Court rules on National Exchange offer

THE Federal Court of Australia has declared that an unsolicited offer to OneSteel shareholders by National Exchange Pty Ltd and its sole director David Tweed is misleading and deceptive.

Justice Raymond Finkelstein made declarations that the offers to purchase shares in OneSteel were misleading and deceptive.

He said, in his judgement, that "In resolving this case it is impossible to ignore the fact … that the offer has been purposely composed so that it will mislead shareholders".

The court made orders:

Preventing National Exchange and Mr Tweed from making further offers in a similar form to OneSteel sharehodlers;

Requiring National Exchange to write to all shareholders who had received its offer explaining that the true value of the offer was less than the $2 per share as stated in the offer; and

Giving shareholders who had accepted the offer 28 days to have their shares returned at no cost to them.

Australian Securities and Investments Commission executive director consumer protection Peter Kell said the decision confirmed ASIC’s belief that the National Exchange offers could have led shareholders to believe they were getting a good deal when, in fact, they were not.

"The judgement reinforce the fact that you cannot mislead people over the value of a share offer and expect to get away with it," he said.

"People have a right to clear and fair communication in relation to their financial dealings."

ASIC had previously alleged that the National Exchange offer to OneSteel shareholders did not make it clear that the purchase price of $2 per share would be paid in fifteen annual instalments of 13 cents, commencing on September 3 2004