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- Keybridge Capital (KBC) has submitted another application to the Takeovers Panel disputing 5G Network’s (5GN) acquisition of Webcentral Group (WCG)
- Back in September, 5GN lobbed a takeover bid for digital services provider Webcentral
- At the time, it held a 10.2 per cent controlling interest but has since upped its stake to 56.68 per cent
- While the bid has been given the green light by WCG directors, Keybridge has fought against the buy
- It submitted its first application contesting the acquisition to the Takeovers Panel in late October, although the committee declined to conduct proceedings against the bid
- Now, Keybridge is back with a fresh objection, claiming both parties failed to make sufficient disclosures about the buy
- It’s not yet clear whether the Takeovers Panel will progress proceedings against 5GN or Webcentral, but Keybridge wants the committee to provide Webcentral shareholders with withdrawal rights and for both parties to make further disclosures
- On the market this afternoon, both Webcentral shares and 5G Network shares are down, trading at 52 cents and $1.33, respectively, while Keybridge shares are trading grey at 7 cents
Keybridge Capital (KBC) has submitted another application to the Takeovers Panel over the ongoing dispute of 5G Network’s (5GN) acquisition of Webcentral Group (WCG).
Keybridge is a financial services group with a portfolio of listed and unlisted investments, including Webcentral Group.
KBC attests disclosures from both 5GN and WCG regarding the acquisition were “materially deficient”, and Webcentral shareholders would have likely made a different election on the offer last year.
5GN has since responded to the application, saying it considers the Takeovers Panel application “without merit” and will update shareholders on further developments in accordance with panel rules.
It follows a decision by the Takeovers Panel in October, when it declined to conduct proceedings on Keybridge’s previous application on the basis Webcentral was financially constrained and directors had waited before accept 5G Network’s offer.
The 5GN acquisition
The initial dispute can be pinned down to when 5GN Networks placed a bid to acquire Webcentral back in September 2020, offering one 5GN share for every 12 WCG shares.
Keybridge says the bidding statement implied a cash value of 14.5 cents per WCG share.
Keybridge highlights in its application to the Takeovers Panel, 5GN had voting power in 56.68 per cent of Webcentral shares and the Webcentral board was “then entirely made up of representatives of 5GN.”
The acquisition was agreed to by Webcentral shareholders before the bid closed on November 10.
Less than three days after the 5GN bid closure and shareholder approval, Webcentral announced it was undertaking a “urgent” capital raise in order to fund operations and pursue its growth strategy.
The company raised the funds through a $3.1 million placement to institutions, with plans to issue another $2.5 million worth of shares to entities associated with two company directors, who also happened to be directors of 5GN.
Keybridge understands Webcentral undertook the capital raise to pay an undisclosed amount to its financial adviser as a success fee as 5G had earned a majority stake in the company.
However, neither the success fee nor the capital raise itself were disclosed in 5GN and Webcentral’s respective bidder’s and target’s statements.
Webcentral also sought to issue 10 million performance rights and 2 million director options to two potentially related parties of 5GN, subject to shareholder approval.
Keybridge asserts “Neither the existence of the success fee nor the intention to conduct the capital raising were disclosed in Webcentral’s target’s statements or 5GN’s bidder’s statements.”
It’s not yet clear whether the Takeovers Panel will progress with proceedings against 5GN or Webcentral, but Keybridge wants the committee to provide Webcentral shareholders with withdrawal rights and for both parties to make further disclosures.
On the market this afternoon, both Webcentral shares and 5G Network shares are down following the developments, trading at 52 cents and $1.33, respectively, while Keybridge shares are trading grey at 7 cents.
