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Origin’s fate hangs in the balance

By next Sunday, it will be clear whether Canada’s Brookfield and EIG of the US have a chance of gaining approval at Origin Energy’s adjourned shareholders’ meeting on Monday, December 4.

Origin’s board still opposes a third takeover proposal from the two bidders, which emerged after last Thursday’s aborted meeting to vote on the scheme of arrangement offer ($9.43 a share). On Thursday, Chairman Scott Perkins described the third offer as “inferior” and noted that it had not undergone scrutiny by an independent expert, unlike the first two offers (the price in the second offer fell within the range of the independent valuation).

Monday’s media reports continued in the same vein, suggesting that the Origin board is leaning toward rejecting the proposal from Canada’s Brookfield and its private equity partner EIG, seen as a last-ditch effort to acquire the ASX-listed electricity and gas giant.

The reports indicated that the board remains unconvinced of the value of the third deal, which would involve Brookfield paying $12.3 billion for Origin’s energy generation and retailing businesses, with EIG subsequently acquiring the remainder of the company’s assets, primarily the APLNG stake.

The alternative proposal would require only a 50.1% approval from shareholders and would value the shares at $9.08 to $9.30 each—less than the $9.43 in the scheme of arrangement’s second offer, which is unlikely to gain approval, with major shareholder AustralianSuper leading a group opposed to it. This requires 75% of the shares voted at the meeting to pass, a prospect that Origin confirmed as unlikely after last Thursday’s meeting.

Some shareholders, like South African fund manager Alan Grey, want the alternative proposal to be presented at the meeting. However, without an independent expert’s report and a formal proposal with a board recommendation, this scenario seems unlikely.

Origin announced on Monday that the deadline for new or revised proxies is now 2 pm on Saturday. However, hard copies of the new or revised proxies must have been received by 5 pm on Friday, December 1.

Shareholders who have already submitted their proxy form can revise their proxy instructions either online or by completing and returning a replacement proxy form. To be valid, proxy forms must be received by the share registry no later than 2:00 pm on Saturday, December 2, 2023. Any proxy form received before this time will revoke any previously submitted proxy instruction. As the proxy deadline falls on a Saturday, hard copy proxy forms should be provided to Origin’s share registry by 5:00 pm on Friday, December 1, 2023.

Monday’s meeting will take place at 2 pm in Sydney at the Shangri-La hotel in Sydney’s Rocks, a different location from last Thursday’s meeting.

All shareholders registered as of November 21 will be eligible to vote at the adjourned meeting.

At the same time, the group of seven banks assembling a $3 billion bridge loan for EIG as part of the second $9.43 a share bid has temporarily halted the deal and may require further information and approvals from their credit committees.

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