Webcentral and 5G Networks agree to merge by scheme of arrangement

Webcentral Group Limited and 5G Networks Limited(5GN) announced that they have entered into a binding Merger Implementation Agreement under which it is proposed that the two companies will merge (Merger) by way of a scheme of arrangement.

This is subject to 5GN shareholder approval and court approval in accordance with Part 5.1 of the Corporations Act 2001(Cth) (Scheme). The Merger is to be implemented by way of the Scheme, under which Webcentral will acquire 100% of the fully paid ordinary shares in 5GN.

5GN shareholders will receive two Web central ordinary shares for each 5GN share held at the Scheme record date and 5GN will become a wholly-owned subsidiary of Web central.

Upon implementation of the Scheme, 5GN shareholders will hold approximately 52% of the combined entity and Webcentral shareholders will own the remaining 48%.

The 2 for 1 merger ratio is consistent with current trading prices and 5 day and 30 day volume weighted average trading prices.

Independent Board Committees

The 5GN directors have established a committee of independent directors, consisting of all 5GN directors except Joe Demase and Joe Gangi (due to their interests in Webcentral).

They will evaluate the terms of the proposed Scheme, reach an independent conclusion on whether the Scheme is in the best interests of 5GN shareholders, and make an independent recommendation to 5GN shareholders on how to vote on the Scheme.

The Webcentral directors have also established a committee of independent directors (Webcentral IBC), consisting of all Webcentral Directors other than Joe Demase.

Both the 5GNIBC and the Webcentral IBC have recommended the Merger.

5GN Directors intend to vote in favour of the Scheme

All 5GN directors intend to vote the 5GN shares held or controlled by them in favour of the Scheme subject to the Independent Expert concluding that the proposed Scheme is in the best interests of 5GN shareholders and in the absence of a superior proposal.

Details of the Merger Implementation Agreement

The Merger Implementation Agreement contains customary terms and conditions on which Webcentral and 5GN will implement the Scheme. The implementation of the Scheme remains subject to certain terms and conditions including but not limited to:

  • 5GN shareholder approval;
  • Court approval
  • The Independent Expert concluding that the Scheme is in the best interests of 5GNshareholders;
  • Webcentral shareholder approval of a reverse take over resolution under ASX Listing Rule 7.1 and the acquisition of related party shares under Rule 10.1 at a Webcentral EGM;
  • No material adverse change or prescribed occurrence (as each defined in the MergerImplementation Agreement) affecting either party.

Under the Merger Implementation Agreement, Webcentral and 5GN are each bound by customary exclusivity provisions including no talk, no shop, notification obligations and matching rights in the event of a competing proposal.

They have also agreed reciprocal break fees of $0.5 million in certain circumstances.

A full copy of the Merger Implementation Agreement, including all applicable conditions, is attached to this announcement. Indicative Timetable and Next Steps 5GN shareholders do not need to take any action in relation to the Merger at this stage.

The scheme booklet containing information relating to the Merger, the Independent Expert’s report on whether the Scheme is in the best interests of 5GN shareholders.

The reasons for the 5GN independent directors’ recommendations and details of the scheme meeting is expected to be sent to 5GN shareholders by September 2021.

5GN intends to appoint PKF Melbourne Corporate Pty Ltd as the Independent Expert.

5GN shareholders will be given the opportunity to vote on the Scheme at the scheme meeting which is expected to be held in October 2021.

Subject to 5GN shareholder approval being obtained by the requisite majorities and the other conditions of the Scheme being satisfied, the Scheme is expected to be implemented.

These dates are indicative only and subject to change. Webcentral is being advised by Cornwalls as legal counsel. 5GN is being advised by Norton Rose Fulbright as legal counsel.