Coppermoly Ltd: intentions of an underwriter

By Bryn Davis

The recent decision of the Takeovers Panel in Coppermoly Ltd [2013] ATP 8 highlights that underwriters and their associates should be extremely careful about making any acquisitions of target shares after having entered into an underwriting agreement, no matter how small.

On 26 June 2013, Coppermoly announced a non-renounceable one-for-four entitlement offer to be fully underwritten by Jelsh Holdings, together with a placement to Jelsh of approximately 3.7 million shares.

When the offer opened, Jelsh had voting power of 0.53 per cent. During the offer period, a related party of Jelsh acquired both on and off market a further 16,290,333 Coppermoly shares, which increased Jelsh’s voting power to 12.06 per cent (pre-underwriting acquisitions). The rights offer closed with only 1.75 per cent of shares being taken up by Coppermoly shareholders under the offer and the shortfall facility. Pursuant to its underwriting arrangement, Jelsh was to take up additional shares in Coppermoly to increase its voting power to 26.76 per cent…

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