Navitas Limited (ASX:NVT) today, on 12 April 2019, released an update regarding the approval of Australian Government’s FIRB to BGH BidCo A Pty Ltd (“BGH BidCo”) for the acquisition of 100% of the issued shares of Navitas under proposed scheme of arrangement. Proposal of the acquisition was subject to the FIRB approval. There are other certain conditions also, which needs to be satisfied before the scheme becomes effective. A Scheme Booklet with important details and information related to this proposed acquisition is likely to be received by shareholders in May 2019.
On 21 March 2019, NVT communicated that it has entered into a SID (Scheme Implementation Deed) with BGH BidCo (BGH BidCo A Pty Ltd). A consortium of the BGH Fund, AustralianSuper, (entities linked with “RMJ” and some limited partners of the BGH Fund, co-investor the with other consortium members) will own “BGH BidCo”. As per the proposal, BGH BidCo will acquire 100% of the share capital of NVT via a scheme of arrangement.
Under the proposed scheme, if implemented, a cash consideration of $5.825 per Navitas share will be received by NVT shareholders. The Cash Consideration values of NVT’s equity is at ~$2.1 billion, which represents:
- Additional $0.325/NVT sh (~6%) to the price offered under the first non-binding proposal from the BGH Consortium of $5.50/NTV share
- 34% premium of $4.35 (the closing price of NVT on 9 October 2018), being the last trading day before NVT announcing about the receiving First Indicative Proposal
- A 33% premium to the one month VWAP up to and including 9 October 2018 of $4.37
- 33% premium to the three months VWAP up to and including 9 October 2018 of $4.39
- An EV/proforma EBITDA from continuing operations for the 12-months ending 31 December 2018 multiple of 15.5x.
Consortium Shareholders – The members of the BGH Consortium, RMJ and AustralianSuper (who in aggregate own ~ 18% of the NVT shares on issue) will get some or all of their consideration in the form of shares in the ultimate holding company of BGH BidCo. RMJ and AustralianSuper will be refrained from their voting rights in General Scheme Meeting and will vote in a separate class.
No Special Dividend – Company had seen a reduction in its franking balance during FY18. NVT is of the view to have a minimum franking credit balance to be applicable as any special dividend, at the time, the scheme is implemented and after paying scheme-related transaction costs. Given the minimal additional franking credit benefit (if any) that would be attached to any special dividend, the management has confirmed that it is not in the best interests of NVT to declare a special dividend. However, in case, the scheme does not happen, management will continue to pay dividends in the future, with franking credits to the extent available.
On 21 March 2019, NVT requested for a trading halt, pending it releasing an announcement. The securities of NVT will be in a trading halt until the earlier of the commencement of normal trading on 25th March 2019 or when the announcement is updated to the public.
On the stock performance front, the stock of NAV, at the time of writing, i.e. on 12 April 2019, AEST 03:45 PM, is trading at $5.760 with a market capitalisation of ~ $2.07 billion.
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