved by the Independent Directors of Namoi Cotton.
For further information, please contact: Namoi Cotton Limited Tim Watson Executive Chairman
i do not hold this share
looks like i missed this one ( unless in the unlikely event the deal falls over .._)
maybe the regulator will block this , but can't see any other real obstacle
Following the completion of due diligence1 , Namoi Cotton Limited (Namoi) has entered into a Scheme Implementation Agreement (SIA) with Louis Dreyfus Company Asia Pte. Ltd. (LDC) to acquire the remaining 83% of issued shares in Namoi that it does not currently own, by way of a scheme of arrangement (Scheme).
Under the Scheme, Namoi shareholders will receive a total cash consideration of $0.51 per share.
This total cash consideration includes Namoi paying a dividend of $0.01 per share to Namoi shareholders on the dividend record date after 1 April 2024 and prior to Scheme implementation2 .
The total cash consideration of $0.51 per share represents a premium of 44% to the closing share price of $0.355 per share and a premium of 37% to the three-month VWAP of $0.372 per share, in each case prior to the announcement of the NBIO on 28 November 20233 .
Namoi is also permitted to pay an additional dividend of $0.01 per share to Namoi shareholders (subject to customary practices) after 31 August 2024 in the event the implementation of the Scheme is delayed beyond that date.
This dividend payment, should it be declared, will be in addition to total cash consideration of $0.51 per share under the Scheme.
Tim Watson, Executive Chairman for Namoi, said: ‘Combining Namoi’s ginning business with LDC is designed to create a strengthened and sustainable business for our grower customers and staff and providing Namoi shareholders the opportunity to realise value for their shares at an attractive premium to the share price prior to the announcement of LDC’s indicative proposal.
‘The implementation of the Scheme is expected in mid-2024.
Until then the Namoi team will be focused on preparing for and delivering, business as usual, for the forthcoming ginning season to our grower customers.
We will also be progressing with the delivery of our obligations to construct and subsequently operate the new gin at Kununurra for the Kimberley Cotton Company4 .’ Joe Nicosia, LDC’s Head of Cotton, said: ‘Namoi’s network of cotton gins and the business relationships it has built over the past 62 years are complementary to LDC’s activities, and we strongly believe the move announced today will add value to both entities.
1 Refer to Namoi’s announcement to the ASX on 28 November 2023, in which it advised that it had received a non-binding, indicative and conditional offer (NBIO) from LDC.
2 Subject to a determination or declaration by the Namoi Board to pay the dividend.
3 Closing price and three-month VWAP as at 27 November 2023. 4 Kimberley Cotton Company Limited, of which Namoi has an interest. 2 | P a g e
‘We intend to retain the Namoi Cotton brand name, operate Namoi gins as in the normal course of business and maintain an office in Toowoomba, and look forward to continuing to deliver a competitive service to our grower customers, as we have done over the past 111 years in Australia.’ Independent Namoi directors’ recommendation and STAM intention Each director of Namoi (other than Sarah Scales who is abstaining5 ) (together, the Independent Directors) intends to recommend that Namoi shareholders vote in favour of the potential transaction, in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the potential transaction is in the best interests of Namoi shareholders.
Each Independent Director who holds Namoi shares, intends to vote his or her Namoi shares in favour of the Scheme at the Scheme Meeting (defined below), subject to the same qualification as above.
As announced on 28 November 2023, Samuel Terry Asset Management Pty Ltd (as trustee for Samuel Terry Absolute Return Group), with a 21.5% shareholding in Namoi, has indicated to Namoi that it intends to vote all of its shares in Namoi in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Namoi shareholders.
Overview of SIA The SIA contains customary terms and conditions in relation to the implementation of the Scheme.
The SIA provides that implementation of the Scheme is subject to a number of conditions which must be satisfied or, if applicable, waived before the Scheme can become effective (Conditions Precedent).
These Conditions Precedent are set out in full in the SIA and include:
• The Independent Expert concluding in the Independent Expert's Report (and continuing to conclude) that the Scheme is in the best interests of Namoi shareholders,
• Approval of the Scheme by Namoi shareholders at the meeting of Namoi shareholders ordered by the Court to be convened to consider the Scheme (Scheme Meeting),
• Regulatory approvals, including from the Australian Competition & Consumer Commission (ACCC) and Foreign Investment Review Board (FIRB),
• No material adverse effect in respect of Namoi including a reduction in consolidated net assets or annual recurring EBITDA beyond specified thresholds prior to the second Scheme court date,
• No prescribed events in respect of Namoi prior to the second Scheme court date, and
• Court approval in respect of the Scheme.
The SIA contains the following customary arrangements:
Obligations in relation to the regulatory approval processes and the satisfaction of the relevant Conditions Precedent, Limited termination rights including that either party may terminate in the event of an unremedied material breach by the other party,
5 Sarah Scales, LDC’s appointed representative to the Namoi Board, will abstain from making a recommendation to shareholders due to her association with LDC. 3 | P a g e
Exclusivity obligations on Namoi, including ‘no shop’, ‘no talk’ and ‘no due diligence’ obligations (the latter two subject to a customary fiduciary exception) along with ‘notification’ and ‘matching right’ obligations, and
Circumstances in which Namoi may be required to pay a break fee to LDC and circumstances in which LDC may be required to pay a reverse break fee to Namoi.
The amount of each of the break fee and the reverse break fee, should either become payable under the SIA, is A$1.0 million.
The SIA contains arrangements for the conduct of business until the implementation of the Scheme, that include:
Operating and capital expenditure to manage the 2024 cotton season, and Delivering on the commitments to KCC for their new gin project at Kununurra.
A copy of the SIA (which sets out all of the Conditions Precedent and other terms relating to the Scheme and its implementation) is attached to this announcement. Scheme Booklet A Scheme Booklet containing important information in relation to the Scheme and the Scheme Meeting will be prepared by Namoi and sent to Namoi shareholders in due course.
The Scheme Booklet will include information in relation to:
The reasons for the Independent Directors’ recommendation in respect of the Scheme,
Copy of the report by the independent expert (BDO Australia Limited) appointed by Namoi in respect of the Scheme (Independent Expert), which will include the Independent Expert's opinion on whether the Scheme is in the best interests of Namoi shareholders (Independent Expert's Report), and
Notice of and information about the Scheme Meeting, including information about how to vote.
Indicative timetable At this stage Namoi shareholders do not need to take any action.
Namoi will continue to keep shareholders and the market informed of developments associated with the Scheme in accordance with its continuous disclosure obligations.
The target date for the implementation of the Scheme is mid-2024.
However, the timetable for the date of the Scheme Meeting and implementation of the Scheme will depend on the process for meeting the above Conditions Precedent, including obtaining the required regulatory approvals.
Blackpeak Capital is acting as financial advisor to Namoi. KWM is acting as legal advisor to Namoi.
This announcement was approved by the Independent Directors of Namoi Cotton.
For further information, please contact: Namoi Cotton Limited Tim Watson Executive Chairman
i do not hold this share
looks like i missed this one ( unless in the unlikely event the deal falls over .._)
maybe the regulator will block this , but can't see any other real obstacle
