Just days before Envestra shareholders were due to meet and vote on APA Group’s $2.1 billion scheme of arrangement proposal to combine the two businesses, a consortium of members of the Hong Kong based Cheung Kong Group has placed a surprise conditional bid of $2.37 billion.

The consortium comprises Cheung Kong (Holdings) Limited, Cheung Kong Infrastructure Holdings Limited and Power Assets Holdings Limited, each of which is a member of the Cheung Kong Group.

Cheung Kong Infrastructure Holdings (Malaysian) Ltd currently holds 17.46% of Envestra’s shares.

The consortium proposal is conditional on:

  • The consortium being satisfied with the results of a due diligence process.
  • Confirmation of certain assumptions concerning Envestra’s operations and financial position.
  • The approval of the Board of Directors of each consortium member.
  • The consortium entering into a bid implementation agreement with Envestra.

Any takeover offer made pursuant to the consortium proposal would be subject to the following conditions:

  • Foreign Investment Review Board approval.
  • Binding confirmation from the required number of Envestra’s financiers that those financiers will not declare any Envestra change of control resulting from the takeover offer to be “unacceptable” for the purposes of Envestra’s Intercreditor Deed Poll.
  • Minimum acceptance: the consortium and its associates having relevant interests in more than 50% (by number) of Envestra’s shares.
  • No prescribed occurrences (as specified in sections 652C(1) and (2) of the Corporations Act).

The consortium has informed Envestra that each consortium member has sufficient financial resources to fund its proportion of an offer. The consortium has also informed Envestra that it does not expect Australian Competition and Consumer Commission approval to be a condition to an offer.

Envestra is reconstituting its Independent Board Committee, which would exclude the APA and CKI nominated directors, to consider both the consortium proposal and the APA Group scheme of arrangement.

Envestra will apply to the Federal Court for an adjournment of the scheme meeting previously scheduled for 13 May 2014. A further announcement on the adjournment will be made following the Court hearing, which is expected to be held on Friday, 9 May 2014.

APA has announced it will make a further announcement in relation to the proposed Scheme of Arrangement in due course.

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