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The attempted takeover of Benjamin Hornigold by NSX-listed investment management company John Bridgeman has been shut down by the Takeovers Panel.
After raising red flags in early September due to the apparent lack of competitiveness of John Bridgeman's offer, the panel has decided to stop the takeover in its tracks.
John Bridgeman has now failed twice to take over Benjamin Hornigold, both times because the Takeovers Panel determined the investment manager was implementing lock-up devices and reducing competitiveness.
In early February 2019 the Takeovers Panel made an order blocking John Bridgeman's first attempted takeover of Benjamin Hornigold. The panel considered that an unpaid $4.5 million unsecured loan given by Benjamin Hornigold to John Bridgeman, Hornigold's exclusive investment manager, operated as a lock-up device.
Following the decision, John Bridgeman directed Benjamin Hornigold to place approximately $5.46 million in aggregate foreign currency banknotes with an entity named King's Currency.
John Bridgeman then made an announcement stating it would no longer proceed with its initial takeover attempt of the Brisbane investment firm.
One day later on 6 March 2019, JB Financial Group, an entity that shares a director in common with Benjamin Hornigold, provided John Bridgeman with an unsecured loan facility worth up to $7 million. John Bridgeman then drew down $4.5 million of the loan facility for the purposes of repaying the $4.5 million unsecured loan given by Benjamin Hornigold in accordance with the Takeover Panels' order. This loan was thus repaid.
Fast forward nearly two months to 26 April and John Bridgeman announced its second attempt to takeover Benjamin Hornigold, with offers opening up on 17 May.
In June, a deed of variation was executed by King's Currency that amended the period for the return of the $5.46 million in aggregate foreign currency banknotes from 30 days, providing all banknotes were not returnable until 12 November 2019.
Later that day all of the directors of Benjamin Hornigold resigned, including former Bond University academic Stuart McAuliffe, and three new directors were appointed.
The panel made a declaration of unacceptable circumstances on 6 September, saying that the King's Currency transaction "effectively replaced the loan subject of the Repayment Order and diminished the value of a material and important asset of Benjamin Hornigold, making it less attractive to a potential acquirer and less likely to attract competing proposals to the 2019 Bid (and as a result, diminished the value of Benjamin Hornigold), in effect operating as a lock-up device."
Based on the above the Takeovers Panel has determined that John Bridgeman cannot announce or make a takeover for Benjamin Hornigold until King's Currency returns the $7.12 million of foreign currency banknotes. This must be done within 10 days.
Additionally, the Panel has ordered that Benjamin Hornigold securityholders who accepted John Bridgeman's takeover bid may elect to void their acceptance, and John Bridgeman must pay costs incurred by Benjamin Hornigold and ASIC in the course of these proceedings.
John Bridgeman must pay Benjamin Hornigold $120,000, and ASIC $17,580.
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