Austar United

The proposed acquisition of AUSTAR by FOXTEL will be accomplished through a series of transactions. The first will involve a new, wholly-owned subsidiary of LGI, acquiring all of the AUSTAR Shares that LGI Group Members do not already control through the proposed Scheme.

Following Implementation of the Scheme and various restructure steps, FOXTEL will acquire the LGI Group’s interest in AUSTAR for $1.52 per AUSTAR Share under the FOXTEL Acquisition.

AUSTAR Minority Shareholders

In order to implement the Scheme, a majority in number of the AUSTAR minority shareholders voting, and who represent at least 75% of the votes cast, must approve the Scheme at the scheme meeting.

A Scheme Booklet containing information relating to the proposal and details of the Scheme Meeting will be mailed to Shareholders on or before December 20 2011. You can also download an electronic copy HERE .

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 from 3pm.

Scheme Consideration

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.

Findings 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 superior proposal;and
  
  
• the FOXTEL Acquisition is fair to Minority Shareholders.

Recommendation of Independent Directors

The Independent Directors of AUSTAR unanimously recommend that AUSTAR 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.

Scheme Conditions

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