This Notice is being issued to provide Participants with further information in relation to the bid and details the acceptance process through CHESS.

On 22 November 2017, Mercantile OFM Pty Ltd lodged a Bidder’s Statement with ASX in connection with a proportional takeover bid offering to acquire 50% or less of each shareholder’s holding of ordinary shares in Bauxite Resources Limited, other than shares already held by Mercantile OFM ("Proportional Bid" or "offer").

BAU shareholders are entitled to accept the offer for 50% of their shares, or less than 50% of their shares. Acceptance of the Proportional Bid in CHESS must be effected in such a way that Mercantile OFM acquires not more than 50% of each holding of ordinary shares in BAU (other than Mercantile OFM's own holding of ordinary shares in BAU). However, if acceptance of the offer would result in a BAU shareholder’s remaining shares being less than a marketable parcel, the offer extends to the whole parcel of their shares and if they accept the offer they will be deemed to have accepted for (and will receive consideration for) 100% of their BAU shares on the terms set out in the bidder’s statement and in accordance with section 618 of the Corporations Act (as modified by Class Order 13/521).

Pursuant to the bidder’s statement, "marketable parcel" means a parcel of shares with a value of not less than $500 based on the "cum-Offer" ASX closing price of BAU shares on the date that is the most recent trading day before the relevant acceptance of the offer is received.

The following processes have been implemented to facilitate those shareholders who wish to accept 50%, or less than 50%, of their ordinary BAU shares into the Proportional Bid and on-sell part or all of the remaining balance. It should be noted that a buyer of all or part of the remaining balance cannot accept the Proportional Bid in respect of that purchase. Alternatively, shareholders may wish to sell their BAU shares prior to acceptance, allowing the buyer to accept the Proportional Bid.

Shareholders trading under the deferred settlement market, ASX Code: BAUE – Ordinary Shares, will be trading shares "ex offer". The Ex Offer shares represent "remaining balance" shares retained by shareholders who have accepted the Proportional Bid. Buyers of these shares are unable to accept the Mercantile OFM Proportional Bid. 

Shareholders trading under the normal settlement market, ASX code: BAU – Ordinary Shares, will be trading shares "cum offer". Buyers of these shares are able to accept the Mercantile OFM Proportional Bid.

What do I need to do by when?

Bid Details:

Offer Terms

CHESS will process acceptance messages until 7pm (Sydney time) on 31 January 2018 or in the event that the bid is extended, such other time as may be notified by Mercantile OFM to the market.

The Mercantile OFM Proportional Bid is conditional and a shareholder may only accept the offer for their BAU shares held at the time acceptance is processed.

Link Market Services is using CHESS 6.1 Offeror Submitted Takeover messages for this offer. 

For information regarding the offer please subit your query in writing to Mercantile OFM at Level 5, 139 Macquarie Street, Sydney NSW 2000, or by Fax on 02 8084 9918 

Sponsoring Brokers/Controlling Participants

Full acceptance of the 50% Proportional Offer

The Proportional Bid is conditional. If accepting through CHESS, 100% of the holding must be moved to an offer accepted subposition using a Takeover Acceptance message. The remaining balance cannot be accessed until after finalisation of the Proportional Bid. Shareholders wishing to sell part or all of the remaining balance must do so through the "ex offer" deferred market under ASX Code: BAUE.

Acceptance of less than the 50% Proportional Offer

If accepting the Offer for up to 50% of a shareholder’s holding through CHESS, the number of shares pertaining to the offer acceptance within the Takeover Acceptance Message must be grossed up in the following manner.

Example: Holding of 10,000 BAU shares.

Instruction to accept the proportional offer for 3,000 shares.

Divide 3,000 by 50% (3000/0.50) = 6000

Back calculate the number of BAU shares that would be acquired by Mercantile OFM if 50% is acquired under the Mercantile OFM Proportional Offer = 6000 * 50% = 3,000 (rounding up fractions to the next whole number with all fractions being rounded up).

Then 6,000 BAU shares must be moved to an offer accepted subposition using a Takeover Acceptance message. 

Need more information?

Issued by

Jenny Yang, Officer, Post Trade Operations

Contact information

Jenny Yang
1800 623 571
cad@asx.com.au

General Information

Participants should refer to Section 13 of the CHESS Procedure Guidelines for Participants and Section 14 of the ASX Settlement Operating Rules for further information concerning the processing of Takeover Acceptance Messages for a CHESS Holding of securities. Some of these issues are summarised below. 

• A Participant must initiate acceptance of an offer by transmission of an EIS type ‘031’ message (Takeover Acceptance) where the securities in question are held in a CHESS Holding. The Participant will receive a ‘032’ message (Effected Takeover Acceptance) from CHESS in response. 
• In addition to the electronic notification to the Participant, paper notification will be sent directly to the Holder as securities are reserved in an offer-accepted subposition. Any change to the balance of securities in subposition will generate further electronic advice to the Participant and paper advice to the Holder.
• Where a Participant receives instructions from a Sponsored Holder, the Participant is required under the ASX Settlement Operating Rules to initiate acceptance of an offer:
• if the Holder specifies the time when or by which the offer must be accepted, in accordance with those instructions; otherwise 
• by End of Day on the date of receipt of instructions from the Holder. Where the offer closes on the date of receipt of instructions then prior to the close of the offer. 

Participants should therefore retain, as a minimum, a record of the date on which instructions to accept an offer are received from a Sponsored Holder.

Disclaimer