NewSat brands EWC takeover bid 'a sham' & demands its cancellation

Stuart Corner
Friday, 18 September 2009 13:07

IT Industry - Strategy

Satellite services provider NewSat (ASX: NWT) has referred the dubious-looking takeover offer from EWC payments to the Takeovers Panel seeking a declaration of unacceptable circumstances on the grounds that the offer is a sham.

NewSat claims that EWC Payments appears to be unable to perform its obligations under the proposed offer and it seeks orders from the Panel cancelling the offer and ordering EWC to pay its costs of dealing with the offer.

According to NewSat, "the market for [NewSat] securities has, since 3 September 2009, been conducted on the basis of an entirely false premise, being that a takeover offer will be made for 100 percent of [NewSat's] shares on terms that will provide [NewSat] shareholders as a whole with an actual consideration equivalent to $50 million in value...."EWC has acted recklessly either as to whether it will proceed with its announced bid, or as to whether it will be able to perform its obligations relating to the bid if a substantial proportion of offers are accepted."

EWC Payments was founded and is run by Matthew Starr, who was involved with NewSat in 2003 but split over disagreements with NewSat founder Adrian Ballintine over the direction the company should take. It announced its bid for NewSat on 3 September offering one EWC share for every 25 NewSat shares and one EWC option for every 29 NewSat options.

According to Starr, "With the nominal value of EWC shares at $0.20 per share, this values NewSat at approximately $50m, which is a significant premium of approximately 35 percent over the current market capitalisation of approximately $37m at the closing price of $0.0006 per share on 02 September."

EWC however is not a listed company and Starr has given no indication of how he has arrived at this "nominal" value of $0.20 for EWC shares. Furthermore for a company claiming annual revenues of almost $500m it has a very low profile. When iTWire Googled "EWC Payments" most of the 49 references we came up with were allegations of wrongdoing on sites dealing with credit card scams, frauds and complaints.

NewSat pointed out that EWC Payments has a paid up capital of only $10, to which EWC responded by saying that it is was wholly-owned subsidiary of a Swiss multinational, headquartered in Geneva (but which it did not name) with a paid up capital of "CHF$1,000,000" (sic).

The Takeovers Panel has yet to decide whether it will launch proceedings in response to NewSat's request.