The release of details follows approval from the NSW Supreme Court to distribute the Information Memorandum (IM) that outlines the demutualisation proposal to SFE's 366 eligible Members. SFE Chairman, Mr Rick Holliday-Smith, said: "The SFE Board is in favour of demutualisation and believes the proposal provides SFE with the greatest flexibility to form strategic alliances, broaden access to its markets and meet the challenges of a changing industry environment. SFE is financially very strong and is positioned to move aggressively forward.
"The Board took advice from Macquarie Bank and Corrs Chambers and Westgarth, and sought the opinion of Members. At the end of the day, the Board had to make up its own mind and Members need to be aware that the proposal now being put to them is the only proposal that they are voting on. If the proposal is rejected, the Board currently intends to remove demutualisation from the agenda for the foreseeable future, whilst reserving the right to reopen the issue at some appropriate future time.
"The Board believes the entitlements policy is fair and reasonable. The decision to assess entitlements according to the rights and benefits of membership that would be given up on demutualisation concurs with the recommendation of our external adviser, Macquarie Bank.
"The Board determined that it would be preferable to establish an exempt market for trading in SFE shares from demutualisation and to leave consideration of a listing for later, once the value of SFE has been maximised through the implementation of key elements of our business strategy. Additionally, SFE's considerable cash reserves will be retained, providing financial resources to form alliances and combat competitive threats."
Features of the proposal to demutualise include:
Ownership of SFE would be separated from the right to trade There are 366 eligible SFE Members made up of 29 Full Members; 71 Local Members; 112 Associate Members; and 154 Temporary Local Members 109 million shares would be issued with Members receiving the following percentage allocation - Full Members 68.5%; Locals 18.5%; Associates 7.4%; and Temporary Locals 5.6%;
Individually, eligible Members within each class would receive approximately the following number of shares; Full Members 2,575,000; Locals 284,000; Associates 72,000; and Temporary Locals 40,000 (rounded to the nearest thousand) Entitlements policy in relation to share allocation is based solely on Member rights and benefits, not Member contribution to value 10% shareholding limit would be imposed;
Cash reserves would be retained by SFE and used to meet strategic goals SFE shares would be traded on an exempt market operated by Austock Grant Samuel and Associates, the independent expert, valued SFE on an exempt market of between $130 million and $158 million, a figure that excludes a control premium.
Mr Holliday-Smith concluded: "Although Grant Samuel believed that a small increase in the overall allocation to one Member class would result in a fairer entitlements policy, it also made it clear that demutualisation is in the best interest of all SFE Members."
Members will have at least three weeks to consider the contents of the IM. Meetings to vote on the proposal will be held at Sydney's Wentworth Hotel on Saturday, 22 July.
For demutualisation to be approved a majority of eligible SFE Members voting within each class; Full, Associate, Local and Temporary Local must vote in favour. In addition, Full Members must approve the proposal by at least 75% at an Extraordinary General Meeting.
The IM will be posted on SFE's website from Monday, 3 July 2000.
