Alinta chairman John Akehurst has written to shareholders outling what the company's board has done to position the company to manage the management buy-out proposal and any other expressions of interest.
Alinta chairman John Akehurst has written to shareholders outlining what the company's board has done to position the company to manage the management buy-out proposal and any other expressions of interest.
Mr Akehurst's letter is below:
Dear Shareholder
I am writing to advise shareholders regarding the status of a potential Management Buy-Out (MBO)
proposal, to outline the steps your Board is taking to address this issue and to answer some of the
questions which have been put to the Board in recent weeks.
On 9 January 2007 Alinta announced it had received an approach from Macquarie Bank Limited
which outlined an incomplete and non-binding Management Buy-Out (MBO) approach which was
being developed by a group that included former Chief Executive Officer Mr Bob Browning and
former Chairman Mr John Poynton.
As a result of the potential conflicts of interest associated with his participation in the preparation of
the MBO proposal, John Poynton resigned as Chairman and the Board of Directors elected me to
replace him. Messrs Poynton and Browning subsequently resigned from the Board and Mr Browning
has resigned from Alinta. The company will retain his services until 30 June 2007 to assist us as
necessary. Mr Peter Magarry, previously Chief Operating Officer of Alinta Asset Management, has
accepted the position of Acting Chief Executive.
The MBO has generated many questions from investors and widespread media coverage. It has
presented your Board with a set of challenging circumstances. The Board has taken a number of
steps to ensure that the ongoing business activities of the company are managed effectively, that
conflicts of interest related to the MBO proposal are addressed and that alternative bids for the
company are encouraged.
At the time of writing to you no formal proposal to acquire any Alinta interests has been received
from any party.
The Company also continues to explore the restructuring proposals which have been previously
foreshadowed.
To assist all shareholders understand the facts, I have listed here the key events which have
occurred and steps taken by your Board:
1. Following advice on 30 November 2006 from the then Chairman John Poynton that he and
four of the Company's most senior executives (MBO Group) might propose a Management
Buy-Out, the Board immediately appointed an Independent Directors Committee (IDC) of the
Board to oversee all related matters;2. The IDC quickly appointed legal and investment banking advisers. It subsequently put in
place protocols to govern the conduct of the MBO Group and control the use of confidential
Company information;
3. These protocols also govern the MBO Group's involvement in all Company matters and
exclude them from having knowledge of, or evaluating any proposal received, by Alinta;
4. The Board also informed the MBO Group that they intended that any process would be
transparent and competitive;
5. Those Board members who were participating in the MBO (Messrs Poynton and Browning)
have since resigned from the Board. The services of the MBO Group have been retained.
They have important knowledge of the Company and responsibilities to the Company and to
shareholders. They are available to assist the Company going forward;
6. Practical arrangements which quarantine the MBO Group executives from the ongoing
activities of the Company have been implemented;
7. The Board has made new management appointments, including an Acting CEO, General
Counsel and Acting Chief Financial Officer. The Board has complete confidence in the
strength of Alinta's new management team to ensure the smooth running of the Company's
business activities and the efficient integration of our new assets;
8. The Board has initiated a process to solicit proposals for the Company and to ensure a fair
and transparent process to manage bidders wishing to submit competing proposals for the
acquisition of all or part of Alinta; and
9. The Board is also putting in place protocols with Alinta's former corporate advisers
Macquarie, for the purpose of protecting the Company's information and providing
confidence to other potential bidders as to the competitive nature of the process.
Be assured that the directors are very mindful of their legal and other obligations. Your directors are
particularly concerned to achieve an outcome that is in the best interests of all shareholders and to
this end have been meeting on an almost daily basis to address and manage the situation which
has arisen.
Alinta is proud of its record of safely and reliably delivering gas and electricity to more than 3 million
customers across Australia. I would like to stress that despite this corporate activity, Alinta's
operational management and staff continues to be closely focused on our ongoing service to our
customers.
Over the coming months, your directors will keep you informed of any significant developments.
Yours faithfully
John Akehurst
Chairman
