Broadspectrum : Fifth Supplementary Target's Statement

Fifth Supplementary Target's Statement - ACCEPT - HSF comments (2 May)

This is an IMPORTANT document and requires your immediate attention

FIFTH SUPPLEMENTARY TARGET'S STATEMENT

This Fifth Supplementary Target's Statement has been issued in response to the off-market takeover bid made by Ferrovial Services Australia Pty Ltd ACN 609 542 556 (an indirectly wholly owned subsidiary of Ferrovial, S.A.) for all the ordinary shares in Broadspectrum Limited.

Your Broadspectrum Directors unanimously recommend that you

ACCEPT‌

THE OFFER

TO ACCEPT FERROVIAL'S OFFER SEE APPENDIX 1 OF THIS DOCUMENT

If you are in any doubt about how to deal with this document, you should seek independent financial, legal, taxation or other professional advice before making a decision as to whether or not to accept the Offer.

Financial Advisor Legal Advisor

Broadspectrum

This document is a supplementary target's statement under section 644 of the Corporations Act 2001 (Cth). It is the fifth supplementary target's statement (Fifth Supplementary Target's Statement) issued by Broadspectrum Limited ABN 69 000 484 417 (Broadspectrum) in relation to the off market takeover bid for all the ordinary shares in Broadspectrum by Ferrovial Services Australia Pty Ltd ACN 609 542 556 (Ferrovial). This Fifth Supplementary Target's Statement supplements, and should be read together with, Broadspectrum's supplementary target's statement dated 28 April 2016 (Fourth Supplementary Target's Statement), Broadspectrum's supplementary target's statement dated 27 April 2016 (Third Supplementary Target's Statement), Broadspectrum's supplementary target's statement dated 8 April 2016 (Second Supplementary Target's Statement), Broadspectrum's supplementary target's statement dated 8 February 2016 (Supplementary Target's Statement) and Broadspectrum's target's statement dated 21 January 2016 (Target's Statement). This Fifth Supplementary Target's Statement prevails to the extent of any inconsistency with the Fourth Supplementary Target's Statement, Third Supplementary Target's Statement, Second Supplementary Target's Statement, Supplementary Target's Statement or the Target's Statement. A copy of this Fifth Supplementary Target's Statement has been lodged with ASIC. Neither ASIC nor any of its officers take any responsibility for its contents. Unless the context otherwise requires, terms defined in the Target's Statement have the same meaning as in this Fifth Supplementary Target's Statement.

The Board of Broadspectrum recommends that you ACCEPT the Offer promptly

Fifth Supplementary Target's Statement

This Fifth Supplementary Target's Statement provides an update on certain material information relevant to Broadspectrum Shareholders in their consideration of the Offer.

1 Offer now unconditional - Ferrovial has received acceptances in excess of 50%

Ferrovial has stated in its Ninth Supplementary Bidder's Statement dated 2 May 2016 that its Offer is now unconditional and that it had received more than 50% acceptances into the Offer.

This means that Ferrovial will acquire the Broadspectrum Shares from those shareholders who have either accepted the Offer or accepted into the Institutional Acceptance Facility ("IAF"). Ferrovial will also acquire the Broadspectrum Shares of all further acceptances validly received before the close of the Offer Period. The Offer is currently scheduled to close at 7pm (AEST) on Friday, 13 May 2016 (see below for further details regarding the extension).

2 Directors' recommendation to ACCEPT

As at the date of this Fifth Supplementary Target's Statement, Ferrovial has advised that total acceptances into the Offer (either directly or by way of the IAF) are 72.17%. Ferrovial therefore will acquire a majority holding in Broadspectrum, regardless of further acceptances. As Ferrovial's voting power in Broadspectrum (including acceptance instructions held under the IAF) increased to more than 50% within the last 7 days of the Offer Period, the Offer Period is automatically extended pursuant to section 624(2) of the Act (as modified by ASIC Class Order 13/521) so that the Offer remains open for acceptance until 7.00pm (AEST) on 13 May 2016 (unless further extended in accordance with the Corporations Act).

The Board of Broadspectrum strongly recommends that you ACCEPT the Offer promptly so that your acceptance is received before the end of the Offer Period. Please refer to Appendix 1 for details on how to accept the Offer.

2 Directors' recommendation to ACCEPT

Your Directors recommend you ACCEPT the Offer as soon as possible.

In addition to the reasons outlined in the Fourth Supplementary Target's Statement (and repeated below), the Offer is now unconditional and Ferrovial will acquire a majority and controlling stake in Broadspectrum, having received 72.17% acceptances.

Accordingly, Broadspectrum Shareholders who do not accept the Offer will become minority shareholders in Broadspectrum unless Ferrovial proceeds with compulsory acquisition (assuming it becomes entitled to do so).

Risks of Being a Minority Shareholder

The Board considers the implications of remaining a minority shareholder in Broadspectrum to be additional incentives to ACCEPT the Offer. These include:

• Ferrovial will be in a position to cast the majority of votes at a general meeting of Broadspectrum. This will enable it to control the composition of the Board and senior management, determine Broadspectrum's dividend policy and control the strategic direction of the businesses of Broadspectrum and its subsidiaries. This is particularly relevant in respect of Ferrovial's intentions around Broadspectrum's provision of services at the regional processing centres in Nauru and Manus Province which could adversely impact Broadspectrum's earnings going forward

• Liquidity of Broadspectrum Shares may be lower than at present, and there is a risk that Broadspectrum could be fully or partially removed from certain S&P/ASX market indices due to lack of free float and/or liquidity

• There may be limited institutional support for Broadspectrum Shares

• There may be fewer analysts providing coverage for Broadspectrum Shares

• If Ferrovial acquires at least 75% of the Broadspectrum Shares it may be able to pass a special resolution of Broadspectrum. This may enable Ferrovial to, among other things, change Broadspectrum's constitution, and

  2 Directors' recommendation to ACCEPT

• Ferrovial has made a number of statements regarding its intentions on acquiring 50.01% or more but less than 90% of all Broadspectrum Shares, including:

  • it intends to encourage the Broadspectrum Board to continue not making dividend payments in favour of retaining cash, and

  • it intends to seek to have Broadspectrum removed from the official list of ASX. If Broadspectrum is delisted, it may result in Broadspectrum Shareholders who do not accept the Offer, holding shares in an unlisted company for which there may not be a liquid market. Please see section

    6.5 of the Target's Statement dated 21 January 2016 (under the heading "ASX Delisting") for important information regarding the process and requirements for any such delisting request.

    Reasons to ACCEPT the Offer

    Your Directors also note the following reasons for their recommendation:

• The developments with respect to Manus Province raise uncertainties which are unlikely to be resolved within the Offer Period

• The Board has noted that there is sufficient doubt that it would not be prudent to maintain its previous statement of the outlook for the Company's FY2017 Underlying EBITDA being in excess of $300 million

• Ferrovial has stated in its view that Broadspectrum's provision of services at the regional processing centres in Nauru and Manus Province will not form part of its services offering in the future. If Broadspectrum no longer provides services to the regional processing centres in Nauru and Manus Province this could have an adverse impact on Broadspectrum's earnings post the expiry of the existing contract with the DIBP

• The opportunity for shareholders to receive the certainty of $1.50 per share in cash in the face of these uncertainties may be attractive

• Ferrovial's Revised Offer represents a 43% premium to the closing Broadspectrum Share price on 27 April 2016 and a 76% premium to the closing Broadspectrum Share price of $0.851on the trading date immediately prior to the announcement of Ferrovial's Offer on 7 December 2015

• Broadspectrum expects to incur transaction costs of $15 - $20 million and further costs in relation to the vesting of existing Broadspectrum Performance Awards and the issue of new cash awards under the new cash incentive scheme set out in Section 3. This economic cost will be borne by all Broadspectrum Shareholders in proportion to their shareholdings, and

• If the Offer lapses, the Broadspectrum share price is likely to fall.

All of the Directors have either accepted or will accept the Revised Offer in respect of their Broadspectrum shareholdings.

Accelerated ten business day payment terms

1 Broadspectrum's closing share price on 4 December 2015.