Postponement of AGM to 30 December 2020
Download the PDFPreparing the document viewer…
Read the announcement as text
ASX ANNOUNCEMENT
22 December 2020
POSTPONEMENT OF ANNUAL GENERAL MEETING TO 30 DECEMBER 2020
The Agency Group Australia Ltd (ASX: AU1) (“The Agency” or “the Company”) hereby gives notice that, in relation
to the Notice of Annual General Meeting dated 23 November 2020, as supplemented by an Addendum to the Notice
of Meeting dated 11 December 2020, (together, “Notice of Meeting”) in respect of the annual general meeting of
shareholders to be held at 9:00am (WST) on Wednesday, 23 December 2020 at 16 Milligan Street, Perth, WA 6000
(“Meeting”), the Takeovers Panel (“Panel”) has made an interim order requiring the Company to defer
consideration of Resolutions 3 to 7 of the Notice of Meeting for consideration at a Meeting to be held no earlier
than Wednesday, 30 December 2020.
Attached is a copy of the media release made by the Panel attaching the interim orders.
Postponement of the Meeting
For the reasons set out above, the board of directors of the Company (”Board”) has resolved to postpone the
Meeting (and allow all resolutions to be considered at the same time) to:
9:00am (WST) on Wednesday, 30 December 2020 at 68 Milligan Street, Perth WA 6000 (“Postponed Meeting”)
The Board remains committed to voting in favour of all resolutions being considered at the Postponed Meeting to
the extent each Board member can vote on the relevant resolutions. The Board believes Resolutions 3 to 7, if
passed, will provide The Agency with a credible long-term funding package to underpin continued growth plans.
Updated information from Nexia Corporate Finance Pty Ltd
As contemplated by the interim orders, The Agency will make a further announcement on or before 24 December
2020 addressing Nexia’s response to the Third Party Comments (as defined in the interim orders). The Board
encourage shareholders to consider that information before deciding whether to submit a Proxy Form (or amended
Proxy Form).
Proxy Forms
The Company confirms that there have been no changes to the Proxy Form previously provided to shareholders.
Shareholders are advised that:
• If you have already completed and returned the Proxy Form which was annexed to the Notice of Meeting
and you do not wish to change your vote, you do not need to take any action as the earlier submitted Proxy
Form will be accepted by the Company unless you submit a new Proxy Form.
• If you have not yet completed and returned a Proxy Form and you wish to vote on the resolutions in the
Notice of Meeting, please complete and return the Proxy Form annexed to the Notice of Meeting no later
than 48 hours before commencement of the Postponed Meeting (i.e. by 9am WST on 28 December 2020).
• If you have already completed and returned the Proxy Form which was annexed to the Notice of Meeting
and you wish to change your vote, you must complete and return the Proxy Form annexed to the to the
Notice of Meeting no later than 48 hours before commencement of the Postponed Meeting (i.e. by 9am WST
on 28 December 2020).
To vote in person, please attend the Meeting at the time, date and place set out above.
By this announcement, the Notice of Meeting is amended and supplemented by the information set out in above.
Ends
Announcement authorised for release by the Board of The Agency Group Australia Limited.
If you require further information, please contact:
Investors Media
The Agency Australia Ltd Chapter One Advisors
Paul Niardone David Tasker / Colin Jacoby
T: +61 08 9204 7955 T: +61 433 112 936 / +61 439 980 359
E: dtasker@chapteroneadvisors.com.au
MEDIA RELEASE
No: TP20/90
Tuesday, 22 December 2020
The Agency Group Australia Limited 01 & 02 – Panel Makes Interim Orders
The Panel has made interim orders in relation to applications dated 8 December 2020
by The Agency Group Australia Limited (Agency) and 16 December 2020 by
Magnolia Equities III Pty Ltd (Magnolia), both in relation to the affairs of Agency.
In order to maintain the status quo, the Panel has ordered that Agency defer
consideration of resolutions 3-7 in the Agency’s Notice of Annual General Meeting
(Peters Proposal Resolutions), which were to be voted on tomorrow, 23 December
2020. Independent Expert Reports prepared by Nexia Perth Corporate Finance Pty
Ltd (Nexia) relating to the Peters Proposal Resolutions have been reviewed by a third
party appointed by Magnolia (Third Party). The orders (among other things) permit
a vote on the Peters Proposal Resolutions to proceed on or after 30 December 2020
provided Agency makes available to Agency shareholders a response by Nexia to the
comments of the Third Party.
The interim orders have effect until the earliest of further order of the Panel,
determination of the proceedings or 2 months from the date of the interim orders.
A copy of the interim orders is attached.
Allan Bulman
Director, Takeovers Panel
Level 16, 530 Collins Street
Melbourne VIC 3000
Ph: +61 3 9655 3500
takeovers@takeovers.gov.au
1/7
ANNEXURE A
CORPORATIONS ACT
SECTION 657E
INTERIM ORDERS
THE AGENCY GROUP AUSTRALIA LIMITED 01 & 02
The Agency Group Australia Limited (Agency) made an application to the Panel
dated 8 December 2020 and Magnolia Equities III Pty Ltd (Magnolia) made an
application to the Panel dated 16 December 2020, both in relation to the affairs of
Agency. 1
The Panel ORDERS:
1. Subject to paragraph 2, Agency must defer consideration of the Peters Proposal
Resolutions until a date after the Panel has made a determination in respect of
The Agency Group Australia 01 & 02.
2. The Peters Proposal Resolutions may be considered at a resumption of the
AGM on a date no earlier than Wednesday, 30 December 2020, provided that
Agency:
(a) in an announcement to ASX no less than 3 days (including at least 1
business day) before the Resumption, makes available to Agency
shareholders a response by Nexia to the Third Party Comments
(submitted by Magnolia in connection with its application) that responds
specifically to each comment, and
(b) keeps for 3 months a record of any votes cast on the Peters Proposal
Resolutions by each Guarantee Shareholder, or associate of a Guarantee
Shareholder, and how those votes were cast, and provides the same to the
Panel on request.
3. Agency must make an announcement to ASX as soon as reasonably practicable
explaining the effect of these orders. If consideration of the Peters Proposal
Resolutions is deferred under paragraph 2, the announcement must:
1
The matters are being heard together under a direction of the Panel
2/7
(a) specify the date to which it is deferred and
(b) clearly and prominently inform Agency shareholders of their right to
submit a new proxy form not later than 48 hours before commencement of
the Resumption of the AGM.
4. These interim orders have effect until the earliest of:
(i) further order of the Panel
(ii) the determination of the proceedings and
(iii) 2 months from the date of these interim orders.
5. In these orders the following terms apply:
AGM the Annual General Meeting of
Agency convened by the Notice of
AGM
Guarantee Shareholder has the meaning given in paragraph
8.3(a) of the Notice of AGM
Independent Expert Report the Independent Expert’s Report
and Financial Services Guide
produced by Nexia dated 23
November 2020
Nexia Nexia Perth Corporate Finance Pty
Ltd
Notice of AGM Agency’s Notice of Annual General
Meeting dated 23 November 2020
Peters Peters Investments Pty Ltd
Peters Proposal potential issue of fully paid
ordinary shares in Agency to Peters
and its associates if $5 million in
new convertible notes are converted
and/or if the options issued to
Peters in May 2020 and October
2020 are exercised
Peters Proposal Resolutions resolutions 3-7 in the Notice of
AGM
Reports Independent Expert Report and
Supplementary Independent Expert
Report
Resumption resumption of the AGM in
accordance with paragraph 2
Supplementary Independent Expert the Supplementary Independent
Report Expert’s Report and Financial
Services Guide produced by Nexia
dated 10 December 2020
Third Party Comments the attached summary (Annexure
A) of comments in a review dated
16 December 2020 of the Reports by
a third party appointed by
Magnolia and provided to the
parties in the proceedings
Tania Mattei
Counsel
with authority of John O’Sullivan
President of the sitting Panel
Dated 22 December 2020
ANNEXURE A: SUMMARY OF REVIEW OF NEXIA REPORTS BY A THIRD
PARTY ENGAGED BY MAGNOLIA
NOTE: The comments below summarise a review dated 16 December 2020 of the
Reports by a third party appointed by Magnolia. The comments below do not
represent or reflect any finding or conclusion by the Panel.
1. Nexia do not clearly identify the valuation date 2, do not rely on “…economic,
market and other conditions prevailing at the date of this Report” as referred to by
Nexia in the Reports 3 and do not define the standard of value. 4
2. Nexia do not compare Agency’s current share price to the exercise price of the
options. The maximum exercise price under the Peters Proposal of $0.027 per
share is 46% lower than Agency’s share price on 9 December 2020 of $0.05 per
share and materially dilutive.
3. Real estate businesses are often valued on a sum of parts basis rather than
valuing the business as a whole using the capitalisation of earnings method
given the different earnings profile of Agency’s operating segments. This does
not appear to be considered by Nexia.
4. Nexia uses an average of two separate valuation calculations, which is
inconsistent with market practice. Further, Nexia do not attempt to reconcile the
material difference between its separate valuation calculations using the
capitalisation of earnings method and quoted market price method.
5. In relation to alternative funding and the possibility of Macquarie appointing a
receiver Nexia have not (or do not appear to have):
(a) performed a valuation of Agency on the basis of its value in exchange on a
piecemeal basis as part of an orderly realisation of assets
(b) sought further information on the possibility of further forebearance by
Macquarie, noting there were several extensions during FY20
(c) commented on other financing options referred to in Agency’s ASX
announcement on 29 October 2020
(d) commented on the impact of the Peters Proposal on the 101,515,093 listed
options which are exercisable at $0.065 and expire on 31 December 2020 5
2
Nexia state the Reports have been prepared in accordance with APES 225 Valuation Services (APES 225).
APES 225 paragraph 5.2c requires that a valuation report clearly communicate the date at which the value has
been determined
3
See page 56 of the Supplementary Independent Expert Report
4
APES 225 paragraph 5.2h requires a valuation report to clearly communicate and define the standard of value
5
See section 5.7.2 of the Supplementary Independent Expert Report
(e) commented on the history of the Macquarie relationship or commented on
the likelihood of Macquarie appointing a receiver on or after 30 December
2020 and
(f) reviewed or considered correspondence, historic or current draft
Macquarie facility documents or deeds of forebearance.
6. In relation to the estimation of expected earnings, Nexia:
(a) capitalised FY20 EBITDA adjusted for the removal of the west coast rent
roll business (West Coast Business) sold after 1 July 2020 using trailing
multiples of comparable companies. Nexia have included a scenario
where 100% of EBITDA for the West Coast Business is excluded. This is an
unreasonable assumption given the reciprocal arrangement in place with
Managex. Nexia have also included two other scenarios where 25% and
62.5% of FY20 EBITDA is removed from normalised EBITDA. These
scenarios seem to be purely subjective
(b) have not factored anticipated growth in agent numbers as referred to by
Agency in the FY20 annual report
(c) exclude reference to continued growth achieved in the “record-breaking
quarter” in the first quarter of FY21
(d) have not quantified the impact of COVID-19 and
(e) have not compared their estimate of normalised EBITDA to the cash flow
forecasts prepared by Agency Directors. 6
7. In the capitalisation of earnings valuation Nexia have made the following
omissions/errors:
(a) incorrectly applied a control premium to EBITDA multiples of comparable
companies, whereas the control premium should be applied to equity
value
(b) not included lease liabilities in their calculation of net debt (whereas they
have excluded the lease expenses in EBTIDA)
(c) not included the present value of the remaining retention amount from the
sale of the West Coast Business of up to $0.485 million
(d) in assessing the value per share if the Peters Proposal does not go ahead
Nexia have not deducted circa $320,000 that will have to be repaid to
Peters and
6
See section 5.6 of the Supplementary Independent Expert Report
(e) not included any other normalisation adjustments for example any
potential one-off and non-recurring legal and consulting costs.
8. In adopting a quoted market price valuation methodology Nexia have stated
there to be a moderate level of liquidity, however, there were 326 days of no
trades over the last three years and substantial shareholders and directors were
responsible for a large portion of share trades.
9. In assessing the reasonableness of the Peters Proposal, the key items to look at
include:
(a) whether the offer is fair, which is not stated as a specific disadvantage of
the proposed Peters Proposal
(b) quantum: a discount of a minimum of 46% to the current share price is
material
(c) the severe dilutive impact of the Peters Proposal occurring after a record
first quarter of FY21
(d) comparing the offer to the quantum of any other offers
(e) presenting a counterfactual orderly realisation value
(f) replacing Macquarie or any other senior debt with a convertible hybrid
security is less attractive to shareholders
(g) the level of interest being shown by multiple parties in Agency may be
positively perceived by the secured creditor as well as its now
substantially reduced exposure
(h) a non-renounceable rights issue was completed in October 2019 at a price
of 6.5 cents per share with an attaching option exercisable at 6.5 cents per
share
(i) there are alternate options but Nexia does not table alternatives
(j) the extent of dilution of existing shareholders
(k) acknowledgment of additional value for the options of the convertible
notes being issued under the Peters Proposal being material primarily due
to the low and dilutive exercise price and
(l) release of personal guarantees of a director and senior management.