SUMMARY OF IMPLEMENTATION AGREEMENT
Golden Circle Limited (Golden Circle) and H.J. Heinz Company Australia Limited (Heinz) have entered into an Implementation Agreement (Implementation Agreement).
The Implementation Agreement sets out the obligations of Golden Circle and Heinz in relation to a Scheme of Arrangement to be proposed to Golden Circle Shareholders. A copy of the Implementation Agreement will be set out in the Explanatory Booklet that is to be provided to Golden Circle Shareholders prior to the Scheme Meeting. A summary of some of the key terms of the Implementation Agreement are set out below.
Implementation of the Scheme is subject to the satisfaction or waiver of a number of conditions precedent including the following:
- all regulatory approvals required to implement the Scheme are obtained including Foreign Investment Review Board approval;
- no prohibitive orders or determinations prevent the implementation of the Scheme;
- Golden Circle Shareholders approve the Scheme at the Scheme Meeting. The resolution for the Scheme must be passed by a majority in number of Golden Circle Shareholders present and voting (in person or by proxy) and whose votes represent at least 75% of the total votes cast at the meeting;
- none of the Directors of Golden Circle change, qualify or withdraw their unanimous recommendation to Golden Circle Shareholders to vote in favour of the Scheme in the absence of a Superior Proposal and subject to the Independent Expert concluding that the Scheme is in the best interest of Golden Circle Shareholders;
- the Scheme is approved by the Supreme Court of Queensland;
- no change in the recommendation of the Golden Circle Board for Golden Circle Shareholders to accept the Heinz Proposal unless there is a Superior Proposal or if the Independent Expert concludes that the Scheme is not in their best interest;
- no occurrence of a Material Adverse Change between the date of signing the Implementation Agreement and 8.00am on the Second Court Date;
- no Golden Circle or Heinz Prescribed Occurrence occurs between the date of the Implementation Agreement and 8:00am on the Second Court Date;
- the warranties given by Golden Circle and Heinz to each other in the Implementation Agreement are (and remain) true and correct; and
- receipt of consent to the Scheme from GE Capital Asset Services and Trading Asia Pacific Pty Ltd being the financier to Golden Circle.
Material Adverse Change
A material adverse change means a matter, event or circumstance including a change in any applicable law that occurs, is announced or becomes known to the Golden Circle Board (whether or not it becomes 5 public) where that matter, event or circumstance:
- has, has had or could reasonably be expected to have, individually or when aggregated with all such matters, events or circumstances the effect of diminishing the net assets of the Golden Circle group as at 30 June 2008 as disclosed in the Golden Circle 2007/2008 Annual Report by an amount of $16.5 million or more; or
- will have or could reasonably be expected to have, individually or when aggregated with all such matters, events or circumstances the result that the EBITDA of the Golden Circle Group for the financial year ending 30 June 2009 is reduced by 20% or more of the budgeted EBITDA for that period.
The occurrence of a Material Adverse Change does not include matters disclosed to Heinz as provided in the Implementation Agreement.
Golden Circle Prescribed Occurrences
Golden Circle Prescribed Occurrences include (among others and subject to various carve outs such as due to a requirement under the Scheme or pursuant to the Implementation Agreement) Golden Circle:
- increasing or decreasing its share capital in any way, including the issue of any dividends;
- acquiring or disposing of material assets;
- entering into contracts requiring material payments;
- materially altering terms of employment or paying termination or retention payments;
- making any changes to its Constitution;
- distributing profits by way of payment of a dividend or otherwise; and
- making any significant changes to accounting policies.
The Implementation Agreement may be terminated by either party at any time prior to 8.00am on the Second Court Date, by giving the other party written notice if:
- the other party is in material breach of its obligations under the Implementation Agreement and has not rectified that breach within five Business Days (or any shorter period ending at 5.00pm on the day before the Second Court Date) after it is given notice by the first party specifying that breach and requiring it to be rectified;
- at the Scheme Meeting, the Scheme is not approved by the necessary majorities of the Scheme Shareholders, except to the extent the Court is prepared to disregard the Headcount Test;
- a Superior Proposal is publicly announced and the Golden Circle Board publicly announces that the Superior Proposal is recommended by the Golden Circle Board;
- Heinz changes the structure of the Heinz Proposal from a scheme to a takeover, provided that the takeover bid is on terms at least as favourable as the Scheme;
- the Court has refused to make any order directing Golden Circle to convene the Scheme Meeting or approving the Scheme, provided that both parties have met and consulted in good faith and agreed that they 6 do not wish to proceed with the Scheme;
- the conditions (as summarised above) are not satisfied or waived (if capable of being waived) by the required date; or
- the date the scheme becomes effective does not occur on or before the End Date.
Under the Implementation Agreement, Golden Circle and Heinz have agreed to the following exclusivity arrangements for the period commencing on the date of the Implementation Agreement and ending on the earliest of:
- the End Date;
- the effective date of the Scheme; and
- the date the Implementation Agreement is terminated in accordance with its terms,
Subject to the exception noted below, during the Exclusivity Period, Golden Circle must ensure that neither it nor any of its Representatives (including Anchorage Golden Circle Pty Ltd and certain of its related bodies corporate), except with the prior written consent of Heinz, enters into or participates in any negotiations, discussions, agreement, arrangement or understanding with any other person in relation to, or which may reasonably be expected to lead to, a Competing Proposal or potential Competing Proposal.
During the Exclusivity Period, Golden Circle must not, and must ensure that its Representatives (including Anchorage Golden Circle Pty Ltd and certain of its related bodies corporate) do not, except with the prior written consent of Heinz, solicit, encourage or invite, directly or indirectly, any enquiries, discussions or proposals in relation to, or which may reasonably be expected to lead to, a Competing Proposal.
Exception to No Talk
Golden Circle may undertake any action that would otherwise be prohibited by the No Talk limb of the above exclusivity arrangements if it is in response to unsolicited proposals that may lead to a bona fide competing proposal where the Golden Circle Board is acting reasonably, in good faith, in order to satisfy what the it considers to be its fiduciary and statutory duties and having received written legal advice that not responding to the proposal would be reasonably likely to constitute a breach of its fiduciary and statutory duties.
Notification of approaches
Golden Circle is obliged under the Implementation Agreement to promptly notify Heinz in writing of all material details of a Competing Proposal.
In compensation for the costs incurred by Heinz in relation to the Proposal, Golden Circle agrees to pay to Heinz $2,100,000 (exclusive of GST) (Break Fee) if any of the following circumstances arise:
- Golden Circle is in material breach of this agreement or of a representation and warranty and, subject to a cure period, Heinz validly terminates the Implementation Agreement;
- at any time prior to the Second Court Date, any Director of Golden Circle changes or withdraws his support or positive recommendation of the Scheme or makes a public statement indicating that he no longer supports the Scheme (Change of Recommendation) and Heinz validly terminates the Implementation Agreement, other than where the Change of Recommendation is because:
- the required regulatory approvals are not obtained;
- a prescribed occurrence occurs in relation to Heinz;
- a warranty given by Heinz in the Implementation Agreement is not true and correct;
- the Independent Expert opines that the Scheme is not in the best interests of Golden Circle Shareholders; or
- Golden Circle is entitled to terminate the Implementation Agreement due to a material, un-rectified breach of the Implementation Agreement by Heinz;
- a Superior Proposal is publicly announced which the Golden Circle Board has recommended to Golden Circle Shareholders and which remains current at the time (if any) that Heinz subsequently validly terminates the Implementation Agreement;
- Anchorage Golden Circle Pty Ltd does not vote in favour of the Scheme in circumstances where Golden Circle has not publicly recommended a Superior Proposal, the Independent Expert has opined the Scheme is in the best interest of Golden Circle Shareholders and Golden Circle is not entitled to terminate the Implementation Agreement; during the term of the Implementation Agreement or for a six month period commencing on the earlier of termination of the Implementation Agreement and the End Date, a Competing Proposal is announced, the Competing Proposal is a Superior Proposal (to the Heinz Proposal) and the proponent of that Competing Proposal:
- acquires a relevant interest in at least 50% of Golden Circle Shares where the Superior Proposal is (or becomes) free from any defeating conditions; or
- acquires the whole or a substantial part of the Golden Circle Group's assets, business or property.
- The Break Fee is not payable merely because the resolution submitted to the Scheme Meeting in respect of the Scheme is not approved by the required majorities, provided that Anchorage Golden Circle Pty Ltd votes in favour of the Scheme.
A Competing Proposal is any proposal or possible transaction or arrangement (whether by way of takeover, share acquisition, Scheme of Arrangement, capital reconstruction, acquisition of main undertaking or otherwise) pursuant to which, if ultimately completed, a person whether alone or together with its associates (other than Heinz or a Related Body Corporate of Heinz) would:
- directly or indirectly, acquire an interest in, a relevant interest in or become the holder of:
- more than 20% of the shares in Golden Circle; or
- the whole or a substantial part or a material part of the business or property of Golden Circle or the Golden Circle Group;
- acquire control of Golden Circle, within the meaning of section 50AA of the Corporations Act; or
- otherwise acquire or merge with Golden Circle (including by a reverse takeover bid, reverse Scheme of Arrangement or dual listed company structure).
The End Date means
- 11.59pm on 31 January 2009; or
- 11.59pm on 27 February 2009 if prior to 7.00pm Brisbane time on 30 January 2009 Heinz gives written notice to Golden Circle extending the End Date to 11.59pm on 27 February 2009; or
- such other date and time agreed in writing between Heinz and Golden Circle.
A Superior Proposal is a bona fide Competing Proposal which:
- in the determination of the Golden Circle Board acting in good faith is reasonably capable of being financed and completed within a reasonable time, taking into account the nature of the Competing Proposal and the person or persons making it; and
- in the determination of the Golden Circle Board acting in good faith and in order to satisfy what the Golden Circle Board reasonably considers to be its fiduciary or statutory duties, would, if completed substantially in accordance with its terms, be likely to result in a transaction more favourable to the Golden Circle Shareholders than the Scheme or any Heinz counterproposal (as applicable).