Dear Shareholder,
On behalf of the OptiComm Board, I am pleased to provide you with the Scheme Booklet, which outlines details you will need to consider in relation to the proposed acquisition of OptiComm Ltd (OptiComm) by Uniti Group Limited (Uniti).
On 15 June 2020, OptiComm and Uniti announced that they had entered into a Scheme Implementation Deed under which Uniti agreed to acquire 100% of the issued capital in OptiComm. The acquisition is to be conducted by scheme of arrangement and is subject to several conditions, including shareholder, Court and regulatory approvals, together with our customary conditions.
If the Scheme is approved and implemented, OPC Shareholders will receive Scheme Consideration of either:
- $5.10 cash per OPC Share (All Cash Consideration Option);
- 3.4228 UWL Shares for each OPC Share (All Scrip Consideration Option);
- 75% Cash Consideration and 25% Scrip Consideration (Mixed Consideration Option 1) equating to $3.825 cash and 0.8557 UWL Shares for each OPC Share;
- 50% Cash Consideration and 50% Scrip Consideration (Mixed Consideration Option 2) equating to $2.550 cash and 1.7114 UWL Shares for each OPC Share; or
- 25% Cash Consideration and 75% Scrip Consideration (Mixed Consideration Option 3) equating to $1.275 cash and 2.5671 UWL Shares for each OPC Share,
subject to scaleback.1
Based on Uniti’s closing share price of $1.54 on 12 June 2020, Uniti’s proposal represents the following total implied value and premium, for each Scheme Consideration alternative including the Special Dividend:
- All Cash Consideration Option: $5.20 per OPC Share representing a 12% premium to OptiComm’s 30-day VWAP prior to 15 June 2020 and a 18% premium to OptiComm’s 60-day VWAP prior to 15 June 2020;
- All Scrip Consideration Option: $5.37 per OPC Share representing a 15% premium to OptiComm’s 30-day VWAP prior to 15 June 2020 and a 22% premium to OptiComm’s 60-day VWAP prior to 15 June 2020;
- Mixed Consideration Option 1: $5.24 per OPC Share representing a 13% premium to OptiComm’s 30-day VWAP prior to 15 June 2020 and a 19% premium to OptiComm’s 60-day VWAP prior to 15 June 2020;
- Mixed Consideration Option 2: $5.29 per OPC Share representing a 13% premium to OptiComm’s 30-day VWAP prior to 15 June 2020 and a 20% premium to OptiComm’s 60-day VWAP prior to 15 June 2020; and
- Mixed Consideration Option 3: $5.33 per OPC Share representing a 14% premium to OptiComm’s 30-day VWAP prior to 15 June 2020 and a 21% premium to OptiComm’s 60-day VWAP prior to 15 June 2020.
The OptiComm Board intends to declare a Special Dividend of A$0.10 per OptiComm Share, which, subject to the Scheme becoming Effective, will be paid on the Special Dividend Payment Date to OptiComm Shareholders who held OptiComm Shares on the Special Dividend Record Date. If the Special Dividend is declared, those OptiComm Shareholders who are entitled to the Special Dividend may be entitled to a franking credit of up to approximately A$0.043 per OptiComm Share. Whether you will be able to realise the full benefit of franking credits attached to any Special Dividend will depend on your tax status and specific circumstances. OptiComm Shareholders should seek independent taxation advice in respect of this matter and refer to Section 8 of the Scheme Booklet.
Based on the 30-day VWAP of UWL Shares of [insert] on [insert] (the last practicable trading date before the date of the Scheme Booklet), Uniti’s proposal represents the following total implied value and premium, for each Scheme Consideration alternative including the Special Dividend:
Independent Expert
The OptiComm Board has also commissioned an independent expert, Lonergan Edwards, to prepare the Independent Expert’s Report in relation to the Scheme. [The Independent Expert has concluded that the Scheme is in the best interests of OPC Shareholders, in the absence of a Superior Proposal.] A copy of the Independent Expert’s Report is contained in Annexure A.
OptiComm Directors’ Recommendation
The OptiComm Board believes that the value and strategic opportunities offered by the Scheme reflect a compelling proposition for OPC Shareholders. In assessing the Scheme, the OptiComm Board considered the reasons to vote in favour or to not vote in favour of the Scheme, other key considerations and risks, and the potential alternatives available to OptiComm, including maintenance of the status quo.
An overview of these reasons is available in Section 3 of the Scheme.
The OptiComm Directors unanimously recommend that OPC Shareholders vote in favour of the Scheme, in the absence of a Superior Proposal. Each OptiComm Director will vote, or procure the voting of, any OptiComm Shares owned or Controlled by them in favour of the Scheme at the Scheme Meeting, in the absence of a Superior Proposal.
In relation to the recommendations of Allan Brackin, David Redfern, Paul Cross and Ken Ogden (Escrowed Directors), OPC Shareholders should have regard to the fact that, if the Scheme is implemented, the Escrowed Directors will be released from their voluntary escrow agreements with OptiComm and will be able to make an Election in respect of their OPC Shares that are currently subject to a voluntary escrow restriction. The OPC Board consider that, despite these arrangements, it is appropriate for the Escrowed Directors to make a recommendation on the Scheme.
Specifically, in relation to the recommendation of Paul Cross, OPC Shareholders should also have regard to the fact that, if the Scheme is implemented, Mr Cross will become entitled to early vesting of unvested OptiComm Performance Rights. The OptiComm Board (excluding Mr Cross)2 exercised its discretion to give effect to these arrangements in accordance with the terms of the OptiComm Incentive Plan. OPC Shareholders should have regard to these arrangements when considering Mr Cross’ recommendation on the Scheme, which appears throughout the Scheme Booklet. Mr Cross considers that, despite these arrangements, it is appropriate for him to make a recommendation on the Scheme.
The Scheme can only be Implemented if approved by OPC Shareholders at the Scheme Meeting to be held at [11:00am] on [Thursday, 10 September 2020]. As such, your vote is important, and I strongly encourage you to take careful consideration of all the information set out in the Scheme Booklet when deciding whether to vote in favour of the Scheme.
Your vote is important and I strongly encourage you to read the Scheme Booklet carefully and cast an informed vote on the Scheme either by personally participating in the virtual Scheme Meeting or by appointing a proxy, an attorney or, in the case of an OPC Shareholder or proxy who is a corporation, a corporate representative to participate in the Scheme Meeting and vote on your behalf. Sections 1.2 to 1.4 of the Scheme Booklet contains further information regarding the virtual Scheme Meeting and your vote.
You should take into consideration all of the information set out in the Scheme Booklet when deciding whether or not to vote in favour of the Scheme. Section 3.2 of the Scheme Booklet summarises the reasons identified by the OptiComm Board as to why you may not want to vote in favour of the Scheme, including risks associated with holding shares in the Combined Group.
If you have any questions or require further information in relation to the Scheme Booklet or the Scheme, you should call the Shareholder Information Line on [insert] (callers within Australia) or [insert] (callers outside Australia), Monday to Friday between 8.30am and 5.30pm (AEDT). If you are in any doubt as to what you should do, you should consult an independent, appropriately licenced and authorised financial, legal and/or tax adviser without delay.
On behalf of the OptiComm Board, I would like to take this opportunity to thank you for your ongoing support of OptiComm and I look forward to your participation in the Scheme Meeting.
Yours sincerely,
Allan Brackin
Chairman
OptiComm Ltd
1 Allocation will be subject to scaleback (if necessary) on a pro rata basis to ensure that, for all of the OPC Shares to be acquired by Uniti under the Scheme, the maximum cash required to be payable as Scheme Consideration by Uniti is ~$406.75m (the Aggregate Cash Consideration) and the maximum shares to be issued by Uniti is ~84.996 m (the Aggregate Scrip Consideration).
2 The exercise of discretion by the OptiComm Board was approved by the Non-Executive OptiComm Directors. Paul Cross did not vote on the resolution given his interest in the subject matter of the resolution.
