An overview of the Scheme
Why have I received this Scheme Booklet?
The scheme booklet has been sent to you because you are an Isentia Shareholder. All Isentia Shareholders (other than Excluded Shareholders) are being asked to vote on a Scheme which, if approved and implemented, will result in Access Intelligence acquiring all Isentia Shares (other than Excluded Shares) for the Total Cash Consideration of $0.175 cash for each Isentia Share held on the Scheme Record Date.
The Scheme Booklet is intended to help you to decide how to vote on the Scheme Resolution which needs to be passed at the Scheme Meeting to enable the Scheme to proceed.
What is the Scheme?
A Scheme is a statutory arrangement facilitated by Part 5.1 of the Corporations Act between a company and the shareholders. It is commonly used in Australia to undertake an acquisition of a publicly listed company.
On 15 June 2021, Isentia announced the proposed Scheme to the ASX. If the Scheme is approved and implemented, Isentia Shareholders (other than Excluded Shareholders (1)) who hold Isentia Shares on the Scheme Record Date will receive Total Cash Consideration of $0.175 for each Isentia Share they own. If the Scheme becomes Effective, Access Intelligence will acquire all of the Scheme Shares that it does not already own for the Scheme Consideration and Isentia will be removed from the official list of the ASX.
Who is Access Intelligence?
Access Intelligence is a public company incorporated in England and Wales that is listed on the Alternative Investment Market (AIM) market of the London Stock Exchange. As at 8 July 2021, Access Intelligence had a market capitalisation of approximately £103.1 million or A$190.6 million (based on an exchange rate of 0.5408 pounds sterling to one Australian dollar as at 8 July 2021).
Access Intelligence is a provider of media intelligence software, delivering software as a service (SaaS) solutions for the corporate communications and reputation management industry. The Access Intelligence software portfolio consists of three core solutions – Vuelio, ResponseSource and Pulsar. Together the portfolio offers a range of applications for reputation management, through the cloud, to clients in the public relations, marketing and communication industries. Access Intelligence has operations in the UK, USA and Australia, and has over 3,500 customers.
How will the scheme be implemented?
In order for the Scheme to be implemented, all Conditions under the Scheme Implementation Deed must be satisfied or waived (if capable), the Scheme Resolution must be approved by Isentia Shareholders (other than Excluded Shareholders) at the Scheme Meeting and the Scheme must be approved by the Court.
What do the Isentia Directors recommend?
The Isentia Directors have considered all of the advantages and disadvantages of the Scheme and unanimously recommend that Isentia Shareholders vote in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to consider the Scheme to be in the best interests of Isentia Shareholders. (2)
The Isentia Directors consider that the reasons for Isentia Shareholders to vote in favour of the Scheme outweigh the reasons to vote against it.
The Isentia Directors encourage you to seek independent financial, taxation, legal, or other professional advice in relation to your vote on the Scheme.
How are the Isentia Directors intending to vote?
Each of the Isentia Directors who holds or controls Isentia Shares intends to vote all Isentia Shares held or controlled by them in favour of the Scheme, in the absence of a Superior Proposal and subject to the Independent Expert continuing to consider the Scheme to be in the best interests of Isentia Shareholders.
What is the Independent Expert’s opinion of the Scheme?
The Independent Expert has determined that, in the absence of a Superior Proposal, the Scheme is fair and reasonable and therefore in its opinion, is in the best interests of Isentia Shareholders.
The Independent Expert has estimated the full underlying value of Isentia to be in the range of $0.13 and $0.18 per Isentia Share.
The Independent Expert’s Report is included as Attachment E to the Scheme Booklet.
The Isentia Directors recommend that you read the Independent Expert’s Report carefully and in its entirety.
Why you may consider voting in favour of the Scheme
- The Independent Expert has determined that, in the absence of a Superior Proposal, the Scheme is fair and reasonable and therefore in its opinion, is in the best interests of Isentia Shareholders
- The Independent Expert has concluded that the Scheme is in the best interests of Isentia Shareholders, in the absence of a Superior Proposal
- The Total Cash Consideration of $0.175 cash per Isentia Share represents a significant premium for your Isentia Shares relative to historical trading prices, prior to the announcement of the Scheme
- The Scheme provides the opportunity to realise certain cash value for all of your investment in Isentia
- No Superior Proposal has emerged since the announcement of the Scheme
- If the Scheme does not proceed, the Isentia Share price may fall, including to a price that is well below the value of the Total Cash Consideration
- If the Scheme does not proceed, it is likely that Isentia may need to raise equity capital to repay debt and fund working capital and ongoing investment in the business. Such a capital raising would be dilutive to you if you are ineligible or choose not to participate in the equity raising. In addition, there can be no certainty that such a capital raise would be successful nor as to the price of any such equity raise
- If the Scheme does not proceed, you will continue to be subject to the risks associated with Isentia’s business and general market risks such as a changing competitive landscape, industry conditions, continued competition in ANZ which has affected customer retention and pricing, ongoing COVID-19 headwinds in Isentia’s South East Asian markets, the results from the Copyright Tribunal, Isentia’s limited covenant headroom and business challenges faced by Isentia in FY21 rather than realising certain value for all of your Isentia Shares through the Scheme
Why you may consider voting against the Scheme
- You may disagree with the Isentia Directors’ unanimous recommendation or the Independent Expert’s conclusion and believe the Scheme is not in your best interests
- You many consider that the Total Cash Consideration does not reflect Isentia’s long-term potential
- You may believe that there is potential for a Superior Proposal to be made in the foreseeable future
- The tax consequences of the Scheme may not suit your current financial circumstances
- You may believe it is in your best interests to maintain your current investment and risk profile
- You may prefer to participate in the future financial performance of the Isentia business
What will happen if a Superior Proposal emerges?
Until the Scheme is approved by the Court, other parties may make unsolicited acquisition proposals for Isentia.
If, during the Exclusivity Period, Isentia is approached in relation to an actual, proposed or potential Competing Proposal it must notify Access Intelligence of the approach.
If the Competing Proposal is a Superior Proposal, Access Intelligence will be given at least four Business Days to provide a bona fide superior counterproposal which at least exceeds the price of the actual, proposed or potential Competing Proposal (Price Superior Counterproposal).
If Access Intelligence makes a Price Superior Counterproposal, then it shall be at the Isentia Board’s discretion to determine whether or not such counterproposal constitutes a superior counterproposal and Isentia must procure that the Isentia Board acts reasonably and in good faith in making its determination.
These (and other) provisions of the Scheme Implementation Deed are summarised in greater detail in section 3 of the Scheme Booklet.
If a Competing Proposal for Isentia emerges prior to the Second Court Hearing, the Isentia Directors will carefully consider the proposal and determine whether it is a Superior Proposal. An exception to certain exclusivity arrangements in the Scheme Implementation Deed allows them to do so.
Isentia will keep you updated of any material developments, including by making announcements via the ASX.
Is there a break fee payable?
Under the Scheme Implementation Deed, Isentia must pay Access Intelligence a reimbursement fee of $500,000 if certain events occur, including if:
- during the Exclusivity Period, a majority of the Isentia Board withdraws, adversely revises or adversely qualifies their recommendation of the Scheme unless:
- the Independent Expert concludes in the Independent Expert’s Report that the Scheme is not in the best interests of Isentia Shareholders (other than Excluded Shareholders) (except where that conclusion is due wholly or partly to the existence, announcement or publication of a Competing Proposal); OR
- Isentia is entitled to terminate the Scheme Implementation Deed under clause 14.1(a)(i) of the Scheme Implementation Deed and has given the appropriate termination notice to Access Intelligence;
- during the Exclusivity Period, a majority of the Isentia Board recommends that Isentia Shareholders accept or vote in favour of, or otherwise support or endorse a Competing Proposal of any kind that is announced (whether or not such proposal is stated to be subject to any pre-conditions) during the Exclusivity Period;
- a Competing Proposal is announced during the Exclusivity Period and, within 12 months, that third party or an associate of that third party completes a certain Competing Proposal or Superior Proposal or otherwise acquires voting power of 50% or more in Isentia or otherwise acquires substantially all of the assets of Isentia; or
- Access Intelligence has terminated the Scheme Implementation Deed under clauses 14.1(a)(i) or 14.1(c) (other than in respect of termination under clause 14.1(c)) in circumstances where the Independent Expert concludes that the Scheme is not in the best interests of Isentia Shareholders (other than Excluded Shareholders) (except where that conclusion is due wholly or partly to the existence, announcement or publication of a Competing Proposal) and the Scheme does not complete.
What are the risks associated with an investment in Isentia if the Scheme does not become Effective?
You will remain an Isentia Shareholder and be subject to the business and general risks of holding your Isentia Shareholding as you have prior to the commencement of the Scheme.
If the Scheme does not proceed, it is likely that Isentia will need to raise equity to repay debt and fund working capital and ongoing investment in the business. Such a capital raising would be dilutive to you if you are ineligible or choose not to participate in the equity raising. There is no certainty as to the ability to raise capital nor the price as to which the equity will be raised at.
If the Scheme does not proceed, the value that Isentia Shareholders will be able to realise from their Isentia Shares (in terms of any future dividends and the price of those Shares) will be uncertain and subject to a number of risks including risks associated with Isentia’s business and general market risks such as a changing competitive landscape, industry conditions, continued competition in ANZ which has affected customer retention and pricing, ongoing COVID-19 headwinds in Isentia’s South East Asian markets, the results of the Copyright Tribunal, Isentia’s limited covenant headroom and business challenges faced by Isentia in FY21.
Among other things, this will also be subject to the performance of Isentia’s business from time to time, general economic conditions and the movement in the share market.
Further information on the risks associated with the Scheme not becoming Effective are in section 6 of the Scheme Booklet.
An overview of the Scheme Consideration
What is the Scheme Consideration?
The Scheme Consideration payable by Access Intelligence under the Scheme is $0.175 per Isentia Share
What is the premium of the Scheme Consideration to Isentia’s Share price?
The Total Cash Consideration of $0.175 cash for each Isentia Share represents a significant premium to recent historical Isentia Share prices, prior to the announcement of the Scheme:
- 157% premium to the closing price of $0.068 per Isentia Share on 11 June 2021, the last trading day prior to the announcement of the Scheme;
- 144% premium to the 1 month VWAP of $0.072 per Isentia Share; and
- 39% premium to the 12 month VWAP of $0.13 per Isentia Share.
How is Access Intelligence funding the Scheme Consideration?
Access Intelligence intends to fund the Scheme Consideration from the proceeds of a fundraise (comprising a placement and subscription to acquire shares in Access Intelligence).
Access Intelligence is of the opinion that is has a reasonable basis for forming the view, and it holds the view, that it will have sufficient funding to meet its funding obligations under, or in connection with, the Scheme.
For further details regarding the funding arrangements of Access Intelligence, see section 5 of the Scheme Booklet.
Does Access Intelligence hold any Isentia Shares?
Access Intelligence has a Relevant Interest (as defined in the Corporations Act) in approximately 19.6 per cent of Isentia’s issued shares. The way the Relevant Interest arises is discussed in detail in section 5.6(a) of the Scheme Booklet. Access Intelligence will not be able to vote in the Scheme Meeting in respect of its shareholding in Isentia and will not receive any consideration for its shareholding in Isentia as its shareholding will not be acquired under the Scheme.
Who is entitled to participate in the Scheme?
Each person who is an Isentia Shareholder (other than an Excluded Shareholder) as at 7.00 pm (Sydney time) on the Scheme Record Date will be entitled to participate in the Scheme.
When will I receive the Scheme Consideration?
If you are an Isentia Shareholder (other than an Excluded Shareholder) on the Scheme Record Date, you will receive the Scheme Consideration on the Implementation Date.
What are the tax implications of the Scheme for you?
If the Scheme becomes Effective, there will be tax consequences for Isentia Shareholders which may include tax being payable on any capital gain on disposal of Isentia Shares.
The tax treatment may vary depending on the nature and characteristics of each Isentia Shareholder and their specific circumstances. General information about the likely Australian tax consequences of the Scheme is set out in section 7 of the Scheme Booklet. Accordingly, Isentia Shareholders should obtain professional tax advice in relation to their particular circumstances.
Will I have to pay brokerage or stamp duty?
You will not have to pay brokerage or stamp duty on the transfer of your Isentia Shares to Access Intelligence under the Scheme.
If you dispose of your Isentia Shares before the Scheme Record Date, brokerage fees may be payable.
Can I sell my Isentia Shares now?
You can sell your Isentia Shares on market at any time before or on the Effective Date at the then prevailing market price, which may differ from the Total Cash Consideration.
Isentia intends to apply to the ASX for Isentia Shares to be suspended from trading on the ASX from the Effective Date. You will not be able to sell your Isentia Shares on market after this date.
If you sell your Isentia Shares on the ASX, you will not receive the Scheme Consideration and you may pay brokerage fees on the sale.
Scheme, voting and approvals
Are there any conditions that must be satisfied or waived in order for the Scheme to be implemented?
There are several Conditions that must either be satisfied or waived (if applicable) for the Scheme to be implemented, including:
- Isentia Shareholders (other than Excluded Shareholders)(3) approving the Scheme;
- Access Intelligence Shareholders approving the Scheme. This condition was satisfied on 9 July 2021;
- The Independent Expert issuing an Independent Expert’s Report concluding the Scheme is in the best interests of Isentia Shareholders and the Independent Expert does not publicly withdraw, qualify or change that opinion at any time before the Second Court Date;
- Court approval of the Scheme;
- No Isentia Prescribed Occurrence occurring;
- No Isentia Regulated Event occurring;
- No Isentia Material Adverse Change;
- No legal restraints preventing, prohibiting or making illegal the Scheme is in effect as at 8.00am on the Second Court Date; and
- The warranties set out in clauses 9.1 and 9.3 and of the Scheme Implementation Deed being true and correct in all material respects on the date of this deed and at 8.00am on the Second Court Date.
As at date of the Scheme Booklet, neither Isentia nor Access Intelligence is aware of any reason why the Conditions not yet satisfied should not be satisfied or waived (as applicable).
What happens if these conditions are not satisfied or the Scheme Implementation Deed is terminated?
If the Conditions above are not satisfied or waived (if applicable), or the Scheme Implementation Deed is terminated, the Scheme will not proceed.
What happens if the Scheme is approved, all conditions are satisfied and it is implemented?
If the Scheme is approved and implemented, the Scheme Shareholders will receive the Scheme Consideration for each Isentia Share held on the Scheme Record Date and Isentia will become a wholly-owned subsidiary of Access Intelligence.
A copy of the Scheme is contained in Attachment C to the Scheme Booklet.
Can the Scheme be terminated?
The Scheme Implementation Deed may be terminated in certain circumstances as described in clause 14 of the Scheme Implementation Deed. If the Scheme Implementation Deed is terminated, the Scheme will not proceed.
Am I entitled to vote at the Scheme Meeting?
If you are registered as an Isentia Shareholder (other than an Excluded Shareholder) on the Register at 7.00pm (Sydney time) on Sunday, 15 August 2021, you will be entitled to vote at the Scheme Meeting.
How do I vote?
You may vote at the Scheme Meeting by participating in the Scheme Meeting via the online platform at https://agmlive.link/ISDSM21 or by appointing a proxy, corporate representative or attorney to vote at the Scheme Meeting on your behalf.
If you do not wish to, or are unable to, participate in the online Scheme Meeting, you may vote by lodging your direct vote or proxy online at www.linkmarketservices.com.au, or, if you received a hardcopy voting form, by following the instructions on the voting form.
See “How to Vote” on page 19 and the Notice of Meeting in Attachment A to the Scheme Booklet for more information.
When and where will the Scheme Meeting be held?
The Scheme Meeting will be held online at https://agmlive.link/ISDSM21 at 9:00am, on Tuesday, 17 August 2021.
Is voting compulsory?
Voting is not compulsory. However, the Scheme will only be successful if it is approved by the required majorities of Isentia Shareholders (other than Excluded Shareholders) and therefore voting is important, and the Isentia Directors encourage you to vote. If the Scheme is approved, you will be bound by the Scheme whether or not you voted and whether or not you voted in favour.
What vote is required to approve the Scheme?
For the Scheme to proceed, at the Scheme Meeting, the Scheme Resolution must be passed by:
- A majority in number (more than 50%) of Isentia Shareholders (other than Excluded Shareholders) who vote on the respective Scheme Resolution (either virtually or by proxy or representative); and
- At least 75% of the votes cast by Isentia Shareholders (other than Excluded Shareholders) on the Scheme Resolution (either virtually or by proxy or representative).
The Court has the discretion to waive the first half of these two requirements if it considers it appropriate to do so.
What happens if I do not vote or if I vote against the Scheme?
If you do not vote or vote against the Scheme, the Scheme may not be approved at the Scheme Meeting. If this occurs the Scheme will not proceed, you will not receive the Total Cash Consideration and you will remain an Isentia Shareholder.
However, if the Scheme is approved by the Requisite Majority of Isentia Shareholders (other than Excluded Shareholders), then, subject to the other Conditions Precedent to the Scheme being satisfied or waived, and Court approval, your Isentia Shares will be transferred to an Access Intelligence Group Member and you will receive the Total Cash Consideration, even if you did not vote or voted against the Scheme Resolution.
Can I keep my shares in Isentia?
If the Scheme is implemented, all your Isentia Shares will be transferred to an Access Intelligence Group Member. This will happen even if you did not vote or you voted against the Scheme.
When will the results of the Scheme Meeting be available?
The results of the Scheme Meeting will be available shortly after the conclusion of the Scheme Meeting and will be announced to the ASX.
What do I do if I oppose the Scheme?
If you, as an Isentia Shareholder, oppose the Scheme, you may:
- Call the Isentia Shareholder Information Line;
- Attend the Scheme Meeting and vote against the Scheme Resolution; and/or
- If Isentia Shareholders (other than Excluded Shareholders) pass the Scheme Resolution at the Scheme Meeting and you wish to appear and be heard at the Second Court Hearing, you must lodge a notice of intention to appear at the Second Court Hearing and indicate opposition to the Scheme. You should seek professional advice as to how to do this.
What if I want further information?
If you have any questions about the Scheme or you would like additional copies of this Scheme Booklet, please contact the Shareholder Information Line on 130 158 729 in Australia or +61 2 9066 4058 from outside Australia between 9:00AM and 6:00PM (Sydney time), Monday to Friday (excluding public holidays) or email email@example.com.
For information about your individual financial or taxation circumstances please consult your financial, legal, taxation or other professional adviser.
(1) ‘Excluded Shareholders’ means any Access Intelligence Group Member holding or controlling Isentia Shares. As at the date of this Scheme Booklet, Access Intelligence (through its wholly-owned subsidiary, Vuelio Australia Pty Ltd) owns approximately 19.6% of the total number of Isentia Shares on issue. Those Isentia Shares held by Vuelio Australia Pty Ltd will not be acquired under the Scheme and Vuelio Australia Pty Ltd will not be able to vote those Isentia Shares on the Scheme.
(2) You should note when considering this recommendation that one of the Isentia Directors, Ed Harrison, will be receiving a benefit if the Scheme proceeds, in the sense that he will be entitled to have certain deferred equity rights (with an implied value of $19,895 based on the Scheme Consideration) vest as shares if the Scheme proceeds. The arrangements are described in more detail in section 8.1 of the Scheme Booklet.
(3) Isentia Shares the subject of the Scheme does not include 39,708,447 Isentia Shares held by Access Intelligence through its wholly-owned subsidiary Vuelio Australia Pty Ltd, as these are Excluded Shares held by an Excluded Shareholder under the Scheme.