At meetings held on 17 August 2011, Centrebet International Limited (Centrebet) shareholders and performance rightholders approved schemes of arrangement whereby Sbet Australia Pty Limited (Sportingbet), a wholly owned subsidiary of Sportingbet plc, acquired all of the Shares and Performance Rights of Centrebet. Please click for a copy of the Scheme Booklet.
The schemes of arrangement were implemented on 31 August 2011 and Centrebet was removed from the official list of ASX Limited on 1 September 2011.
In consideration for the transfer of Centrebet Shares and Performance Rights to Sportingbet, on 1 September 2011, the “scheme consideration” was distributed to shareholders and performance right holders. The scheme consideration consisted of:
In addition, the Centrebet Option holders received cash consideration, being the difference between $2.00 and the exercise price of each option, plus one Litigation Claim Right and one Litigation Claim Unit for each Option they held.
The Litigation Claim
If the Litigation Claim is successful, all payments of funds from any proceeds of the Litigation Claim will come from Sportingbet pursuant to its obligations under the Litigation Management Deed. Effectively, holders of the Litigation Claim Rights and Litigation Claim Units will be entitled to 90% of the net proceeds of the Litigation Claim after deducting specified costs and expenses incurred in connection with the Litigation Claim.
Under the terms of the Litigation Management Deed, Sportingbet is not required to make any payments until either of the following events has occurred:
- the Litigation Claim is wholly and finally determined so there is no possibility of any further appeal (or other proceedings) with any prospects of success being brought by any party to the Litigation Claim, evidenced by written advice to that effect from Senior Counsel; or
- the Litigation Claim is wholly and unconditionally settled or wholly or unconditionally withdrawn, as determined by the Claim Committee, or failing such determination, as advised in writing by Senior Counsel.
The value of any cash refund is to be paid by Sportingbet in accordance with the Payment Waterfall set out in the Litigation Management Deed within 28 days of receipt of the cash refund by any member of the Sportingbet Group or the Centrebet Group. Sportingbet’s payment obligation is not secured.
If any member of the Sportingbet Group or the Centrebet Group receives any carry forward loss as a result of the Litigation Claim and is able to use any of the carry forward loss to reduce the amount of GST that would otherwise be payable, the value of any carry forward loss utilised will be paid by Sportingbet in accordance with the Payment Waterfall. Sportingbet will pay such amount within 7 days from the date which any member of the Sportingbet Group or Centrebet Group would otherwise have been liable to pay an amount of GST but for the receipt of such carry forward loss. Again, Sportingbet’s payment obligation is not secured.
Status of the Litigation Claim
- On 26 July 2011, the Federal Court delivered a favourable judgment in the matter of Sportsbet Pty Limited v Commissioner of Taxation (“Sportsbet Judgement”).
- On 18 August 2011, Centrebet announced that they had been advised that the Commissioner decided not to appeal against the Sportsbet Judgement and that Centrebet considered the Sportsbet Judgement formed a reasonable basis to hold the view that the Federal Court would be likely to determine the Centrebet Proceedings in favour of Centrebet. Centrebet also advised that the Commissioner’s solicitors had informed Centrebet that they were instructed that the Commissioner would not re-argue the issues in the Centrebet Proceedings.
- On 19 August 2011, Centrebet announced that the proceedings between Centrebet and the Commissioner of Taxation had been adjourned. Whilst no date has been fixed for the relisting of the adjourned directions hearing, we understand that Centrebet will seek to promptly resolve the matter in their favour.
- On 6 March 2012, the Claim Committee, which has the general responsibility of managing the Litigation Claim, resolved that Litigation Claim Participants would receive a payment (subject to rounding) of $0.134747547 per Litigation Claim Right held. Payments were made on 8 March 2012 by cheque or electronic transfer to the bank accounts nominated whilst Litigation Claim Participants were a shareholder of Centrebet International Limited or as otherwise advised to One Investment Group.
The ATO have issued a Class Ruling on the capital gains implications of the share scheme for share scheme participants. A copy of the Class Ruling can be found at Class Ruling in the Key Documents links. Other information about this tax treatment can be found on the ATO website at: http://law.ato.gov.au/atolaw/view.htm?DocID=CLR/CR201189/NAT/ATO/00001
The above information should not be regarded as financial, legal, taxation or investment advice. Readers of this information should consult their own advisers in this regard.