ASCIANO LTD Date: 30 September 2015
ASCIANO SCHEME BOOKLET REGISTERED WITH ASIC
Australian Securities and Investments Commission ('ASIC') has registered the Scheme Booklet attached to this announcement.
The Independent Expert has concluded that the Scheme is in the best interests of Asciano shareholders, in the absence of a superior proposal.
Asciano Directors unanimously recommend that Asciano shareholders vote in favour of the Scheme in the absence of a superior proposal.
Asciano Limited (ASX: AIO, OTCUS: AIOYY) ('Asciano') today announced that ASIC has registered the Scheme Booklet in relation to the previously announced Scheme of Arrangement ('Scheme') under which Nitro Corporation Pty Ltd, an entity controlled by a consortium of Brookfield Infrastructure Partners Limited, other Brookfield sponsored and managed private funds and two institutional partners will acquire 100% of the issued capital of Asciano.
A copy of the Scheme Booklet, including the Independent Expert's Report and a notice of Scheme Meeting, is attached to this announcement and will be sent to Asciano shareholders on or about Thursday, 8 October 2015.
The Independent Expert, Grant Samuel & Associates Pty Limited, has concluded that the Scheme is in the best interests of Asciano shareholders, in the absence of a superior proposal. Grant Samuel's conclusion should be read in context with the full Independent Expert's Report and the Scheme Booklet attached to this announcement.
Asciano's Board of Directors unanimously recommends that Asciano shareholders vote in favour of the Scheme, in the absence of a superior proposal.
Scheme Meeting
The Scheme Meeting will be held on Tuesday, 10 November 2015 at the State Library of Victoria, Village Roadshow Theatrette, 328 Swanston Street, Melbourne, commencing at the later of 10:30am or the conclusion of the Annual General Meeting of the Asciano shareholders due to commence at 10:00am that same day.
All Asciano shareholders are encouraged to vote either by attending the Scheme Meeting in person, or by lodging a proxy vote by 10.30am on Sunday, 8 November 2015. Details of how to lodge a proxy vote are included on the proxy form and in the Scheme Booklet.
Investor and Analyst Enquiries:
Kelly Hibbins
Phone: + 61 2 8484 8046
Email: Kelly_hibbins@asciano.com.au
Media Enquiries:
Richard Baker
Phone: + 61 408 985 008
Email: media@asciano.com.au
Page | 2
Indicative timetable1
Event | Expected date |
Scheme Booklet despatched to Asciano shareholders | Thursday, 8 October 2015 |
Scheme Meeting to vote on the Scheme | Tuesday, 10 November 2015 |
Second Court Date for approval of the Scheme | Tuesday, 17 November 2015 |
Effective Date of the Scheme | Wednesday, 18 November 2015 |
Special Dividend Record Date | Monday, 23 November 2015 |
Special Dividend Payment Date | Tuesday, 1 December 2015 |
Record date for determining entitlement to Scheme Consideration | Wednesday, 2 December 2015 |
Scheme Implementation Date | Tuesday, 8 December 2015 |
Special Dividend
Asciano expects to pay a fully franked Special Dividend of up to A$0.90 per Asciano share before the Scheme Implementation Date (subject to the Scheme becoming Effective and a favourable draft ATO Tax Ruling being obtained). To the extent that a Special Dividend is paid, the scheme consideration will be reduced to account for the cash value of the Special Dividend.
Whether an Asciano shareholder is able to capture the full benefit of the franking credits associated with the Special Dividend will depend on their personal tax circumstances, including whether they satisfy relevant 45-day 'holding period rules' described in Section 9 of the Scheme Booklet. Applying the expected timetable, an Asciano shareholder who holds their Asciano shares at risk for a continuous period from at least 17 October to 1 December 2015 (inclusive) should satisfy the 'holding period rules'. See Section 9 of the Scheme Booklet for further details.
Further Information
Asciano shareholders can obtain further information by contacting the Asciano Shareholder Information Line on 1300 729 310 for shareholders located in Australia, and +61 3 9415 4608 for shareholders located outside Australia.
For further information, please contact:
Investors and analysts | Media |
Kelly Hibbins | Richard Baker |
tel: +61 2 8484 8046 | tel:+61 2 8484 8103 |
mobile: +61 414 609 192 | mobile: +61 408 985 008 |
email: kelly_hibbins@asciano.com.au | email: media@asciano.com.au |
- Ends -
1 All dates following the Scheme Meeting are indicative only and subject to change.
Asciano Limited ABN 26 123 652 862
This is an important document and requires your immediate attention. You should read it in its entirety before you decide whether or not to vote in favour of the Scheme. If you are in doubt as to what you should do, you should consult your legal, financial or other professional advisor.
Your Directors unanimously recommend
that you VOTE IN FAVOUR of the Scheme in the absence of a Superior Proposal.
In relation to a recommended proposal from a consortium led by Brookfield Infrastructure Partners Limited, as general partner of Brookfield Infrastructure Partners L.P., to acquire all of your shares in Asciano Limited via a scheme of arrangement between Asciano Limited and the holders of Asciano Limited shares.
Financial advisers Legal adviser
Important notices
This Scheme Booklet contains important information
This Scheme Booklet is the explanatory statement required to be sent to Asciano Shareholders under Part 5.1 of the Corporations Act in relation to the Scheme.
The purpose of this Scheme Booklet is to explain the terms of the Scheme and the manner in which the Scheme will be considered and implemented (if approved by the Requisite Majority of Asciano Shareholders and by the Court) and
to provide information as prescribed or which is otherwise material to the decision of Asciano Shareholders whether or not to vote in favour of the Scheme. This document includes the explanatory statement for the Scheme required by section 412(1) of the Corporations Act.
You should read this document in its entirety before making a decision as to how to vote. If you are in doubt as to what you should do, you should consult your legal, financial or other professional advisor.
Status of Scheme Booklet
This Scheme Booklet is not a disclosure document required by Chapter 6D of the Corporations Act. Section 708(17) of the
Corporations Act provides that Chapter 6D of the Corporations Act does not apply in relation to arrangements under Part 5.1 of the Corporations Act approved at a meeting held as a result of an order under section 411(1). Instead, Asciano Shareholders asked to vote on an arrangement at such a meeting must be provided with an explanatory statement as referred to above.
Responsibility for information
The information contained in this Scheme Booklet other than the Brookfield Information, the Investigating Accountant's Report and the Independent Expert's Report ('Asciano Information') has been prepared by Asciano and is the responsibility of Asciano. Neither Brookfield Infrastructure,
its Security holders, BIP GP, nor any of their directors, officers or advisors assume any responsibility for the accuracy or completeness of that information.
The Brookfield Information has been provided by Brookfield Infrastructure and is the responsibility of Brookfield Infrastructure. Neither Asciano nor any of its Directors,
its officers or advisors assume any responsibility for the accuracy or completeness of the Brookfield Information.
Grant Samuel has prepared the Independent Expert's Report in relation to the Scheme contained in Annexure A and takes responsibility for that report.
Deloitte Corporate Finance Pty Ltd has prepared the Investigating Accountant's Report contained in Annexure B and takes responsibility for that report.
ASIC and ASX involvement
A copy of this Scheme Booklet has been reviewed by ASIC for the purposes of section 411(2) of the Corporations Act. ASIC has been requested to provide a statement, in accordance with section 411(17)(b) of the Corporations Act, that ASIC
has no objection to the Scheme. ASIC's policy in relation to statements under section 411(17)(b) of the Corporations Act is that it will not provide such a statement until the Second Court Date. This is because ASIC will not be in a position to advise the Court until it has had an opportunity to observe the entire Scheme process. If ASIC provides that statement, it will be produced to the Court on the Second Court Date.
A copy of this Scheme Booklet has been lodged with ASX and registered by ASIC pursuant to Section 412(6) of the Corporations Act.
Neither ASIC nor ASX nor any of their respective officers take any responsibility for the contents of this Scheme Booklet.
Forward looking statements
Certain statements in this Scheme Booklet relate to the future. These statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to be materially different from expected future results, performance or achievements expressed or implied by those statements. These statements reflect only views held as at the date of this Scheme Booklet. Additionally, statements of the intentions of Brookfield Infrastructure reflect its present intentions as at the date of this document and may be subject to change.
Other than as required by law, none of Asciano, its Directors or officers, Brookfield Infrastructure, its Affiliates, directors or officers, nor any other person gives any representation, assurance or guarantee that the events expressed or implied in any forward looking statements in this Scheme Booklet will actually occur and you are cautioned not to place undue reliance on any forward looking statement.
Subject to any continuing obligations under law or the ASX Listing Rules, Asciano and the Directors disclaim any obligation or undertaking to disseminate after the date of
this Scheme Booklet any updates or revisions to any forward looking statements to reflect any change in expectations in relation to those statements or change in events, conditions or circumstances on which a statement is based other than to comply with legal obligations or the ASX Listing Rules.
Investment advice
The information contained in this Scheme Booklet does not constitute financial product advice. In preparing this Scheme Booklet, Asciano has not taken into account the objectives, financial situation or needs of individual Asciano Shareholders. It is important that you consider the information in this Scheme Booklet in light of your
particular circumstances. If you are in doubt as to what you should do, you should consult your legal, financial or other professional advisor.
ii asciano scheme booklet
Important notice associated with Court order under subsection 411(1) of the Corporations Act The fact that under subsection 411(1) of the Corporations Act the Court has ordered that a meeting be convened and has approved the explanatory statement required to accompany the notice of the meeting does not mean that the Court:
has formed any view as to the merits of the proposed Scheme or as to how Asciano Shareholders should vote (on this matter Asciano Shareholders must reach their own decision); or
has prepared, or is responsible for the content of, the explanatory statement.
The order of the Court that the Scheme Meeting be convened is not, and should not be treated as, an endorsement by the Court of, or any other expression of opinion by the Court on, the Scheme.
Notice of Scheme Meeting
The Notice of Meeting is set out in Annexure G.
Notice of Second Court Hearing
At the Second Court Hearing, the Court will consider whether to approve the Scheme following the vote at the Scheme Meeting.
Any Asciano Shareholder may appear at the Second Court Hearing, expected to be held at l0.00am on Tuesday,
17 November 2015 at the Supreme Court of New South Wales, 184 Phillip St, Sydney.
Any Asciano Shareholder who wishes to oppose approval of the Scheme at the Second Court Hearing may do so
by filing with the Court and serving on Asciano a notice of appearance in the prescribed form together with any
affidavit that the Asciano Shareholder proposed to rely on.
Shareholders outside Australia
This Scheme Booklet is subject to Australian disclosure requirements.
The release, publication or distribution of this Scheme Booklet in jurisdictions other than Australia may be restricted by law
or regulation in those jurisdictions and persons who come into possession of it should seek advice on and observe any restrictions. Any failure to comply with those restrictions may constitute a violation of applicable laws or regulations.
This Scheme Booklet has been prepared solely in accordance with Australian law and the information contained in this Scheme Booklet may not be the same as that which would have been disclosed if this Scheme Booklet had
been prepared in accordance with the laws and regulations outside Australia.
This Scheme Booklet is neither an offer to sell nor
a solicitation of an offer to buy securities as such terms are defined under the U.S. Securities Act. The securities referred to in this Scheme Booklet, including the BIP CDIs to be sold under the Sale Facility, have not been and will
not be registered under the U.S. Securities Act or under the securities laws of any jurisdiction of the United States, and therefore may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the U.S. Securities Act. This Scheme Booklet does not constitute an offer to issue or sell, or the solicitation of any offer to buy, any such securities in any jurisdiction where the offer or sale is not permitted.
Brookfield Infrastructure intends to rely on an exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof in connection with the Scheme and the issue of the BIP CDIs. The Court's approval is required for the Scheme to become Effective. If the Court approves the Scheme, its approval will constitute the basis for the BIP CDIs to be issued to persons in the 'United States' or to 'U.S. persons' (each as defined in Regulation S under the U.S. Securities Act) without registration under
the U.S. Securities Act, in reliance on the exemption from the registration requirements provided by Section 3(a)(10) thereof.
The BIP CDIs to be issued under the Scheme to Scheme Shareholders in the United States will be freely transferable under United States federal securities laws, except by persons who are deemed to be 'affiliates', as such term
is defined under Rule 144 of the U.S. Securities Act, of Brookfield Infrastructure or who will be deemed affiliates of Brookfield Infrastructure after implementation of the Scheme.
BIP CDIs issued under the Scheme to any person deemed to be an 'affiliate' of BIP or who will be deemed an 'affiliate' of Brookfield Infrastructure following implementation of
the Scheme under Rule 144 under the U.S. Securities Act, may not be resold in the United States or to a U.S. person except in a transaction permitted by Rule 144 under the U.S. Securities Act, outside the United States in reliance upon Regulation S under the U.S. Securities Act or as otherwise permitted by the U.S. Securities Act.
This Scheme Booklet has been prepared in accordance with the disclosure requirements of Australia, which are different from those of the United States. For example, the financial statements included in this Scheme Booklet have been prepared in accordance with IFRS which are consistent with applicable Australian accounting standards (see Section 4.4), which may not be comparable to the financial statements
of companies prepared in accordance with U.S. generally accepted accounting principles. Furthermore, this Scheme Booklet contains certain pro forma financial information.
Such pro forma financial information does not purport to be in compliance with Article 11 of Regulation S-X of the SEC. Under Article 11, pro forma income statements must be presented assuming the Scheme has been consummated at the beginning of the first fiscal year presented and may only include adjustments which give effect to events that
are (i) directly attributable to the transaction, (ii) expected to have a continuing impact on the entity and (iii) factually supportable. Many of the pro forma adjustments made in
arriving at the pro forma financial information included in this Scheme Booklet would not be permissible under the SEC's rules and regulations on pro forma financial presentation.
This Scheme Booklet has not been filed with or reviewed by the SEC or any state securities authority and none
of them has passed upon or endorsed the merits of the Scheme or the accuracy, adequacy or completeness of this Scheme Booklet. Any representation to the contrary is a criminal offence.
The enforcement by investors of civil liabilities under the U.S. federal securities laws may be affected adversely by the fact that Asciano and Brookfield Infrastructure are incorporated or organised outside the United States, that some or all of their respective officers and directors and the experts named in this Scheme Booklet are residents of a foreign country, and that all or a substantial portion of the assets of Asciano and Brookfield Infrastructure and said persons are located outside the United States. As a result, it may be difficult
or impossible for investors in the United States to effect service of process within the United States upon Asciano or Brookfield Infrastructure, their respective officers or directors or the experts named in this Scheme Booklet, or to realise against them upon judgments of courts of the United States predicated upon civil liabilities under the federal securities laws of the United States or 'blue sky' laws of any state within the United States. In addition, investors in the United States should not assume that the courts of Bermuda, Canada or Australia: (a) would enforce judgments of United States courts obtained in actions against such persons predicated upon civil liabilities under the federal securities laws of the United States or 'blue sky' laws of any state within the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the federal securities laws of the United States or 'blue sky' laws of any state within the United States.
Tax implications of the Scheme
If the Scheme becomes Effective, there will be tax consequences for Scheme Shareholders which may include tax being payable on any gain on disposal of Asciano Shares.
For further detail regarding general Australian tax consequences of the Transaction, refer to Section 9 of this Scheme Booklet. The tax treatment may vary depending on the nature and characteristics of each Asciano Shareholder and their specific circumstances. Accordingly, Asciano Shareholders should seek professional tax advice in relation to their particular circumstances.
Privacy
Asciano and Brookfield Infrastructure and their respective registries may collect personal information in the process of implementing the Scheme. This information may include
the names, contact details and security holdings of Asciano Shareholders and the names of persons appointed by to act as proxy, attorney or corporate representative at the Scheme Meeting. The collection of some of this information is required or authorised by the Corporations Act.
The primary purpose of collecting this information is to assist Asciano and Brookfield Infrastructure to conduct the Scheme Meeting and to implement the Scheme. Personal information of the type described above may be disclosed to the Asciano Registry and the registry of BIP, print and mail service providers, authorised securities brokers and Related Bodies Corporate of Asciano and BIP.
Asciano Shareholders have certain rights to access personal information that has been collected. They should contact the Asciano Registry in the first instance, if they wish to access their personal information.
Asciano Shareholders who appoint a named person to act as their proxy, attorney or corporate representative should ensure that they inform that person of these matters.
Interpretation
Capitalised terms used in this Scheme Booklet are defined in the Glossary.
A reference to a Section or Annexure is a reference to a section of, or annexure to, this Scheme Booklet.
Some of the documents reproduced in the annexures to this Scheme Booklet have their own defined terms, which are sometimes different from those in the Glossary.
Any diagrams, charts, graphs and tables appearing in this Scheme Booklet are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available
at the date of this document. All numbers are rounded unless otherwise indicated.
The financial amounts in this Scheme Booklet are expressed in Australian currency unless otherwise stated. A reference to $, A$ and AUD and cents is to Australian currency, unless otherwise stated. A reference to US$ and USD is to the currency of the United States of America.
All times referred to in this Scheme Booklet are references to times in Sydney, Australia, unless otherwise stated.
Asciano and Brookfield Infrastructure's websites The contents of Asciano and Brookfield Infrastructure's websites do not form part of this Scheme Booklet and Asciano Shareholders should not rely on their content.
Date
This Scheme Booklet is dated Wednesday, 30 September 2015.
Table of contents
Important Notices ii
Important Dates 2
Letter from the Chairman of Asciano 3
Letter from the CEO of Brookfield Infrastructure 5
Reasons to vote in favour of the Scheme 6
Reasons why you may vote against the Scheme 11
What you should do 15
What I will receive and making an Election 16
Frequently asked questions 21
Summary of the Scheme 41
Information on Asciano Group 50
Information on Brookfield Infrastructure, BIP Interests and BIP CDIs 58
Information about the Combined Group 101
Comparison of constitutions, corporate laws and securityholder rights 117
Risk factors 128
Tax implications 144
Additional information concerning the Scheme 148
Glossary 155
Annexure A - Independent Expert's Report 163
Annexure B - Investigating Accountant's Report 347
Annexure C - Scheme Implementation Deed 353
Annexure D - Scheme of Arrangement 432
Annexure E - Deed Poll 461
Annexure F - Material contract summaries 473
Annexure G - Notice of Meeting 484
Corporate Directory 486
Shareholder Information Line
Asciano has established a Shareholder Information Line which Asciano Shareholders should call if they have any questions in relation to the Scheme.
The telephone number for the Shareholder Information Line is 1300 729 310 (within Australia) or +61 3 9415 4608 (outside Australia). The Shareholder Information Line is open from Monday to Friday from 9:00am to 5:00pm (Sydney time).
This Scheme Booklet contains important information about the Scheme and it will help you make an informed decision about how to vote.Dates Events | |
Sunday, 8 November 2015 at 10:30am (Sydney time) | Latest time and date for receipt of proxy forms for Scheme Meeting |
Sunday, 8 November 2015 at 7:00pm (Sydney time) | Scheme Meeting Record Date for determining eligibility to vote at the Scheme Meeting |
Tuesday, 10 November 2015 at the later of 10:30am (Sydney time) and immediately after close of Asciano's Annual General Meeting | Scheme Meeting to be held at State Library of Victoria, Village Roadshow Theatrette, 328 Swanston Street, Melbourne |
If the Scheme is agreed to by the Requisite Majority of Asciano Shareholders
Monday, 16 November 2015 | Announcement of Special Dividend (if any) to the ASX, conditional on the Scheme becoming Effective. |
Tuesday, 17 November 2015 | Second Court Date for approval of the Scheme |
Wednesday, 18 November 2015 | Effective Date Court order is lodged with ASIC and Scheme takes effect Last day of trading in Asciano Shares on ASX |
Thursday, 19 November 2015 | BIP CDIs expected to commence trading on ASX on a deferred settlement basis1 |
Monday, 23 November 2015 at 7:00pm (Sydney time) | Special Dividend Record Date2 Record date for determining entitlement to Special Dividend |
Monday, 30 November 2015 at 5:00pm (Sydney time) | Election Date Asciano Shareholders to make Election between Maximum Cash Consideration, Maximum Scrip Consideration or Standard Consideration by 5:00pm (Sydney time) |
Tuesday, 1 December 2015 | Special Dividend Payment Date Date of payment of Special Dividend (if any) |
Wednesday, 2 December 2015 at 7:00pm (Sydney time) | Scheme Record Date Record date for determining entitlement to Scheme Consideration |
Friday, 4 December 2015 | Expected announcement of Asciano Shareholder Elections to the ASX |
Tuesday, 8 December 2015 | Implementation Date Payment of cash-consideration component of Scheme Consideration (by either cheque or electronic funds transfer to the nominated bank accounts used for dividend payments) Issue of BIP CDIs |
Tuesday, 8 December 2015 | Last day of deferred settlement trading on BIP CDIs on ASX |
Wednesday, 9 December 2015 | BIP CDIs expected to commence trading on ASX on a normal settlement basis |
Note: all dates stated above or throughout this Scheme Booklet are indicative only and (among other things) are subject to all necessary approvals from the Court. Any changes to the above timetable (which may include an earlier or later date for the Second Court Date) will be announced through ASX and notified on Asciano's website (www.asciano.com.au).
Asciano Shareholders who trade BIP CDIs on a deferred settlement basis may risk adverse financial or legal consequences if they purport to sell BIP CDIs other than in certain circumstances. See Sections 3.17 and 10.8 for information with respect to relief provided by ASIC regarding the trading of BIP CDIs during the expected deferred settlement period.
See Section 3.4 for information regarding the Special Dividend and circumstances in which it may be paid.
Important Note
Proposal to acquire all Asciano Shares
This is a proposal under which a special purpose vehicle controlled by Brookfield lnfrastructure proposes to acquire all Asciano Shares by way of scheme of arrangement.
Scheme Consideration
Under the terms of the proposed scheme of arrangement, Asciano Shareholders may elect to receive either:
Standard Consideration, being A$6.9439 cash (reduced by the cash value of any Special Dividend paid) and 0.0387 BIP CDls per Asciano Share; or
Maximum Cash Consideration, being all cash consideration; or
Maximum Scrip Consideration, being consideration provided only in BIP CDls.
The provision of Maximum Cash Consideration or Maximum Scrip Consideration will be subject to scale-back if the number of Asciano Shareholders who elect Maximum Cash Consideration or Maximum Scrip Consideration exceeds the cash or scrip available to satisfy these Elections (see in particular Sections 1 and 3.3 of this Scheme Booklet for further details regarding how the Scheme Consideration Elections and scale-back will operate).
Nature of BIP CDls
BIP CDls are financial instruments that will be traded on the ASX. They are of a substantially different nature from a direct holding of shares in an Australian ASX-Iisted company and confer substantially different rights. Shareholders should carefully consider the
information in this Scheme Booklet regarding the nature of BIP CDls and their differences from Asciano Shares (see in particular Sections 5.7, 5.8(c) and 7).
Dear Asciano Shareholder
On behalf of the Asciano Board, I am pleased to provide you with this Scheme Booklet that contains important information in relation to the proposed Scheme with Brookfield Infrastructure.
On 18 August 2015, Asciano announced that it had entered into
a Scheme Implementation Deed with Brookfield Infrastructure under which it is proposed that a special purpose entity controlled by Brookfield Infrastructure acquires all of the issued ordinary shares in Asciano that
it does not own by way of scheme of arrangement.
This Scheme Booklet sets out details of the proposed Scheme and important matters relevant to your vote in relation to the Scheme. If the Scheme is implemented, Asciano Shareholders will be entitled to receive Standard Consideration of:
A$6.9439 cash (reduced by the cash value of any Special Dividend paid); and
• 0.0387 BIP CDIs,3
for each Asciano Share held on the Scheme Record Date.
As at 23 September 2015, the last practicable trading day prior to the date of this Scheme Booklet, the implied value of the Standard Consideration was approximately A$9.0732 per Asciano Share,4 representing an enterprise value of approximately A$12 billion and
a premium of 37.8% to the undisturbed three month VWAP of Asciano Shares.5 At the time of announcing the Transaction, the implied value of the Standard Consideration was approximately A$9.15076 per Asciano Share,6 representing an enterprise value of approximately A$12 billion
Each BIP CDI will represent a beneficial interest in one BIP Interest and will have rights that are economically equivalent to the rights attaching to BIP Interests. BIP CDIs will be quoted and traded on the ASX in Australian dollars. See Section 7.2 for more details.
Based on the price of US$38.46 per BIP Interest as at NYSE close on 23 September 2015 and the AUD/USD exchange rate of 0.6990 as quoted at 6:00am on 24 September 2015.
Undisturbed volume-weighted average price ('VWAP') based on cumulative trading for the three months from 1 April 2015 up to and including 30 June 2015, being the last day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield Infrastructure.
Based on the price of US$42.05 per BIP Interest as at NYSE close on 14 August 2015 and the AUD/USD exchange rate of 0.7374 as quoted at 6:00am on 15 August 2015.
and a premium of 39.0% to the undisturbed three month VWAP of Asciano Shares.7
Since the Transaction was announced, equity markets have been impacted by significant global volatility. From 18 August 2015 until 23 September 2015, being the last practicable trading day prior to the date of this Scheme Booklet, the S&P500 index has declined 7.5%, ASX200 has declined 5.8% and the AUD/USD exchange rate has fallen from 0.73438 to 0.6990. The price of a BIP Interest has declined 4.4% (in USD terms) as a result of which the implied value of the Standard Consideration has also declined.
Asciano expects to pay a fully franked Special Dividend of up to A$0.90 per Asciano Share before the Scheme Implementation Date (subject
to the Scheme becoming Effective and a favourable draft ATO Tax Ruling being obtained). To the extent that a Special Dividend is paid,
the Scheme Consideration will be reduced to account for the cash value of the Special Dividend.
In addition, Asciano Shareholders have flexibility to choose their preferred form of Scheme Consideration by electing to receive the 'Standard Consideration', 'Maximum Cash Consideration' or 'Maximum Scrip Consideration'. The Maximum Cash Consideration and the Maximum Scrip Consideration may be subject to scale-back, which
will be calculated using a fixed price for BIP CDIs of approximately A$57.02468 and an assumed offer value of approximately A$9.15076 (reduced by the cash value of any Special Dividend paid) per Asciano Share. For example, if an Asciano Shareholder who selects Maximum Cash Consideration is subject to scale-back, the component of the assumed offer value of approximately A$9.15076 (reduced by the cash value of any Special Dividend paid) which cannot be satisfied in cash will be satisfied in BIP CDIs provided at the fixed price of approximately A$57.02468. The extent of the scale-back will depend on the Elections made by Asciano Shareholders and all Asciano Shareholders may not receive the exact consideration chosen in their Election. See Section 1.2 for worked examples of the potential outcome of Elections, depending
Undisturbed VWAP based on cumulative trading for the three months from 1 April 2015 up to and including 30 June 2015, being the last day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield Infrastructure.
The AUD/USD exchange rate as quoted at 6am on 19 August 2015.
on the percentage of Asciano Shareholders who make, or are deemed to have made, an Election for each form of consideration.9
Brookfield Infrastructure has received in-principle approval from the ASX for a foreign exempt listing. Asciano Shareholders should be aware that CDIs differ in nature from a direct holding of shares in an Australian ASX-listed company, including in respect of how the ASX Listing Rules apply to CDIs. Shareholders should carefully consider the information
in this Scheme Booklet regarding the nature of BIP CDIs, as well as the difference between an investment in Asciano and an investment in BIP (see in particular Sections 5.7, 5.8(c) and 7).
The Asciano Board unanimously recommends that you vote
in favour of the Scheme in the absence of a Superior Proposal. Each Asciano Director intends to vote in favour of the Scheme in respect of all Asciano Shares they own or control, in the absence
of a Superior Proposal. In reaching its recommendation, the Asciano Board has had regard to a range of factors including the value of the Scheme Consideration and the ability, via the receipt of BIP CDIs, for Asciano Shareholders to continue to share in the benefits and risks of the Asciano business through BIP's 55% direct and indirect holding in the proposed special purpose acquirer of Asciano.10
The Asciano Board also considered the performance of Brookfield Infrastructure and the benefits and risks of owning BIP CDIs and BIP Interests. This included a consideration of the significant differences between the rights attaching to Asciano Shares and the rights attaching to BIP CDIs and BIP Interests - a number of which may be considered to be adverse from the perspective of Asciano Shareholders. Key differences include the fact that BIP is externally managed, the limited fiduciary duties owed by the external manager of BIP, lower levels of rights and protections for holders of BIP CDIs and BIP Interests and the impact of the structure of BIP on the takeover premium for BIP CDIs and BIP Interests (as summarised in Reason 3.4 of 'Reasons why you
might vote against the Scheme' on page 13). Further detail regarding the Asciano Board recommendation is set out on the following pages.
The Asciano Board commissioned Grant Samuel to prepare an Independent Expert's Report for the Scheme. The Independent Expert has assessed the full underlying value of Asciano to be in the range of A$8.42 to A$9.40 per Asciano Share and concluded that the Scheme is in the best interests of Asciano Shareholders in the absence of
a Superior Proposal. The full report of the Independent Expert is set out in Annexure A.
The Scheme is subject to a number of Conditions Precedent, including certain third party approvals, which are described in Section 3.2.
The Scheme can only be implemented if it is approved by the Requisite Majority of Asciano Shareholders at the Scheme Meeting to be held
at the State Library of Victoria, Village Roadshow Theatrette, 328 Swanston Street, Melbourne on Tuesday, 10 November 2015 at the later of 10:30am and immediately after close of Asciano's Annual General Meeting, and if it is subsequently approved by the Court.
The Directors urge you to read the Scheme Booklet (including the Independent Expert's Report) in its entirety as it contains important information that will need to be considered before you vote on the Scheme.
The Directors also strongly encourage you to participate in this important decision either by attending the meeting to vote or by completing the enclosed proxy form.
If you have any questions about the Scheme or any other matter in this Scheme Booklet, you should contact Asciano's Shareholder
Information Line on 1300 729 310 (within Australia) or +61 3 9415 4608 (outside Australia).
If you are in any doubt as to what you should do, you should consult your legal, financial or other professional advisor.
On behalf of the Asciano Board, I would like to take this opportunity to thank you again for your ongoing support of Asciano. Your Board believes that the proposed acquisition of Asciano by Brookfield Infrastructure is in the best interests of Asciano Shareholders.
Yours sincerely
Malcolm Broomhead
Chairman
Asciano Limited
See also Sections 1 and 3.3 for further details regarding how the Scheme Consideration Elections and scale-back will operate.
For further information regarding the ownership structure of the Acquirer, see FAQ 6.8 and Section 5.1.
Dear Asciano Shareholder
The board and management of Brookfield Infrastructure Partners L.P.
Brookfield Infrastructure believes that the offer is compelling to Asciano Shareholders, offering a 39.0% premium at the time of announcing
('BIP' or 'Brookfield Infrastructure') are pleased to provide you with
the Transaction to Asciano's undisturbed three month VWAP,11
with
the opportunity to participate in the Scheme to integrate Asciano's assets into Brookfield Infrastructure's platform to create a leading global infrastructure business.
Brookfield Infrastructure owns and operates high quality, long-life assets that provide essential products and services for the global economy. The company employs over 9,000 operating employees and investment professionals with assets of scale across five continents. BIP owns and operates assets within the utilities, transport, energy and communications infrastructure sectors and has a strong history of
growing its distribution to unitholders. BIP has a prudent capital structure and current average debt term to maturity of 9 years. BIP is listed on the NYSE, TSX and, if the Scheme is successful, will have securities listed on the ASX.
The acquisition of Asciano strengthens BIP's rail logistics platform and provides the foundation for a global ports platform. In rail, BIP's
existing VLI rail network in Brazil will be enhanced by Pacific National's strong Australian presence in critical coal, bulk and freight operations. Similarly, BIP's global port assets spanning the Americas and Europe will be managed together with Asciano's leading position in key container terminals in Brisbane, Fremantle, Melbourne and Sydney. BIP will benefit from being able to attract new international clients with the enhanced network of assets and leveraging best-in-class intellectual property and technology.
Standard Consideration consisting of 76% cash and 24% BIP CDIs,
with the opportunity to elect to maximise either component (subject to aggregate caps on cash and CDIs).
As at 23 September 2015, the last practicable trading day prior to the date of this Scheme Booklet, the implied value of the Standard Consideration was approximately A$9.0732 per Asciano Share,12
representing a premium of 37.8% to Asciano's undisturbed three month VWAP.13
The Transaction has been unanimously recommended by the Asciano Board and the Independent Expert has concluded that the Scheme
is in the best interests of Asciano Shareholders in the absence of a Superior Proposal.
On behalf of the board and management team of BIP, I encourage you to vote in favour of the Scheme and I look forward to welcoming you as a BIP Securityholder following successful implementation.
Yours sincerely
Sam Pollock
Undisturbed VWAP based on cumulative trading for the three months from 1 April 2015 up to and including 30 June 2015, being the last day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield Infrastructure. Based on the price of US$42.05 per
BIP Interest as at NYSE close on 14 August 2015 and the AUD/USD exchange rate of 0.7374 as quoted at 6:00am on 15 August 2015.
Based on the price of US$38.46 per BIP Interest as at NYSE close on
23 September 2015 and the AUD/USD exchange rate of 0.6990 as quoted at 6am on 24 September 2015.
Undisturbed VWAP based on cumulative trading for the three months from 1 April 2015 up to and including 30 June 2015, being the last day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield Infrastructure.
This Section sets out the reasons why the Directors consider that you should vote in favour of the Scheme. Whilst the Directors acknowledge that there are reasons to vote against the Scheme (see the following Section titled 'Reasons why you may vote against the Scheme'), they believe that the reasons to vote in favour of the Scheme significantly outweigh the reasons to vote against the Scheme.
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The Directors unanimously recommend that you vote in favour of the Scheme, in the absence of a Superior Proposal
The Directors unanimously recommend that you vote in favour of the Scheme at the upcoming Scheme Meeting on 10 November 2015, in the absence of a Superior Proposal. In reaching their recommendation, the Directors have assessed the Scheme having regard to the reasons to vote in favour of, or against, the Scheme, as set out in this Scheme Booklet.
Each Asciano Director intends to vote in favour of the Scheme in respect of all Asciano Shares they own or control, in the absence of a Superior Proposal.
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The Independent Expert has concluded that the Scheme is in the best interests of Asciano Shareholders in the absence of a Superior Proposal
The Directors appointed Grant Samuel as Independent Expert to prepare an Independent Expert's Report providing an opinion as to whether the Scheme is in the best interests of Asciano Shareholders.
The Independent Expert has assessed a valuation range of A$8.42 to A$9.40 per Asciano Share. The Independent Expert has also assessed the implied value of the Standard Consideration to be A$8.93 - A$9.28 per Asciano Share, which is within this range.
Accordingly, the Independent Expert has concluded that the Scheme is in the best interests of Asciano Shareholders in the absence of a Superior Proposal.
The Independent Expert has also identified a number of factors that should be considered when assessing the scheme:
The value of the consideration is commensurate with the full underlying value of Asciano;
The Proposal represents material premiums for control (of 35 - 40%).14 Premiums of this magnitude are above the level of control premiums typically expected in takeovers which tend to fall in the range of 20 - 35%, but it is important to recognise that premiums for control are an outcome not a determinant of value; and
As the scrip component represents only approximately 24% of the total standard consideration, unless there were sustained material adverse movements in the Brookfield Infrastructure unit price or exchange rates, it is likely that the Proposal would still be fair and therefore still be in the best interests of Asciano Shareholders.
Asciano Shareholders should carefully review the Independent Expert's Report in its entirety. A copy of the Independent Expert's Report is included in Annexure A of this Scheme Booklet.
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The offer represents attractive value for Asciano Shareholders
The implied value of the Scheme Consideration represents a significant premium over historical trading prices of the Asciano Shares. The implied value of the Standard Consideration, excluding the potential benefit of franking credits associated with the Special Dividend, is approximately A$9.0732 per Asciano Share as at 23 September 2015, being the last practicable trading day prior to the date of this Scheme Booklet.15
Since the Transaction was announced, equity markets have been impacted by significant global volatility. From 18 August 2015 until 23 September 2015, the last practicable trading day prior to the date of this Scheme Booklet, the S&P500 index has declined 7.5%, the ASX200 has declined 5.8% and the AUD/USD exchange rate has fallen from 0.7343 to 0.6990. The BIP Interest price has declined 4.4% (in USD terms) as result of which the implied value of the Standard Consideration has also declined. The volatility in global equity markets has contributed to the decline in the implied value of the Scheme Consideration.
At the time of announcing the Transaction, the implied value of the Standard Consideration was A$9.15076 per Asciano Share.16
As at 23 September 2015, the last practicable trading day prior to the date of this Scheme Booklet, the implied value of the Standard Consideration was approximately A$9.0732 (based on the price of US$38.46 per BIP Interest as at NYSE close on 23 September 2015 and the AUD/USD exchange rate of 0.6990 as quoted at 6:00am on 24 September 2015) which represents a premium of 9.2% to A$8.31 per Asciano Share, being the closing share price on 23 September 2015.
Based on the price of US$38.46 per BIP Interest, as at NYSE close on 23 September 2015 and the AUD/USD exchange rate of 0.6990 as quoted at 6:00am on 24 September 2015.
Based on the price of US$42.05 per BIP Interest as at NYSE close on 14 August 2015 and the AUD/USD exchange rate of 0.7374 as quoted at 6:00am on 15 August 2015.
Current Implied Value of the Standard Consideration - premium to VWAPs17
$10.00
VWAP (A$ per share)
$8.00
Current implied value of the Standard Consideration: A$9.07
37.8% 37.3% 37.8% 46.1%
$6.00
$4.00
6.58 6.61 6.58 6.21
$2.00
$0.00
Undisturbed 5 day VWAP
Undisturbed 1 month VWAP
Undisturbed 3 month VWAP
Undisturbed 12 month VWAP
The implied value of the Standard Consideration at the time of announcing the Scheme,18 was also approximately 30% above the median of broker valuations of Asciano Shares of A$7.05 per Asciano Share. The broker valuations are based on broker reports published prior to the announcement on 1 July 2015 of Brookfield Infrastructure's approach and use methodologies commonly used to value companies in the infrastructure and logistics sector.19 Whilst broker valuations of ASX listed companies provide a useful comparison, they are based on assumptions and projections that may or may not be realised or achieved and should be viewed accordingly.
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The Scheme provides some flexibility for each Asciano Shareholder to determine the optimal form of consideration
Asciano Shareholders have flexibility to elect to receive Standard Consideration, Maximum Cash Consideration or Maximum Scrip Consideration.
Asciano Shareholders electing to receive Standard Consideration will receive cash consideration of A$6.9439 (reduced by the cash value of any Special Dividend paid) and scrip consideration of 0.0387 BIP CDIs for each Asciano Share held on the Scheme Record Date.
Asciano Shareholders who wish to maximise their participation in the potential strategic and financial benefits from a combination of Asciano with Brookfield Infrastructure may elect to receive Maximum Scrip Consideration. Asciano Shareholders electing to receive Maximum Scrip Consideration will receive up to 0.16047 BIP CDIs (reduced to account for the cash value of any Special Dividend paid) for each Asciano Share held on the Scheme Record Date, subject to a proportional scale-back in certain circumstances (see Sections 1 and 3.3).20
Scale-back will be performed based on a fixed price for BIP CDIs of approximately A$57.02468 and an assumed offer value of approximately A$9.15076 (reduced by the cash value of any Special Dividend paid) per Asciano Share. For example, to the extent a shareholder who selects Maximum Cash Consideration is subject to scale-back, the component of the assumed offer value of approximately A$9.15076 (reduced by the cash value of any Special Dividend paid) which cannot be satisfied in cash will be satisfied in BIP CDIs provided at the fixed price of approximately A$57.02468. To the extent that BIP Interests trade below or above A$57.02468, Asciano Shareholders may wish to take this into account in making their Elections as the implied value of the Scheme Consideration is impacted by the value of BIP CDIs from time to time. As at 23 September 2015, being the last practicable date prior to the date of this Scheme Booklet, BIP Interests were trading at a value of approximately A$55.0215.21 Prior
to the Scheme Meeting, Asciano intends to provide an update to Asciano Shareholders regarding the value of BIP Interests and, to the extent it considers appropriate, interim results of Elections (which results will not be made final prior to the Election Date, anticipated to be 30 November 2015).
Alternatively, Asciano Shareholders can elect to receive Maximum Cash Consideration. Asciano Shareholders electing to receive Maximum Cash Consideration will receive approximately A$9.15076 cash for each Asciano Share held on the Scheme Record Date (reduced by the cash value of any Special Dividend paid), subject to a proportional scale-back in certain circumstances (see Sections 1.1 and 3.3).
Further access to cash is available for Asciano Shareholders making an Election to sell their BIP CDIs as part of the Sale Facility which will be available in relation to up to 400 BIP CDIs which they are entitled to receive under the Scheme.
Further details of the Election, the scale-back mechanism and the Sale Facility are set out in Sections 1 and 3.3.
Based on the price of US$38.46 per BIP Interest, as at NYSE close on 23 September 2015 and the AUD/USD exchange rate of 0.6990 as quoted at 6:00am on 24 September 2015. The undisturbed VWAPs are based on cumulative trading for the respective periods up to and including 30 June 2015, being the last day prior to Asciano confirming to the ASX that it had received a non-binding indicative proposal from Brookfield Infrastructure. 5 day VWAP based on trading from 24 June 2015, 1 month VWAP based on trading from 1 June 2015, 3 month VWAP based on trading from 1 April 2015 and 12 month VWAP based on trading from 1 June 2014.
Based on the price of US$42.05 per BIP Interest as at NYSE close on 14 August 2015 and the AUD/USD exchange rate of 0.7374 as quoted at 6:00am on 15 August 2015.
The median is based on 12 broker valuations, dated from 17 February 2015 to 30 June 2015 and with a total range of A$6.00 - 8.00 per Asciano Share. The valuations are calculated using discounted cash flow analysis, sum-of-the-parts discounted cash flow analysis and multiples sum-of-the-parts. All valuations were published prior to the announcement of Brookfield Infrastructure's interest in acquiring Asciano on 1 July 2015 and broker valuations may have been impacted by this or other factors in the period post 1 July 2015. Where research analysts have released multiple reports during the period, the most recent valuation has been included in the median calculation.
The cash value of any Special Dividend paid will reduce the scrip consideration received by Asciano Shareholders who elect Maximum Scrip Consideration. For example, if a Special Dividend of A$0.90 were paid, BIP CDIs received by Asciano Shareholders electing Maximum Scrip Consideration will, subject to scale-back, be 0.14469 BIP CDIs for each Asciano Share held on the Scheme Record Date. See Sections 1 and 3.3 of this Scheme Booklet.
Based on the price of US$38.46 per BIP Interest as at NYSE close on 23 September 2015 and the AUD/USD exchange rate of 0.6990 as quoted at 6:00am on 24 September 2015.
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Asciano Shareholders may receive a fully franked Special Dividend of up to A$0.90 per Asciano Share. This gives an additional benefit to certain Asciano Shareholders who are Australian tax residents
Subject to the Scheme becoming Effective and a favourable draft ATO Tax Ruling being obtained, Asciano expects to pay a fully franked Special Dividend of up to A$0.90 per Asciano Share. To the extent that a Special Dividend is paid, the Scheme Consideration will be reduced to account for the cash value of any Special Dividend paid. The Special Dividend is expected to be paid on or about Tuesday, 1 December 2015.
Those Asciano Shareholders who can capture the full benefit of the franking credits associated with the Special Dividend will receive an additional benefit valued at up to approximately A$0.386 per Asciano Share.
The value of franking credits will not be the same for all Asciano Shareholders. Whether an Asciano Shareholder is able to capture the full benefit of the franking credits will depend on their personal tax circumstances, including whether they satisfy the relevant 45-day 'holding period rules'.22 See Section 9 for further details regarding the tax implications of the Scheme and the Special Dividend.
By way of illustration, an Asciano Shareholder who is a superannuation fund with a marginal tax rate of 15% will receive a refundable tax credit of approximately A$0.193 per Asciano Share as a result of the franking credits. See Section 9 for further details regarding the tax implications of the Scheme and the Special Dividend.
- Asciano Shareholders have the opportunity to participate in the Combined Group
Applying the expected timetable, an Asciano Shareholder who holds their Asciano Shares at risk during the period from 17 October 2015 to 1 December 2015 (inclusive) should satisfy the 'holding period rules' and be eligible for the franking credit and tax offset. This issue is being addressed in the ATO Tax Ruling requested by Asciano. Asciano Shareholders should refer to the ATO Tax Ruling once it is published.
Brookfield Infrastructure August 2015 release 'Proposed Investment in Asciano Limited'. For 2015, data used is the annualised FFO and distribution per BIP Interest using the results for the 6 months ended 30 June 2015 (noting that BIP has a 31 December 2015 financial year end). Note that past performance is not an indicator of future performance.
Asciano Shareholders will be able to participate in the Combined Group, including the Asciano business, via the receipt of scrip consideration.
6.1 Track record of delivering growth to securityholders
BIP has consistently achieved its stated growth targets since its inception in 2008.
BIP has a stated target of 5-9% growth in distributions per annum and 10% FFO growth per BIP Interest per annum, and it has achieved an approximately 12% distribution per BIP Interest CAGR and 23% FFO per BIP Interest CAGR since 2009.
Brookfield Infrastructure FFO per BIP Interest and distribution per BIP Interest (in USD)23
CAGR: 23%
3.45
3.30
3.60
1.03 1.06
1.79
1.10
2.41
1.32
2.41
1.50
1.72
1.92
CAGR: 12%
2.12
2009 2010 2011 2012 2013 2014 2015
FFO per BIP Interest Distribution per BIP Interest
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