However, QGC was quoted by the AAP as saying it would continue to pursue Sydney Gas, despite indicating earlier in the week it may surrender the offer, depending on the panel’s ruling.
QGC is also required to extend its bid for a month after the replacement statement is released, which “identifies and corrects the information deficiencies”, the panel said yesterday.
The panel also ruled there was no clear or intelligible explanation of the conditional nature of the offer nor were shareholders made aware of “the potential delays in being able to deliver funds to Sydney Gas.”
Sydney Gas executive director Stephen Kwik said the company was vindicated in its decision to approach the panel with the deficiencies.
“Shareholders should now be presented with a clear and understandable bidders statement that contains all material information and is not misleading or confusing,” Kwik said.
“It is disappointing that Sydney Gas’ desire to ensure its shareholders are provided with full and accurate disclosures had to be imposed on QGC by the panel.”
A key part in the takeover was an offer by QGC to fund the redemption of $30 million of convertible notes held by the Australian Gas Light Company (AGL).
However, the panel said Sydney Gas shareholders were not told about the possibility their company could be forced to fund the first tranche of notes, due on April 1.
It also ordered QGC to provide a more detailed financial forecast or withdraw its revenue forecasts with an explanation. Some parts of the statement were also found by the panel to be unintelligible.
QGC, which is offering one of its shares for every two Sydney Gas shares, plans to seek a review of the ruling, the panel said.
The decision follows Sydney Gas’ announcement that its first-half net loss ending December 31, 2005, of $A1.66 million, narrowed from a $2.75 million loss in the previous corresponding period.
The company said this result was boosted by a one-off $10.4 million gain following the sale of half its petroleum interest to AGL under its joint venture agreement in November.
Sydney Gas said it expected further improvements in the second half, but warned production revenue would be lower now that 50% of the earnings belonged to AGL.
The shares of both companies resumed trading on the ASX, after entering a voluntary trading halt on Wednesday. At 8.30 (WST) this morning, QGC shares were up 4.3% at 85c, while Sydney Gas remained unchanged at 35c.
Sydney Gas halted trading of its shares after QGC warned it may give up its takeover bid if input from the Takeovers Panel delayed the closing date for the offer. QGC said it was concerned the market was trading shares in both companies without considering the consequences of any such delay.
Late last month, Sydney Gas went to the Takeovers Panel to temporarily stop QGC from despatching a bidder’s statement, alleging defects in certain forward-looking statements and debt facilities.
QGC said today’s shareholder meeting has approved the share placement to raise funds for the takeover.
In a presentation at the meeting, QGC managing director Richard Cottee said QGC's market cap was $A328 million compared with SGL's $A101m.
QGC delivered a shareholder return of 137.35 in 2005, compared with SGL's return of -72.1%, according to Cottee.