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About the proposal Information on the transaction Announcements Frequently Asked Questions Scheme Meeting and General Meeting

Frequently Asked Questions

What is a scheme of arrangement?

A scheme of arrangement is a procedure under the Corporations Act that allows for the rights and obligations of some or all shareholders in a company to be rearranged pursuant to an agreement between the company and its shareholders (or a class or classes of shareholders). Schemes of arrangement are frequently used to implement control or merger transactions in Australia.

In order to become binding, a scheme of arrangement must be approved by the Court and by shareholders (or classes of shareholders, depending on the terms of the proposed scheme of arrangement) in accordance with the requisite majorities specified in the Corporations Act.

What will shareholders receive for their AUSTAR shares?

If the Scheme is Implemented, Minority Shareholders will receive $1.52 in cash per share. This cash consideration represents a significant premium to AUSTAR’s average historical trading prices.

The cash payment of $1.52 per share represents:

  • a 20.2% premium to the closing price of $1.265 on 25 May 2011, being the last trading day prior to AUSTAR’s announcement that it had received a proposal from FOXTEL;

  • a 21.5% premium to the one month volume weighted average share price of AUSTAR Shares to 25 May 2011;

  • a 17.9% premium to the three month volume weighted average share price of AUSTAR Shares to 25 May 2011;

  • a 54.3% premium to the closing price of $0.985 on 17 February 2011, being the last trading day prior to publication in the media of speculation about the Transaction;

  • a 55.8% premium to the one month volume weighted average share price of AUSTAR Shares to 17 February 2011;
    and

  • a 56.8% premium to the three month volume weighted average share price of AUSTAR Shares to 17 February 2011.


Excluded Shareholders (that is, AUSTAR Shareholders who are LGI Group Members) will not participate in the Scheme, will not receive the Scheme Consideration and will retain their AUSTAR Shares after the Scheme is Implemented until Completion.

Will I have to pay brokerage or stamp duty in respect of the Scheme Consideration?

No. Scheme Shareholders will not have to pay brokerage or stamp duty in relation to the Scheme Consideration.

What is the recommendation of the Independent Expert?

The Independent Expert has assessed the full underlying value of AUSTAR Shares at between $1.23 and $1.40, and has concluded that the Scheme is fair and reasonable and therefore that it is in the best interests of AUSTAR Shareholders, in the absence of superior proposal.

In addition, the Independent Expert has concluded that:

  • the Scheme is in the best interests of Minority Shareholders, in the absence of a superior proposal;and
  • the FOXTEL Acquisition is fair to Minority Shareholders.


What is the recommendation of the Independent Directors?

The Independent Directors of AUSTAR unanimously recommend that Minority Shareholders vote in favour of the Scheme and the Resolutions, in the absence of a superior proposal and subject to the Independent Expert not varying adversely or withdrawing its conclusion that the Scheme is in the best interests of Minority shareholders.

Each Independent Director intends to vote all AUSTAR shares that he holds or that are held on his behalf in favour of the Scheme and associated shareholder resolutions.

Are there any conditions to be satisfied in order for the Scheme to be implemented?

There are a number of Conditions precedent that remain to be satisfied or waived before the Scheme can become Effective.

For the Scheme to proceed:

  • Minority Shareholders must approve the Scheme at the Scheme Meeting by the requisite majorities;

  • AUSTAR Shareholders must approve the Resolutions at the General Meeting by the requisite majorities;

  • the Court must approve the Scheme in accordance with section 411(4)(b) of the Corporations Act;

  • Australian competition law approval must be received with respect to the Transaction;

  • Australian foreign investment approval must be received by the required parties with respect to the Transaction;

  • the private letter ruling from the IRS, received by LGI, relating to the United States federal income tax treatment of the Transaction must not be withdrawn, invalidated or modified in an adverse manner, and any representation, qualification or assumption made in obtaining that ruling must not cease to apply;

  • there must be no restraint or other prohibition imposed on the Transaction by any court or Government Agency;

  • no AUSTAR Prescribed Occurrence or AUSTAR Material Adverse Change may have occurred; and

  • the Independent Expert must not have withdrawn or adversely varied its conclusion that the Scheme is in the best interests of Minority shareholders.


Certain Conditions Precedent may be waived by one or more of the parties to the Implementation Deed.

What happens if any of the conditions are not satisfied?

If one or more of the Conditions Precedent is not satisfied, the Transaction will not be implemented unless the Condition Precedent may be waived, and the relevant party or parties to the Implementation Deed agree to waive it. This is the case even if the Scheme is approved by Minority Shareholders at the Scheme Meeting.

What happens if the transaction does not proceed?

If the Transaction does not proceed, Minority Shareholders will not receive the Scheme Consideration but will retain their AUSTAR Shares and the parties will not implement the other Transaction steps. AUSTAR will continue to operate as a standalone company listed on the ASX.

Certain transaction costs incurred by AUSTAR, totalling approximately $5 million, will be payable. Additionally, depending on the reasons for the Scheme not proceeding, a Reimbursement Fee (of approximately $19.3 million) may be payable to FOXTEL Management

Why can’t LGI vote?

Because of the way the transaction is structured, namely that a new, wholly-owned subsidiary of LGI will first acquire all the AUSTAR shares it doesn’t currently control during the first phase, the Scheme will only require the approval of AUSTAR minority shareholders.

Can the $1.52 be increased if another bidder emerges?

The price has been agreed and documented between the parties and the Independent Directors have unanimously recommended that AUSTAR minority shareholders vote in favour of the Scheme and associated shareholder resolutions, in the absence of a superior proposal and subject to the Independent expert not varying adversely or withdrawing its conclusion that the Scheme is in the best interests of Minority shareholders.

The AUSTAR Board believes the value is appropriate in the context of a change of control transaction.

Is it likely that a Superior Proposal will emerge?

No Superior Proposal has been received by AUSTAR, despite media speculation about the Transaction since 18 February 2011 and AUSTAR’s announcement of its receipt of a proposal from FOXTEL and execution of definitive transaction documentation on 26 May 2011 and 11 July 2011, respectively.

The Independent Directors consider the emergence of any Superior Proposal from the date of this Scheme Booklet until the Implementation Date to be unlikely in light of LGI's majority ownership of AUSTAR.

Since 18 February 2011, no AUSTAR Director has received any approaches which would cause him to believe that a Superior Proposal is likely to emerge.

When will the shareholder vote will be held?

The Scheme Meeting and General Meeting will be held on Friday 30 March 2012 at the AGL Theatre, Museum of Sydney, 37 Phillip St, Sydney NSW 2000 at 3pm

When will the transaction be completed?

Expected to be 24 May 2012 if the Scheme is approved at the Scheme Meeting and the Resolutions are passed at the General Meeting

When would shareholders receive payment?

If the Scheme is implemented, shareholders would receive payment following this. It is expected the Scheme will be completed in early 2012.

Where can I call for further information?

If you have any questions in relation to the Transaction please call the AUSTAR Shareholder Information Line 1300 706 158 (within Australia) or on +61 3 9946 4459 (outside Australia) Monday to Friday between 9:00am and 5:00pm (Sydney time) or contact your legal, financial, taxation or other professional adviser.