Hastings Funds Management Limited ABN 27 058 693 388 AFSL No. 238309 Level 27, 35 Collins Street Melbourne VIC 3000 Australia T +61 3 8650 3600 F +61 3 8650 3701 www.hf.com.au Melbourne, London, San Antonio, Sydney ASX Announcement Hastings Diversified Utilities Fund (HDF) Total pages: 53 13 July 2012 HDF PPA Takeover Offer Recommended A subcommittee of independent directors of Hastings Funds Management Limited (HFML), as Responsible Entity for HDF, today advised that it has assessed the all cash, conditional takeover proposal of $2.325 1 per HDF security received from Pipeline Partners Australia Pty Ltd (Pipeline Partners Australia), and unanimously recommend that HDF Securityholders accept the offer. The independent directors recommendation is subject to there being no superior offer as well as the receipt of an independent expert s report that concludes that the offer is fair and reasonable. HDF has entered into a Bid Implementation Deed (BID) with Pipeline Partners Australia 2 in relation to the offer which values HDF s equity at $1.232 billion. Grant Samuel has been appointed to complete an independent expert s report in relation to this offer. The offer is subject to a number of conditions, including: 70 percent minimum HDF Securityholder acceptance; No change of control which will include existing lenders agreeing relevant waivers in relation to Pipeline Partners Australia s proposal should it achieve control of HDF; HFML confirming the Performance Fee payable for any performance period commencing on or after 1 January 2012 is limited to $50 million while Pipeline Partners Australia s offer remains open or acceptances exceed 50 percent; and Other customary bid conditions including all relevant regulatory approvals having been obtained as set out fully in the attached BID. Independent Director Acceptance The independent director that holds HDF securities has indicated that the proposal will be accepted in respect of their HDF security holdings in the absence of a superior offer as well as the receipt of an independent expert s report that concludes that the offer is fair and reasonable. The non-independent directors will abstain from making a recommendation to HDF Securityholders regarding the offer because of their potential conflict of interest. Unless otherwise stated, the information contained in this document is for informational purposes only. It does not constitute an offer of securities and should not be relied upon as financial advice. The information has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person or entity. Before making an investment decision you should consider, with or without the assistance of a financial adviser, whether any investments are appropriate in light of your particular investment needs, objectives and financial circumstances. Neither Hastings, nor any of its related parties including Westpac Banking Corporation ABN 33 007 457 141, guarantees the repayment of capital or performance of any of the entities referred to in this document and past performance is no guarantee of future performance. Hastings, as the Manager or Trustee of various funds, is entitled to receive management and performance fees. 1 Represents an offer value of $2.35 per security less the $0.025 distribution payable on 6 August 2012. Pipeline Partners Australia may also deduct future distributions declared by HDF. 2 Pipeline Partners Australia s Media Release attached to this release (Appendix 1).
Bid Implementation Deed The BID, attached as Appendix 2, outlines: The obligations of both HFML as Responsible Entity for HDF and Pipeline Partners Australia as to the implementation of the takeover bid; All the conditions applicable to the bid; and Exclusivity arrangements and details of the break fee undertaking of 1 percent of HDF's equity value based on the offer. The break fee undertaking replaces the previously agreed cost reimbursement undertaking that has expired. Performance Fee HFML has confirmed that while Pipeline Partners Australia s current offer remains open, or PPA has a relevant interest in more than 50% of the HDF stapled securities, it will accept Performance Fee payments for the performance periods from 1 January 2012 of only $50 million. HFML intends to take into account the sustained performance of HDF and whether control of HDF has changed or whether HDF has undergone a change of responsible entity when it makes a decision regarding the payment of $23,383,549, being the previously deferred portion of the performance fee accrued for the six months ended 31 December 2011. Timetable The independent directors of HDF and Pipeline Partners Australia expect to dispatch the Target s Statement and Bidder s Statement respectively for the takeover offer in the coming weeks. Detailed reasons why HDF Securityholders should accept the offer, in the absence of a superior offer and the receipt of a independent expert concluding (and continuing to conclude) that the offer is fair and reasonable, will be included in HDF s Target s Statement. Advisers J.P. Morgan and RBC Capital Markets are acting as joint financial advisers to HDF in relation to the offer, and Freehills are acting as legal advisors to HDF. For further enquiries, please contact: Colin Atkin Simon Ondaatje Chief Executive Officer Head of Investor Relations Hastings Diversified Utilities Fund Hastings Diversified Utilities Fund Tel: +61 3 8650 3600 Tel: +61 3 8650 3600 Fax: +61 3 8650 3701 Fax: +61 3 8650 3701 Email: investor_relations@hfm.com.au Email: investor_relations@hfm.com.au Website: www.hfm.com.au Website: www.hfm.com.au Jefferson Petch Company Secretary Hastings Funds Management Limited
Appendix 1: Pipeline Partners Australia Media Release
(ACN 157 963 810) 13 July 2012 Pipeline Partners Australia announces recommended cash takeover offer for Hastings Diversified Utilities Fund All-cash Offer price of $2.325 per HDF stapled security Eligible HDF securityholders will be also entitled to receive the $0.025 HDF cash distribution for the 30 June 2012 quarter Offer to be unanimously recommended by the Independent Directors of HDF, subject to there being no superior proposal and an independent expert concluding that the Offer is fair and reasonable Westpac has agreed to accept the Offer for 8.1% of HDF stapled securities Consortium of experienced Australian and Canadian infrastructure investors behind Pipeline Partners Australia Offer subject to conditions, including 70% minimum acceptance Pipeline Partners Australia Pty Limited (PPA) today announces that it has executed a Takeover Bid Implementation Deed (Implementation Deed) with Hastings Diversified Utilities Fund (HDF) regarding an HDF-recommended offer by PPA to acquire all of the issued stapled securities of HDF (Offer). A copy of the Implementation Deed is attached to HDF's announcement of the Offer. The Offer will be implemented by way of an off-market takeover bid with an offer price of $2.325 cash for each HDF stapled security. In addition, as announced by HDF on 20 June 2012, HDF securityholders registered as at 29 June 2012 will be entitled to receive a cash distribution of $0.025 per HDF stapled security for the quarter ending 30 June 2012 and it is expected that this distribution will be paid on 6 August 2012. This adds up to combined payments of $2.35 cash for each HDF stapled security to eligible HDF securityholders. The Offer price of $2.325 cash per HDF stapled security represents a substantial premium to the trading prices of HDF stapled securities prior to the announcement on 14 December 2011 of the APA Group offer for HDF: a 31.4% premium to the closing price on 13 December 2011 of $1.77 per HDF stapled security, being the day before the announcement of the APA Group offer; and a 40.3% premium to the three month volume weighted average price ending 13 December 2011 of $1.66 per HDF stapled security.
The Implementation Deed provides that all of the Independent Directors of HDF 1 will unanimously recommend that HDF securityholders accept PPA s Offer, subject to there being no superior proposal and an independent expert concluding (and continuing to conclude) that the Offer is fair and reasonable to HDF securityholders. The Implementation Deed also provides protections in favour of PPA, including no-shop, notalk and no-due diligence restrictions on HDF (subject to customary exceptions), a notification and matching right for PPA, and the right for PPA to receive a break fee in certain circumstances equal to 1% of the HDF equity value implied under PPA s Offer. Westpac Banking Corporation, the holder on a proprietary basis of around 8.1% of the HDF stapled securities, has entered into an agreement with PPA to accept the Offer in respect of those HDF stapled securities. PPA is an Australian company, owned by experienced Australian and Canadian infrastructure investors. The major investors in PPA are Caisse de dépôt et placement du Québec (Caisse), and Utilities of Australia Pty Ltd as the trustee of Utilities Trust of Australia (UTA), among others. Commenting on the Offer the Chairman of UTA, Rob Jolly, said We are delighted to announce this all-cash offer and we believe it is highly attractive to HDF securityholders, particularly in a volatile and uncertain environment. HDF owns assets that fit well with UTA s portfolio strategy. The Caisse is a long-term investor, and the opportunity to invest in these types of assets with an Australian partner that we know well is fully aligned with our strategy, said Macky Tall, Senior Vice-President, Investments, Infrastructure at the Caisse. We are pleased that the HDF board is unanimously recommending this offer to HDF securityholders. PPA s Offer is subject to some conditions. These are set out in full in section 3 of the attached schedule, and include a requirement that the Offer results in PPA having a relevant interest in at least 70% of the HDF stapled securities and that there are no material change of control rights. Waivers from HDF s financiers will be sought. PPA s Offer does not require approval from the Australian Competition and Consumer Commission (ACCC), and PPA has received the necessary approval from the Australian Foreign Investment Review Board (FIRB). PPA intends to lodge its Bidder s Statement containing details of the terms of the Offer and other material information relevant for HDF securityholders with ASIC, HDF and the ASX early next week, and intends to despatch the relevant documentation to HDF securityholders and open the Offer as soon as possible. PPA is being advised by Goldman Sachs and Allens. 1 The Independent Directors of HDUF are Alan Cameron (Chairman), James Evans (Non-executive Director), Stephen Gibbs (Non-executive Director) and James McDonald (Non-executive Director).
About the Caisse de dépôt et placement du Québec The Caisse de dépôt et placement du Québec is a financial institution that manages funds primarily for public and private pension and insurance plans. As at December 31, 2011, it held $159.0 billion in net assets. As one of Canada s leading institutional fund managers, the Caisse invests in major financial markets, private equity and real estate. For more information: www.lacaisse.com. About Utilities Trust of Australia UTA is an unlisted unit trust that seeks to consistently provide investors with benchmark-plus returns by taking influential positions in global infrastructure projects. UTA invests on behalf of predominantly Australian institutional investors and corporate and industry superannuation funds. UTA currently has a portfolio of 17 infrastructure assets across Australia, the United Kingdom, continental Europe and the United States, including airports, toll roads, seaports and utilities, with a net asset value of A$2.6 billion as at 30 June 2012. Although UTA is a Hastings-managed fund, the trustee of UTA is independent from Hastings, with six investor-nominated directors, a Hastings representative director and an independent Chair. They have been separately advised by an independent consultant. The trustees of UTA and HDF have implemented strict information barriers and established separate working teams to ensure that individuals from UTA involved in formulating this Offer have regard only to the interests of UTA investors. Further information in relation to Utilities Trust of Australia is available on www.hfm.com.au/insto/equity/uta/. For further information, please contact: Nigel Kassulke Cannings Corporate Communications Tel: +61 2 8284 9990 Mob: +61 407 904 874
Schedule Offer Terms 2 1. Offer Price (a) (b) $2.325 (cash) per HDUF Stapled Security (Offer Price). The Offer Price represents $2.35 less $0.025 per HDUF Stapled Security to account for the cash distribution for the quarter ending 30 June 2012 announced by HDUF on 20 June 2012. The Bidder has the right, but not the obligation, to deduct from the Offer Price otherwise payable to each HDUF Securityholder under the Offer the amount of any further distributions determined or declared by the Responsible Entity to which an HDUF Securityholder is entitled in respect of quarters ending after 30 June 2012. 2. Offer Period The Offer will remain open for a minimum period of one month (unless withdrawn during that period under section 652B of the Corporations Act). 3. Offer Conditions The Offer and any contract resulting from acceptance of the Offer are subject to the fulfilment of the following conditions: (a) (b) (minimum ownership) that during, or at the end of, the Offer Period, the number of HDUF Stapled Securities in which the Bidder and its associates together have relevant interests (disregarding any relevant interest that the Bidder has merely because of the operation of section 608(3) of the Corporations Act) is at least 70% of all the HDUF Stapled Securities; (Performance Fee) that, no later than seven days after the date of the Offer, the Responsible Entity makes an announcement to the ASX to the effect that: (i) (ii) the Performance Fee which will be accepted by the Responsible Entity for the half-year period ending 30 June 2012 will not exceed $50 million; and the Responsible Entity will not accept any Performance Fee for any period commencing on or after 1 July 2012, on the basis of an offer of $2.325 per HDUF Stapled Security (as adjusted for distributions) and while the Offer remains open or the Bidder has a relevant interest in more than 50% of the HDUF Stapled Securities; (c) (other regulatory approvals) that before the end of the Offer Period, all appropriate waiting and other time periods (including any extensions of such waiting and other time periods) under applicable laws or regulations of any relevant jurisdiction have expired, lapsed or been terminated (as appropriate) and all regulatory obligations in 2 In this Schedule, unless otherwise stated in this Announcement, capitalised terms have the meaning given to them in the Implementation Deed.
any relevant jurisdiction having been complied with in each case in respect of the Offer or any matter arising from the proposed acquisition of HDUF by the Bidder; (d) (no restraining orders) that between the Announcement Date and the end of the Offer Period: (i) (ii) there is not in effect any preliminary or final decision, order or decree issued by a Government Agency; and no application is made to any Government Agency (other than by any member of the Bidder Group), or action or investigation is announced, threatened or commenced by a Government Agency, in consequence of, or in connection with, the Offer (other than a determination by ASIC or the Takeovers Panel in exercise of the powers and discretions conferred by the Corporations Act), which: (iii) (iv) restrains or prohibits (or if granted could restrain or prohibit), or otherwise materially adversely impacts on, the making of the Offer or the completion of any transaction contemplated by the Offer (whether subject to conditions or not) or the rights of the Bidder in respect of HDUF, the HDUF Group or the HDUF Stapled Securities to be acquired under the Offer; or requires the divestiture by the Bidder of any HDUF Stapled Securities, or the divestiture of any assets of the HDUF Group, the Bidder Group or otherwise; (e) (no material adverse effect) that no specified event occurs that will or is reasonably likely to have a material adverse effect on the assets and liabilities, financial position and performance, profits and losses or prospects of the HDUF Group, including as a result of making the Offer or the acquisition of HDUF Stapled Securities pursuant to the Offer. For these purposes, a specified event is: (i) (ii) an event or occurrence that occurs during the Offer Period (but not an event or occurrence required or specifically permitted or contemplated by this agreement or fairly disclosed in the Data Room Materials before the Announcement Date); or an event or occurrence that occurs prior to the Offer Period, but is not announced by HDUF to the ASX, fairly disclosed in the Data Room Materials, or something which the Bidder is otherwise aware of, in each case prior to the Announcement Date, however a specified event does not include any change in general political, economic or financial conditions or that affects the infrastructure or pipeline sector generally, including for the avoidance of doubt any change of law; (f) (no material acquisitions, disposals or new commitments) that except for any proposed transaction announced by HDUF to the ASX or fairly disclosed in the Data Room Materials before the Announcement Date, or which is approved by the Bidder (such approval not to be unreasonably withheld), none of the following events occurs during the period from the Announcement Date to the end of the Offer Period: (i) any HDUF Group Entity acquires, offers to acquire or lease or agrees to acquire or lease one or more companies, entities, securities, businesses or
(ii) (iii) (iv) (v) (vi) (vii) assets (or any interest in one or more companies, entities, securities, businesses or assets) for an amount in aggregate greater than $20 million, other than in the ordinary course of business, or makes an announcement in relation to such an acquisition, offer or agreement; any HDUF Group Entity disposes of or leases, offers to dispose of or lease or agrees to dispose of or lease one or more companies, entities, securities, businesses or assets (or any interest in one or more companies, entities, securities, businesses or assets) for an amount, or in respect of which the book value (as recorded in the HDUF Group s statement of financial position as at 30 June 2011) is, in aggregate, more than $20 million other than in the ordinary course of business, or makes an announcement in relation to such a disposition, offer or agreement; any HDUF Group Entity enters into, or offers to enter into or agrees to enter into, any agreement, joint venture, partnership, asset or profit sharing arrangement, management agreement, merger of businesses or of corporate entities or commitment which would require expenditure, or the foregoing of revenue, involving a commitment of or securities, assets or liabilities by any HDUF Group Entity of an amount which is, in aggregate, more than $20 million, other than in the ordinary course of business, or makes an announcement in relation to such an entry, offer or agreement; any HDUF Group Entity enters into any corporate transaction which would or would be likely to involve a material change in the manner in which any HDUF Group Entity conducts its business, the nature (including balance sheet classification), extent or value of any HDUF Group Entity s assets, or the nature (including balance sheet classification), extent or value of the liabilities of the HDUF Group; any HDUF Group Entity incurs, commits to, or brings forward the time for incurring or committing, or grants to another person a right the exercise of which would involve any HDUF Group Entity member incurring or committing to any capital expenditure or liability, or foregoing any revenue, for one or more related items or amounts of in aggregate more than $20 million, except for the incurrence of any capital expenditure in accordance with the day to day operating activities of the HDUF Group as conducted prior to the Announcement Date; any HDUF Group Entity waives any material third party default or accepts as a settlement or compromise of a material matter less than the full compensation due to any HDUF Group Entity; any HDUF Group Entity enters, agrees to enter into or renews any contract of service or varies or agrees to vary any existing contract of service with any current or proposed responsible entity, director or manager or makes or agrees to make any substantial change to the basis or amount of remuneration; (g) (remuneration payment) that after the Announcement Date and before the end of the Offer Period, no HDUF Group Entity pays or agrees to pay any retirement benefit
or allowance to any responsible entity, current or proposed director, executive officer, manager or other employee, or makes or agrees to make any substantial change to the basis or amount of remuneration or the terms of redundancy or other employee entitlements of any current or proposed director, executive officer, manager or other employee (except as required by law or provided under any superannuation, provident or retirement scheme in effect on the Announcement Date); (h) (change of control) that after the Announcement Date and before the end of the Offer Period, no person exercises or purports to exercise, has stated an intention to exercise, or has any rights (whether subject to conditions or not) under any provision of any agreement or other instrument, including an agreement for transportation of gas, to which any HDUF Group Entity is a party, or by or to which any HDUF Group Entity or any of its assets may be bound or be subject, which could result, to an extent which is material in the context of the HDUF Group taken as a whole, in: (i) (ii) (iii) any such agreement or other instrument being terminated, varied or modified or any action being taken or arising thereunder; the interest of any HDUF Group Entity in any firm, joint venture, trust, corporation or other entity (or any arrangements relating to such interest) being terminated, varied or modified; or the business of any HDUF Group Entity with any other person being adversely affected, as a result of the Offer, the acquisition of HDUF Stapled Securities by the Bidder, the Responsible Entity ceasing to be the responsible entity of HDUF, or the appointment of another entity as the new responsible entity of HDUF; (i) (j) (index decline) that between the Announcement Date and the end of the Offer Period, the S&P ASX 200 Index does not fall to (or below) a level which 15% lower than the level as at the end of the trading day immediately before the Announcement Date (threshold level) and remain at or below that threshold level until the Business Day immediately prior to the end of the Offer Period; (Other Occurrences) that during the period beginning on the Announcement Date and ending at the end of the Offer Period, none of the following events occur: (i) (ii) (iii) HDUF converts all or any of the HDUF Stapled Securities into a larger or smaller number of HDUF Stapled Securities; HDUF or any other member of the HDUF Group resolves to reduce its capital in any way (not including (1) any distributions to holders of HDUF Stapled Securities; and (2) any distribution by one HDUF Group Entity to another HDUF Group Entity) or reclassifies, combines, splits, redeems or repurchases directly or indirectly any securities; any HDUF Group Entity directly or indirectly, declares, pays or distributes, or incurs a liability to make or pay, any distribution, bonus or other share of its profits, income, capital or assets by way of any form of distribution (but not including (1) any distributions to holders of HDUF Stapled Securities; and (2) any distribution by one HDUF Group Entity to another HDUF Group Entity);
(iv) any HDUF Group Entity: (A) (B) enters into a withdrawal offer or buy-back agreement; or resolves to approve the terms of a withdrawal offer under the Corporations Act or the terms of a buy-back agreement under sections 257C(1) or 257D(1) of the Corporations Act; (v) (vi) (vii) (viii) (ix) (x) (xi) any HDUF Group Entity issues HDUF Stapled Securities or other securities other than the issue of HDUF Stapled Securities to the Responsible Entity in respect of any Performance Fee payable to the Responsible Entity under any HDUF Constitution, or grants an option over HDUF Stapled Securities or other securities, or agrees to make such an issue or grant such an option; any HDUF Group Entity issues, or agrees to issue, convertible notes or convertible units; any HDUF Group Entity disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property; any HDUF Group Entity grants, or agrees to grant, a security interest in the whole, or a substantial part, of its business or property; any HDUF Group Entity resolves to be wound up; a liquidator or provisional liquidator of any HDUF Group Entity is appointed; a court makes an order for the winding up of any HDUF Group Entity; (xii) an administrator of any HDUF Group Entity is appointed under sections 436A, 436B or 436C of the Corporations Act (or its equivalent under any foreign law); (xiii) (xiv) (xv) (xvi) (xvii) (xviii) any HDUF Group Entity executes a deed of company arrangement (or its equivalent under any foreign law); a receiver or a receiver and manager (or their equivalents under any foreign law) is appointed in relation to the whole, or a substantial part, of the property of any HDUF Group Entity; any HDUF Group Entity makes any change to its constitution or other constituent documents or a meeting being convened to consider a resolution to change a constitution or any other constituent document of any HDUF Group Entity; any HDUF Group Entity passes any special resolution; any of the HDUF Trusts are terminated; or the Responsible Entity effects or facilitates the resettlement of the property of any of the HDUF Trusts. For the purposes of this paragraph 1.1(j), a reference to an HDUF Group Entity acting or agreeing to act in a particular way is to be read, in relation to the HDUF Trusts, as either the Responsible Entity, in its capacity as responsible entity of the relevant trust, or (if relevant) the HDUF members acting or agreeing to act in that way; and
(k) (Litigation) that during the period beginning on the Announcement Date and ending at the end of the Offer Period no person announces, commences or threatens any litigation against an HDUF Group Entity (whether in aggregate or for any single litigation) which may or may reasonably result in a judgement against an HDUF Group Entity of more than $5 million. 4. Definitions In this Schedule: Bidder means PPA. Announcement Date means 13 July 2012. HDUF means Hastings Diversified Utilities Fund. HDUF Trusts means the HDUF Epic Trust (ARSN 109 770 961), HDUF Finance Trust (ARSN 109 770 765) and HDUF Further Investments Trust (ARSN 109 897 921) which together constitute HDUF. Responsible Entity means Hastings Funds Management Limited (ACN 058 693 388) in its capacity as responsible entity of each of the HDUF Trusts.
Appendix 2: Bid Implementation Deed