About the scheme
Questions:
What are EGI Shareholders being asked to consider?
EGI Shareholders are being asked to consider and vote on a proposed restructure of their current investment in EGI Shares.
This restructure is being proposed under a scheme of arrangement between EGI and its Shareholders. If the Scheme is approved and implemented, EGI Shareholders participating in the Scheme will receive one Ellerston Unit for each EGI Share they hold on the Scheme Record Date.
The Ellerston Fund is an unlisted unit trust. The responsible entity of the Ellerston Fund is Ellerston Capital Limited.
EGI Shareholders will be asked to consider and vote on the Scheme at the Scheme Meeting. If all of the Scheme Conditions are satisfied or waived (in accordance with the Scheme Implementation Deed), the Scheme will constitute a binding arrangement between EGI and each Scheme Shareholder, as a result of which they are entitled to receive Units in the Fund.
EGI Shareholders are also being asked to consider and vote on the Early Termination Fee Resolution to allow payment of the Early Termination Fee to Ellerston Capital (in its capacity as the Manager) in connection with the Scheme. The Scheme is conditional on EGI Shareholder approval of the Early Termination Fee Resolution, and so if the Early Termination Fee Resolution is not approved, the Scheme will not proceed.
If the Scheme proceeds, what will be the effect?
If the Scheme proceeds:
Scheme Shareholders will receive an issue of a new class of fully paid units in the Fund (Class B units), at an exchange ratio of one new Unit for every one EGI Share held on the Scheme Record Date – this is subject to Scheme Shareholders delivering their KYC Information to the Independent Custodian
all EGI Shares will be acquired by Ellerston Capital in its capacity as the Responsible Entity of the Ellerston Fund;
EGI will become wholly-owned by the Ellerston Fund and will be delisted from ASX;
Scheme Shareholders who have made a valid Election will receive additional Ellerston Units in accordance with their Election and the terms of the Scheme;
the portfolio of EGI's investments will ultimately be transferred to the Fund after the Scheme is implemented;
the current investment management agreement between EGI and Ellerston Capital will be terminated with effect on the Implementation Date and EGI will pay Ellerston Capital the Early Termination Fee (see further Section 13.5 of the Explanatory Booklet); and
Scheme Shareholders who receive Ellerston Units (both under the Scheme and the Ellerston Unit Offer) may request the withdrawal (redemption) of all or some of their Units in accordance with the constitution of the Fund after the Implementation Date.
Why is the Scheme being proposed?
The Scheme is being proposed to address the persistent discount to NTA at which EGI Shares have traded since the Company's listing on ASX in October 2014.
If the Scheme proceeds, EGI Shareholders will become Unitholders in the Ellerston Fund, being an unlisted investment vehicle with a Unit price that will reflect at all times the underlying NAV of the Fund's investment portfolio. As Unitholders in the Ellerston Fund, EGI Shareholders will have the ability to withdraw (redeem) all or some of their Units at a value equal to or close to the Fund's NAV, as opposed to the likely greater discount to NTA they would receive if they were to sell their EGI Shares on ASX.
Your Independent Directors consider that the Scheme provides a solution to this issue. Equally, for EGI Shareholders who wish to remain invested in a similar concentrated underlying global equity portfolio, the Scheme allows them to do so because the Ellerston Fund will pursue an investment strategy with a similar underlying portfolio to EGI that focuses on a concentrated global portfolio of small to mid-cap equities securities. The Ellerston Fund will be generally unhedged but it is aware of currency and cash exposures and will manage them in line with its macroeconomic and market outlook.
Am I entitled to participate in the Scheme?
If you remain an EGI Shareholder as at the Scheme Record Date (currently proposed to be 7.00pm on Tuesday, 11 August 2020), you will be entitled to participate in, and will be bound by, the Scheme.
What are the key conditions that need to be satisfied before the Scheme can proceed?
The key remaining conditions that must be satisfied are:
EGI Shareholders approving the Scheme by passing the Scheme Resolution by the requisite majorities at the Scheme Meeting;
EGI Shareholders passing the Early Termination Fee Resolution at the General Meeting;
the KYC Information Condition being satisfied;
the Court approving the Scheme;
there being no breach of any EGI Representations and Warranties and no breach of any Responsible Entity Representations and Warranties prior to the Delivery Time on the date of the Second Court Hearing.
EGI will make a statement at the commencement of the Scheme Meeting regarding the status of these conditions.
As at the date of the Explanatory Booklet, neither EGI nor the Responsible Entity is aware of any reason why the Conditions will not be satisfied.
What happens if the Scheme does not proceed?
If the Scheme is not approved by EGI Shareholders or is not approved by the Court and you still hold any EGI Shares at either of those points in time:
you will not receive the Scheme Consideration;
any additional Units you have applied for under the Ellerston Unit Offer will not be issued;
you will retain your current investment in EGI Shares and in doing so will continue to retain the benefits of an investment in EGI Shares and continue to be exposed to the risks presently associated with this investment. These include general risks of holding shares and risks that are specific to EGI's business as described in Section 9.2 of the Explanatory Booklet;
the expected advantages of the Scheme, as outlined in Section 2.3 of the Explanatory Booklet, will not be realised;
equally some of the potential disadvantages of the Scheme identified in Section 2.4 of the Explanatory Booklet, will no longer be relevant;
EGI will have incurred substantial costs (being approximately $850,000) and expended management time and resources for a proposed restructure that does not proceed; and
the Independent Directors consider that the price of EGI Shares on ASX may fall if no comparable or Superior Proposal emerges.
What are the risks of the Scheme?
The risks associated with the Scheme include but are not limited to:
the risk that the Scheme is not approved by EGI Shareholders at the Scheme Meeting or the Early Termination Fee Resolution is not passed by EGI Shareholders at the General Meeting or the KYC Information Condition is not satisfied, in which case EGI will have incurred substantial costs associated with a failed Scheme; and
the Scheme may deliver cost savings in operating synergies following its implementation. However, it is possible that the integration of EGI and the Ellerston Fund will be more difficult or take more time than currently anticipated, and could delay the realisation of scale, synergy and other benefits expected to result from the Scheme.
What are the risks of being a Unitholder in the Ellerston Fund?
The Ellerston Fund will pursue an investment strategy with a similar underlying portfolio to EGI that focuses on a concentrated global portfolio of small to mid-cap equities securities. The Ellerston Fund will be generally unhedged but it is aware of currency and cash exposures and will manage them in line with its macroeconomic and market outlook. Accordingly, the risks of being a Unitholder in the Ellerston Fund are similar in many respects to the risks to which you are currently exposed as an EGI Shareholder.
What are the choices for EGI Shareholders?
EGI Shareholders may:
vote in favour of the Scheme Resolution at the Scheme Meeting and in favour of the Early Termination Fee Resolution at the General Meeting;
vote against the Scheme Resolution at the Scheme Meeting and against the Early Termination Fee Resolution at the General Meeting;
vote in favour of the Scheme Resolution at the Scheme Meeting but against the Early Termination Fee Resolution at the General Meeting (or vice versa) (noting that in order for the Scheme to be implemented both the Scheme Resolution AND the Early Termination Fee Resolution must be approved);
sell their EGI Shares before trading is suspended on the Effective Date; or
do nothing.
EGI Shareholders who support the Scheme may also Elect to participate in the Ellerston Unit Offer.
What happens if a Competing Proposal for EGI emerges?
Although no Competing Proposal has emerged as at the date of the Explanatory Booklet, it is possible that one could emerge. If an unsolicited Competing Proposal for EGI is received before the Scheme Meeting, the Independent Directors will carefully consider it to determine whether it is a Superior Proposal and will inform you of any material developments which may affect the Independent Directors' view that the Scheme is presently the most favourable proposal for all your EGI Shares.
Can I sell my EGI Shares now?
Yes. EGI Shareholders may sell their EGI Shares on ASX or Chi-X at the prevailing market price at any time before the close of trading on ASX on the Effective Date (currently proposed to be Friday, 7 August 2020). You will not be able to sell your EGI Shares on market after the Effective Date, as this will be the last day of trading in EGI Shares on ASX and Chi-X before trading in EGI Shares on ASX is suspended.
You may however seek to sell your EGI Shares off-market after the Effective Date but before the Scheme Record Date (currently proposed to be 7.00pm on Tuesday, 11 August 2020).
If you sell your EGI Shares before the Scheme Record Date you:
will receive the proceeds from the sale of your EGI Shares sooner than you would receive your Scheme Consideration under the Scheme (noting that your sale proceeds may vary from the Scheme Consideration);
may incur a brokerage charge if you sell your EGI Shares on market;
will not be able to participate in the Scheme or a Superior Proposal, if one emerges; and
may be liable for tax on the disposal of their EGI Shares, (as may also be the case for Scheme Shareholders, as to which see Section 10 of the Explanatory Booklet further details).
Will I be giving any warranties in respect of my EGI Shares?
Yes. Each Scheme Shareholder will be deemed to have warranted to EGI and the Responsible Entity that all of their EGI Shares will, at the date of transfer under the Scheme, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and interests of third parties of any kind, and restrictions on transfer of any kind, and that they have full power and capacity to transfer their EGI Shares to the Responsible Entity (together with all rights and entitlements attaching to such shares).
You should ensure that these warranties can be given by you prior to, and remain correct as at, the Implementation Date.
Under what circumstances can the Responsible Entity terminate the Scheme Implementation Deed?
The Responsible Entity can terminate the Scheme Implementation Deed at any time before the Delivery Time on the Second Court Date if the Independent Board Committee withdraws or adversely changes their recommendation that EGI Shareholders vote in favour of the Scheme or has recommended or made a statement supporting a Competing Proposal.
The Scheme Implementation Deed may be terminated in other certain circumstances, details of which are summarised in Section 11.4 of the Explanatory Booklet. If the Scheme Implementation Deed is terminated, the Scheme will not proceed.
What is happening with the existing EGI Management Agreement?
EGI and Ellerston Capital (in its capacity as the Manager) have agreed under the Scheme Implementation Deed that, subject to the Scheme becoming Effective, the EGI Management Agreement will be terminated with effect from the Implementation Date.
On that date, Ellerston Capital will be entitled to receive from EGI the Early Termination Fee, being 1.50% of the net tangible asset value of each security in each class of the Company's asset portfolio as calculated under the ASX Listing Rules as at the Implementation Date.
The amount of the Early Termination Fee was negotiated between the Independent Directors and Ellerston Capital (in its capacity as the Manager) and is lower than the amount to which Ellerston Capital (in its capacity as the Manager) is contractually entitled under the EGI Management Agreement.
Payment of the agreed Early Termination Fee by EGI to Ellerston Capital (in its capacity as the Manager) requires the approval of EGI Shareholders under Chapter 2E of the Corporations Act. EGI has convened the General Meeting for EGI Shareholders to consider and vote on the Early Termination Fee Resolution.
Scheme Consideration and KYC Information
Questions:
What will I receive if the Scheme is implemented?
If the Scheme is approved and implemented, EGI Shareholders will receive one Ellerston Unit for each EGI Share they hold on the Scheme Record Date (currently proposed to be 7.00pm on Tuesday, 11 August 2020), provided they have returned their KYC Information to the Independent Custodian. The timing for the receipt of your KYC Information is as follows:
For Shareholders making an Election to participate in the Ellerston Unit Offer - you must complete and return your green Election and Subscription Form (which has fields for the provision of your KYC Information) by the Election Cut-Off Date (being 7.00pm (Sydney time) on Thursday, 16 July 2020).
For Shareholders not making an Election to participate in the Ellerston Unit Offer - you must complete and return your yellow KYC Information Form by the KYC Information Cut-Off Date (being 7.00pm on Wednesday, 5 August 2020).
Failure to provide your KYC Information by these dates will not affect the entitlement of the Responsible Entity to acquire your Shares on the Implementation Date but this delay will affect the nature of the Scheme Consideration you will receive on the Implementation Date (and before your Shares are so acquired).
If I am a Foreign Scheme Shareholder, what consideration will I receive if the Scheme is implemented?
Foreign Scheme Shareholders will not receive Ellerston Units under the Scheme. Instead, the Ellerston Units that would otherwise have been issued to them will be issued to the Independent Custodian on the Implementation Date (Ineligible Units).
The Independent Custodian will apply to withdraw (redeem) the Ineligible Units as soon as reasonably practicable and in any event, not more than 20 Business Days after the Implementation Date.
The Independent Custodian will pay the withdrawal proceeds into a dedicated trust account. The release of those proceeds to each Foreign Scheme Shareholder will require them to first provide their KYC Information to the Independent Custodian and will be less all applicable taxes and charges incurred by the Independent Custodian in connection with the withdrawal.
When and how will I receive my Scheme Consideration?
If all approvals and conditions for the Scheme are satisfied or waived (as applicable), the Scheme Consideration will be provided to all Scheme Shareholders on the Implementation Date (currently proposed to be Tuesday, 18 August 2020). The nature of the Scheme Consideration you will receive on the Implementation Date will depend on whether or not you have provided your KYC Information to the Independent Custodian before the KYC Information Cut-Off Date. For Scheme Shareholders who have provided their KYC Information to the Independent Custodian before the KYC Information Cut-Off Date, they will receive an issue of Ellerston Fund Units as their Scheme Consideration on the Implementation Date.
For Scheme Shareholders who have not provided their KYC Information to the Independent Custodian before the KYC Information Cut-Off Date, the Ellerston Funds Units attributable to them will be issued on the Implementation Date to the Independent Custodian, to be dealt with by it in accordance with the Scheme.
What is the Customer Identification Procedure?
The Ellerston Fund is an unlisted unit trust. Accordingly, in order for the Responsible Entity to be 'reasonably satisfied' of the identity of the holders of the Ellerston Units, the Responsible Entity is required to collect certain customer identification information (and verify that information) in compliance with the AML/CTF Act before it can issue Ellerston Units to Scheme Shareholders entitled to receive Ellerston Units.
Customer identification information may include detailed know your customer (KYC) information in relation to a Scheme Shareholder, such as, for an individual Scheme Shareholder, their name, address, and date of birth and for a Scheme Shareholder that is a corporation, details of their directors and beneficial owners, and where a Scheme Shareholder is a trustee, details of the trust and beneficiaries.
Failure to provide your KYC Information by the KYC-Information Cut-Off Date will affect the nature of the Scheme Consideration you will receive on the Implementation Date.
What am I required to provide as part of the Customer Identification Procedure?
Your required KYC Information is contained in the Election and Subscription Form (for those Shareholders who wish to make an Election to participate in the Ellerston Unit Offer) or in the KYC Information Form (for those Shareholders who do not wish to make any such Election). Both forms accompany the Explanatory Booklet. In order to receive Ellerston Units as your Scheme Consideration, you must complete and return to the Independent Custodian either form in accordance with the instructions on the relevant form. Please complete every part of the form that is relevant to the type of EGI Shareholder that you are. You will also be required to provide certified copies of certain identification documents. Please refer to section J of the Election and Subscription Form or section I of the KYC Information Form (whichever is applicable to you) for further details.
Note that if it is not possible for you to obtain certified copies due to COVID-19 pandemic measures implemented, recommended or adopted to prevent the spread of the COVID-19 virus, uncertified copies may be acceptable. Please inform us that this is the case when providing us with the relevant documents.
Why am I required to complete the Customer Identification Procedure?
In 2006 the Federal Government enacted the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act).
The purpose of this legislation is to enable Australia’s financial sector to maintain international business relationships, detect and prevent money laundering and terrorism financing by meeting the needs of law enforcement agencies and to bring Australia in line with international standards.
The Responsible Entity is required to comply with the AML/CTF Act before issuing Units under the Scheme, the Ellerston Unit Offer or otherwise.
What will happen if I have not completed the Customer Identification Procedure by the KYC Information Cut-Off Date?
Your KYC Information must be received by the Independent Custodian on or before 7.00pm on either the Election Cut-Off Date (for Shareholders making an Election to participate in the Ellerston Unit Offer) or the KYC Information Cut-Off Date (for Shareholders not making such an Election) if you are a Scheme Shareholder and you are to receive your Ellerston Units on the Implementation Date.
If your KYC Information is received by the Independent Custodian after this time, the Ellerston Funds Units attributable to you will be issued on the Implementation Date to the Independent Custodian, to be dealt with by it in accordance with the Scheme.
Failure to return your KYC Information on time will not affect the Responsible Entity's entitlement under the Scheme to receive a transfer of all of your Shares on the Implementation Date.
What are the tax implications of the Scheme?
The tax implications for the Scheme Shareholders if the Scheme is approved and implemented will depend on the specific taxation circumstances of each Scheme Shareholder.
Section 10 of the Explanatory Booklet provides a general outline of the Australian income tax consequences for Scheme Shareholders who dispose of their EGI Shares under the Scheme.
You should consult with your tax adviser regarding the tax consequences of disposing of your EGI Shares in accordance with the Scheme in light of current tax laws and your particular circumstances.
Will I have to pay brokerage fees or stamp duty?
No, you will not have to pay brokerage or stamp duty on either the transfer of your EGI Shares to the Responsible Entity or the receipt of Ellerston Units under the Scheme.
If you dispose of your EGI Shares before the Scheme Record Date, brokerage fees may be payable.
About the Ellerston Fund
Questions:
What is the Ellerston Fund?
The Ellerston Fund is an existing unlisted unit trust, established in New South Wales, Australia in or around November 2015 and registered with ASIC so that it is a registered managed investment scheme.
The Ellerston Fund pursues an investment strategy that that has a similar underlying global equity portfolio to EGI.
Who is the responsible entity of the Ellerston Fund?
Ellerston Capital Limited ACN 110 397 674.
As the Responsible Entity, Ellerston Capital Limited will be responsible for the management and governance of the Fund. Ellerston Capital Limited is currently the investment manager of EGI.
Why does EGI wish to 'convert' to an unlisted unit trust?
Your Independent Directors consider that an unlisted unit trust is a preferable vehicle through which to offer investors exposure to EGI's investment strategy.
Your Independent Directors also consider that a unit trust offers significant benefits to EGI Shareholders, including but not limited to improved liquidity and lower operating costs.
What is the Withdrawal Facility and how does it work?
The Ellerston Fund will implement a Withdrawal Facility. Subject to certain withdrawal windows and withdrawal restrictions, you will be able to withdraw (redeem) some or all of your Units by giving the Ellerston Fund registry written notice.
What are the intentions of the Responsible Entity with regards to the investments of the Fund following implementation of the Scheme?
The Responsible Entity intends to employ an investment strategy for its underlying global equity portfolio that is similar to that currently employed for EGI, subject to certain changes including that the Fund's portfolio of investments will generally be unhedged. Nevertheless, the Responsible Entity is aware of currency and cash exposures and will manage them in line with its macroeconomic and market outlook.
What are the benefits of being invested in the Ellerston Fund?
The expected benefits of being a Unitholder in the Ellerston Fund compared to being an EGI Shareholder include:
The Ellerston Fund will pursue an investment strategy with a similar underlying portfolio to EGI that focuses on a concentrated global portfolio of small to mid-cap equities securities. The Ellerston Fund will be generally unhedged but it is aware of currency and cash exposures and will manage them in line with its macroeconomic and market outlook;
Scheme Shareholders will be able to better manage the liquidity of their current investment by applying for additional Units or requesting the withdrawal (redemption) of all or some of their Units at or close to the Fund's NAV;
the costs of operating as an unlisted registered managed investment scheme are expected to be lower than operating as an ASX listed investment company;
a two year waiver of management fees (commencing on the Implementation Date) applies to EGI Shareholders receiving Ellerston Fund Units under the Scheme and (for those making a valid Election) under the Ellerston Unit Offer and who maintain their investment for at least two years after the Implementation Date. Therefore, the management expense structure should be lower than what currently applies to EGI during this two year period; and unlike EGI Shares, the price of Units will not be subject directly to exogenous market forces such as broader investor sentiment applicable to the share market generally.
What are the risks of being invested in the Ellerston Fund?
Section 9.3 of the Explanatory Booklet sets out the risks to which you will be exposed as an Ellerston Fund Unitholder.
The risks are in many ways similar, but not identical to, the risks to which you are currently exposed as an EGI Shareholder.
About the Ellerston Unit Offer
Questions:
What is the Ellerston Unit Offer
EGI Shareholders (other than those who are classified under the Scheme as Foreign Scheme Shareholders) may to elect to 'top up' the Units they will receive in the Ellerston Fund as Scheme Consideration by subscribing for additional Units under the Ellerston Unit Offer.
Can I participate in the Ellerston Unit Offer
All EGI Shareholders (other than those who are classified under the Scheme as Foreign Scheme Shareholders or those who did not hold any EGI Shares as at the Election Calculation Date) may participate in the Ellerston Unit Offer in respect of their EGI Shares (if any) held at the Election Calculation Date and the Scheme Record Date.
Is there a maximum I can invest in the Ellerston Unit Offer?
Yes. For each EGI Shareholder, this optional additional investment in the Ellerston Fund will be for a maximum dollar amount up to the approximate value of their current EGI Shareholding as at the Election Calculation Date, being Friday, 5 June 2020.
Please note that if you acquire further EGI Shares after the Election Calculation Date, those additional EGI Shares will not increase your capacity to participate in the Ellerston Unit Offer.
What are the Independent Directors' intentions in relation to the Ellerston Unit Offer?
In the absence of a Superior Proposal, each of your Independent Directors (with the exception of Paul Dortkamp) also intends to make an Election to participate in the Ellerston Unit Offer in respect of some or all EGI Shares held or controlled by them on the Election Calculation Date and the Scheme Record Date.
However, your Independent Directors make no recommendation in relation to whether you should make an Election to participate in the Ellerston Unit Offer. You should form your own view as to whether you wish to make any such Election based on your individual circumstances, financial situation, taxation position, investment objectives and risk profile. You should also consider obtaining professional advice appropriate to your specific circumstances before making any Election.
What should I do if I want to participate in the Ellerston Fund Offer?
If you wish to elect to receive additional Ellerston Fund Units, you must complete the accompanying green Election and Subscription Form in accordance with the instructions on that form. This form includes fields for the provision of your KYC Information – see section J of the form. You should disregard the yellow KYC Information Form (as that form is only relevant to Shareholders who do not wish to make an Election to participate in the Ellerston Unit Offer).
Please return the completed original green Election and Subscription Form so that it is received by the Independent Custodian by the Election Cut-Off Date (currently expected to be 7.00pm (Sydney time) on Thursday, 16 July 2020). A reply paid envelope is enclosed for the return of your green Election and Subscription Form.
The Election and Subscription Form also includes payment instructions for the receipt of your Subscription Monies. Please also ensure that your Subscription Monies are received in accordance with the instructions on the green Election and Subscription Form by the Election Cut-Off Date (currently expected to be 7.00pm (Sydney time) on Thursday, 16 July 2020).
Can I vary, withdraw or revoke my Election?
Yes. You can vary your Election at any time before the Election Cut-Off Date. To do so, you need to request a replacement Election and Subscription Form and submit this before the Election Cut-Off Date.
You can also withdraw or revoke your Election by providing written notice to the Independent Custodian but will need to do so before the Election Cut-Off Date.
Any variation, withdrawal or revocation after the Election Cut-Off Date will only be accepted at the Responsible Entity's absolute discretion.
Will the two year waiver of management fees apply to Units issued under the Ellerston Unit Offer?
Yes. The two year waiver of management fees by the Responsible Entity will commence on the Implementation Date and will apply to all Units issued under the Scheme as well as under the Ellerston Unit Offer.
Instead of participating in the Ellerston Unit Offer, can I just purchase more EGI Shares on market?
Yes. You may wish to obtain additional Units by acquiring more EGI Shares through on market purchases prior to the Scheme Record Date (therefore increasing the number of Units that you will receive as Scheme Consideration). However, this approach will result in you incurring brokerage charges and will be subject to the prevailing trading price of EGI Shares on ASX.
Where can I find further information on the Ellerston Unit Offer?
Please refer to Section 1.4 of the Explanatory Booklet and the PDS of the Ellerston Fund, at Appendix 7 for further details on the Ellerston Unit Offer.
Independent Directors Recommendations & Intentions
Questions:
Who are the Independent Directors?
The Independent Directors are all of the EGI directors other than Mr Ashok Jacob, being:
Mr Paul Dortkamp;
Mr Samuel Brougham; and
Mr William Best
What do the Independent Directors recommend?
The Independent Directors unanimously recommend that you vote in favour of the Scheme Resolution at the Scheme Meeting and in favour of the Early Termination Fee Resolution at the General Meeting, in the absence of a Superior Proposal.
How are the Independent Directors going to vote?
Each Independent Director intends to vote all EGI Shares held or controlled by them in favour of the Scheme Resolution and the Early Termination Fee Resolution, in the absence of a Superior Proposal.
What is the opinion of the Independent Expert?
The Independent Expert has concluded that the Scheme is fair and reasonable and in the best interest of EGI Shareholders, in the absence of a superior proposal.
About Voting
Questions:
When and where will the Scheme Meeting be held?
The Scheme Meeting will be held as a virtual (online only) meeting at 11.00am (Sydney time) on Friday, 31 July 2020. There will be no physical meeting where EGI Shareholders and proxies can attend in person.
You can watch and participate in the Scheme Meeting by logging in online at https://agmlive.link/EGI20.
What am I being asked to vote on?
As an EGI Shareholder, you are being asked to vote at the Scheme Meeting on whether the Scheme should proceed and to vote at the General Meeting on whether the Early Termination Fee Resolution should be passed.
What voting majority is required to approve the Scheme?
or the Scheme to proceed, the Scheme Resolution must be passed by:
a majority in number (more than 50%) of EGI Shareholders present and voting at the Scheme Meeting (personally or by proxy, attorney, or in the case of an EGI Shareholder or proxy who is a corporation, by corporate representative) (Headcount Test); and
at least 75% of the total number of votes which are cast at the Scheme Meeting by EGI Shareholders (personally or by proxy, attorney, or in the case of an EGI Shareholder or proxy who is a corporation, by corporate representative).
The Court has a statutory discretion to disregard the Headcount Test for the purpose of the Scheme Meeting.
The Court must also approve the Scheme before it can become Effective.
What voting majority is required to approve the Scheme?
The Early Termination Fee Resolution requires the approval of a simple majority (more than 50%) of the votes cast by EGI Shareholders present and voting at the General Meeting, whether in person, by proxy or attorney or, in the case of a corporate EGI Shareholder or proxy, by a representative.
How do the Scheme Resolution and the General Meeting Resolution inter-relate?
In order for the Scheme to proceed, EGI Shareholders must pass the Scheme Resolution at the Scheme Meeting and the Early Termination Fee Resolution at the General Meeting by the required majorities.
The Scheme Resolution and the Early Termination Fee Resolution are inter-dependent resolutions, meaning that unless each are approved, the Scheme cannot proceed and the Early Termination Fee would not be paid by EGI to Ellerston Capital.
This inter-dependency reflects the commercially integrated nature of the overall proposal that EGI Shareholders are being asked to consider and vote on. Specifically, the Scheme, the termination of the current fixed term EGI Management Agreement (which still has another four years to run), the payment of the negotiated Early Termination Fee and the two year waiver of management fees by the Responsible Entity of the Ellerston Fund collectively represent a single, integrated proposal for EGI Shareholders to vote on.
Am I entitled to vote?
If you are registered as an EGI Shareholder on the Share Register at 7.00pm on Wednesday, 29 July 2020, you will be entitled to attend and vote at the Meetings (subject to the voting exclusions that apply to Ellerston Capital and Ashok Jacob).
Is voting compulsory?
Voting is not compulsory. However, the Scheme will only be successful if it is approved by the required majorities of EGI Shareholders and if the Early Termination Fee Resolution is passed at the General Meeting. Therefore voting is important and the Independent Directors encourage you to vote.
If the Scheme is approved and implemented, you will be bound by the Scheme whether or not you were present at the Scheme Meeting, whether or not you voted and whether or not you voted in favour of it or against it.
How do I vote in person?
You may watch and participate in the virtual Scheme Meeting to be held at 11.00 am (Sydney time) on Friday, 31 July 2020 by logging in online at https://agmlive.link/EGI20
You can watch and participate in the General Meeting to be held at 12.00 noon (Sydney time) on Friday, 31 July 2020 or as soon as reasonably practicable after the Scheme Meeting has concluded by logging in online at https://agmlive.link/EGIGM20 following the conclusion or adjournment of the Scheme Meeting.
How do I vote if I'm unable to participate in the virtual Meetings or if I don't wish to participate in the virtual Meetings?
If you are unable to watch and participate in the virtual Meetings by logging in online or if you do not wish to do so, you may vote by completing and lodging the Scheme Meeting Proxy Form for the Scheme Meeting, and the General Meeting Proxy Form for the General Meeting. The Proxy Forms can be lodged by mail or by fax. Alternatively, you may choose to appoint a proxy for the Meetings online.
You can also vote by appointing a corporate representative (if you are a corporate shareholder) or an attorney.
Please note that if you wish to revoke your proxy appointments, you will need to advise the Share Registry of this revocation prior to the commencement of the Scheme Meeting. You may do so by contacting the Share Registry on +61 1300 551 627 Monday to Friday between 9.00am and 5.00pm (Sydney time). Unless your proxy's appointment is revoked, you will not be allowed to vote at the Scheme Meeting or the General Meeting. This means that if you appoint a proxy prior to the Scheme Meeting or the General Meeting but then decide to attend the Scheme Meeting or the General Meeting yourself, your proxy retains the ability to vote, not you.
Full details of how to vote and how to lodge the Proxy Forms, corporate representative appointment or power of attorney or appoint a proxy online are set out in Section 4.5 of the Explanatory Booklet.
When will the results of the Meetings be known?
The results of the Meetings will be available during the Meetings and will be announced online and to ASX shortly after the conclusion of the Meetings.
Even if the Scheme Resolution is passed at the Scheme Meeting, the Scheme will only proceed if Court approval of the Scheme is obtained and all of the other Scheme Conditions are satisfied or waived.
What should I do if I wish to support the Scheme and Early Termination Fee Resolution?
If you support the Scheme and Early Termination Fee Resolution you should participate in the virtual Scheme Meeting by logging in online and voting in favour of the Scheme Resolution. You should also participate in the virtual General Meeting by logging in online and voting in favour of the Early Termination Fee Resolution. Alternatively, you may lodge proxy votes in favour of the Scheme Resolution and Early Termination Fee Resolution.
You should also complete the accompanying KYC Information Form, or if you are eligible and wish to participate in the Ellerston Unit Offer, the Election and Subscription Form in accordance with the instructions on the relevant form. Please complete every part of the KYC Information Form or Election and Subscription Form that is relevant to the type of EGI Shareholder that you are.
Please return the relevant form so that it is received by the Independent Custodian by the relevant deadlines being:
in relation to the Election and Subscription Form, by the Election Cut-Off Date (being 7.00pm (Sydney time) on Thursday, 16 July 2020; or
in relation to the KYC Information Form, by the KYC Information Cut-Off Date (7.00pm (Sydney time) on Wednesday, 5 August 2020.
What should I do if I wish to oppose the Scheme or the Early Termination Fee Resolution?
If you do not support the Scheme or the Early Termination Fee Resolution:
you should attend the Scheme Meeting or the General Meeting, either by logging online personally or by proxy, and vote against the Scheme Resolution or the Early Termination Fee Resolution or both Resolutions; and/or
if Shareholders pass the Scheme Resolution at the Scheme Meeting and the Early Termination Fee Resolution at the General Meeting, you may wish to oppose the approval of the Scheme, by filing and serving a notice of opposition and any other supporting documents on EGI by at least one day before the Second Court Date and attending the Second Court Hearing.
Can I be bound by the Scheme if I do not vote or if I voted against its approval?
Yes, if the Scheme is approved and implemented your EGI Shares will be transferred to the Responsible Entity and, you will receive the Scheme Consideration for each of your EGI Shares (subject to you having provided your KYC Information), even if you were not present at the Meetings, you did not vote or you voted against the Scheme or the Early Termination Fee Resolution or both.
What are my alternatives?
As an EGI Shareholder you have the option of voting on the Scheme and Early Termination Fee Resolution, selling your shares prior to the Scheme Record Date and/or not voting on the Scheme.
General Questions
Questions:
Do I have to sign anything in relation to the Scheme?
You are required to sign and return:
to the Independent Custodian, your KYC Information (provision for which is contained in the green Election and Subscription Form for Shareholders who wish to participate in the Ellerston Unit Offer or in the yellow KYC Information Form for Shareholders who do not wish to participate in the Ellerston Unit Offer); and
if you wish to vote by proxy, to the Share Registry, your Scheme Meeting Proxy Form and your General Meeting Proxy Form,
by the dates specified in the Important Dates and Times section at page 10 of the Explanatory Booklet.
If the Scheme becomes Effective and the Scheme is implemented, EGI will automatically have authority to sign a transfer document on behalf of all Scheme Shareholders.
You should be aware that, if you are a Scheme Shareholder, you will be deemed to have warranted to EGI, and authorised EGI to warrant to the Responsible Entity on your behalf, that:
all of your EGI Shares are fully paid and free from all encumbrances (for example, mortgages or other Security Interests); and
you have full power and capacity to transfer your EGI Shares to the Responsible Entity.
You should ensure that these warranties can be given by you prior to, and remain correct as at, the Implementation Date.
What will happen if the Scheme is approved by the Court?
If the Court makes orders approving the Scheme, EGI will lodge with ASIC an office copy of the Court orders given under section 411(4)(b) of the Corporations Act approving the Scheme. It is expected that this will occur on the Business Day immediately following the Second Court Hearing.
What happens on the Implementation Date?
On the Implementation Date, the Responsible Entity will acquire all of the EGI Shares and you will receive your Scheme Consideration (provided you have given your KYC Information to the Independent Custodian before the KYC Information Cut-Off Date).
What other information is available and who can help answer my questions about the Scheme?
If you have any questions about the Scheme, please contact the EGI Shareholder Information Line on 1300 671 080 within Australia or +61 2 8022 7953 if outside Australia Monday to Friday between 9.00am and 5.00pm (Sydney time).
For information about your individual financial or taxation circumstances please consult your financial, legal, taxation or other professional adviser.
Useful Contacts
Questions:
If you have any questions about the Scheme, please contact Ellerston Investor Relations on +61 2 9021 7701, or info@ellerstoncapital.com Monday to Friday between 9.00am and 5.00pm (Sydney time).
If you have any questions regarding the EGI Registry, contact Mainstream Fund Services on +61 2 8259 8550 or Ellerston@mainstreamgroup.com. You can also write to Ellerston C/O Mainstream Fund Services – Unit Registry GPO Box 4968, Sydney NSW 2001.
Important Forms & Documents
Please review all documents and requirements.