Optus to Acquire Uecomm for A$227m

12th June 2004. SingTel Optus Pty Limited (“Optus”) today announced a takeover offer through its wholly owned subsidiary, Optus Networks Pty Limited (“Optus Networks”) to acquire all of the issued shares of Uecomm Limited (“Uecomm”) at a price of 40 cents cash per ordinary share (“Offer”).  Uecomm is a Melbourne-based telecommunications company focussed on business solutions. Uecomm was formed in 1996 as a subsidiary of United Energy & floated on the ASX in 2000, with United Energy holding 66% ownership. United Energy was acquired by Alinta Ltd in 2003.

Utilities group Alinta, which retains 66 per cent of Uecomm, has already given undertakings to accept the Optus offer. In a pre-bid deal, Optus secured options to buy 20 per cent of Alinta’s stake at 32.5¢ a share and Alinta plans sell its remaining 46 per cent holding at 32.5¢ unless a higher offer arises.

Minority Uecomm shareholders are being offered 40¢ a share and Optus’s incoming chief executive, Paul O’Sullivan, encouraged them to accept the offer, saying it was a 15.9 per cent premium to the closing price of their shares on May 18.

The non-Alinta associated Directors of Uecomm (“Independent Directors”) unanimously recommend that shareholders accept the Optus Offer of 40 cents per share in respect of their shares in the absence of a superior proposal.  The Independent Directors note that the Offer price of 40 cents per ordinary share represents a premium of:

* 15.9% to the Uecomm closing share price of 34.5 cents on 18 May 2004 which was the last full trading day before Uecomm shares were placed in a trading halt;
* 20.7% to the volume weighted average trading price of Uecomm’s shares over the week prior to 18 May 2004 of 33.1 cents; and
* 22.5% to the volume weighted average trading price of Uecomm’s shares over the month prior to 18 May 2004 of 32.7 cents.

For Uecomm’s minority shareholders, the Offer price of 40 cents per share is equivalent to:

* An enterprise value to EBITDA multiple of 12.9 times Uecomm’s reported EBITDA for the year ended 31 December 2003; and
* An enterprise value to EBITDA multiple of 8.7 times Uecomm’s publicly stated EBITDA target for the year ended 31 December 2004.

SingTel Optus advised it will not relocate or integrate the operations of Uecomm if it succeeds with its $227 million takeover of the Melbourne-based telco, opting instead to keep it as a “stand-alone channel”. In its Bidder’s Statement released after Friday’s close, Optus said Uecomm’s value was driven by its current business model, and it intended to retain the smaller telco as a “stand-alone channel to focus on the mid-sized business market . . . and government organisations”.

Uecomm is being advised on the offer by NM Rothschild & Sons (Australia) Limited and Freehills.

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