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Premium Income Fund – Declaration of Unacceptable Circumstances and Orders

by Martha.Ware 6. June 2011 07:58

The Takeovers Panel has made a declaration of unacceptable circumstances and final orders in relation to an application dated 11 May 2011 by Wellington Capital Limited as responsible entity for the Premium Income Fund (PIF) in relation to the affairs of PIF.


On 17 May 2010, ALF PIF Finance Limited (ALF Finance) lodged a bidder's statement with ASIC in respect of a proposal to acquire all of the units in PIF under an off-market bid. A replacement bidder's statement was lodged with ASIC on 15 June 2010. ALF Finance lodged a notice of variation dated 18 February 2011 with the National Stock Exchange and ASIC, purporting to extend the offer period to 14 June 2011.

On or about 2 May 2011, ALF Finance dispatched a letter dated 18 April 2011 to PIF unitholders. The letter enclosed a copy of the notice of variation and contained additional information for PIF unitholders.

The bid was scheduled to close on 28 February 2011. However, the notice of variation was not dispatched to PIF unitholders until on or about 2 May 2011.


In the Panel's view, the bid was not extended in accordance with s 650D of the Corporations Act 2001 (Cth). ALF Finance has continued to communicate with PIF unitholders and receive acceptances after 28 February 2011 on the basis that the bid is still on foot.

The Panel considers that the communications after close of the bid, the receipt of acceptances after close of the bid, failure to prepare a further supplementary bidder's statement as required and the material deficiencies in the disclosure in the existing replacement bidder's statement and the 18 April letter has resulted in:

  • the acquisition of control over PIF units not taking place in an efficient competitive and informed market and
  • PIF unitholders not having enough information to assess the merits of the bid.

The Panel considers that even if the bid was validly extended, the corrections required would not leave unitholders with a reasonable time to consider the proposal.

The Panel considers that it is not against the public interest to make a declaration of unacceptable circumstances. It has had regard to the matters in s 657A(3).


The Panel has made orders that:

  1. ALF Finance make an announcement to the market that the bid ended on 28 February 2011 without the conditions having being fulfilled or waived and all acceptances will be returned
  2. no further acceptances be processed by ALF Finance in relation to the bid
  3. any acceptances that have been processed be reversed
  4. any acceptances be returned to unitholders as soon as practicable after the date of the orders
  5. none of ALF Finance, Mr James Byrnes or any associate of either of them communicate with PIF unitholders, except as required by these orders, until after ALF Finance has complied with the orders in paragraphs 1 to 4 above and ALF Finance has confirmed satisfaction of the orders in accordance with paragraph 6 below.
  6. ALF Finance confirm in writing to the Panel and all parties when it has complied with these orders.

The sitting Panel was Diana Chang, Byron Koster and Peter Scott (sitting President).

The Panel will publish reasons for the decision in due course on its website www.takeovers.gov.au.


Takeovers and Reconstructions


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