This Prospectus relates to an initial public offering of $275 million worth of New Shares by NEC1 and the sale of 179.7 million
Existing Shares held by SaleCo (as well as up to $2,344,000 of New Shares by NEC to Eligible Participants under the Employee Gift Offer, for nil consideration). The total number of Shares on issue at the completion of the Offer will be 931 million2 and all
Shares will rank equally with each other. The Shares offered under this Prospectus will represent approximately 33% of the Shares on issue on Completion3.
The Offer is expected to raise $670 million (comprising $275 million from the issue of New Shares by NEC for NEC’s benefit and $395 million4 for the sale of Existing Shares held by SaleCo). Successful Applicants under the Offer will pay the Final Price,
which will be determined at the conclusion of the bookbuild and may be set at a price below, within or above the Indicative Price Range.
7.1.1 Structure of the Offer
The Offer comprises:•
the Retail Offer, which consists of the:–
Broker Firm Offer – open to Australian resident retail clients of Brokers who have received a firm allocation from their Broker;–
Employee Gift Offer – open to Eligible Participants who have received an offer from NEC to acquire, at no cost, the nearest number of whole Shares (rounded down) up to the value of $1,000 each; and–
Priority Offer – open to certain Retail Offer Investors nominated by NEC, limited to $5 million in aggregate proceeds; and•
the Institutional Offer – an invitation to bid for Shares made to Institutional Investors, in Australia under this Prospectus, and in a number of other eligible jurisdictions under the Institutional Offering Memorandum.Details of each component of the Retail Offer and the allocation policy under the Retail Offer are described in Section 7.3. Details of the Institutional Offer and the allocation policy under the Institutional Offer are described in Section 7.4.
No general public offer will be made under the Offer. The allocation of Shares between the Retail Offer and the Institutional Offer will be determined by the Joint Lead Managers, in agreement with NEC, having regard to the allocation policy outlined in Sections 7.3.6 and 7.4.4.
7.1.2 Purpose of the Offer and use of proceeds
The purpose of the Offer is to provide NEC with:•
a liquid market for its Shares and an opportunity for Existing Shareholders to realise part of their investment in NEC;•
funds to repay, in part, NEC’s existing debts and pay the Offer costs; and•
additional financial flexibility to pursue the growth strategy outlined in Section 3.6 through improved access to capital markets.The proceeds of the Offer will be applied to:
•
repayment of debt drawn on NEC’s debt facilities;•
payment to SaleCo (which will distribute payments to Selling Shareholders);•
increase in cash and cash equivalents; and•
payment of the costs associated with the Offer.1. This is 125 million New Shares based on the assumption that the Final Price is at the midpoint of the Indicative Price Range. It does not include the total of 4.9 million Shares to be issued to the Non-Executive Director Shareholders (as described in Section 6.3.2.3) and to two Senior Managers (as described in Section 6.3.2.4) at Completion; nor does it include 1.1 million Shares to be issued under the Employee Gift Offer assuming all Eligible Participants accept their offers and the Final Price is at the midpoint of the Indicative Price Range, given that will be for no consideration (as described in Section 7.3.2).
2. This is based on the assumption that the Final Price is at the midpoint of the Indicative Price Range. It includes the total of 4.9 million Shares to be issued to the Non- Executive Director Shareholders (as described in Section 6.3.2.3) and to two Senior Managers (as described in Section 6.3.2.4) at Completion as well the 1.1 million Shares to be issued under the Employee Gift Offer assuming all Eligible Participants accept their offers and the Final Price is at the midpoint of the Indicative Price Range (as described in Section 7.3.2).
3. This is based on the assumption that the Final Price is at the midpoint of the Indicative Price Range. 4. Assuming the Final Price is at the midpoint of the Indicative Price Range.
Sources Uses Cash proceeds received from sale of
Existing Shares $395 million
5 Payment of proceeds to SaleCo5 $395 million
Cash proceeds received from issue of New Shares $275 million Payment of costs of the Offer5 $22 million Payment of one-off Senior Management bonuses $4 million
Repayment of debt $199 million
Increase in cash and cash equivalents $50 million
Total sources $670 million Total uses $670 million
7.1.3 Pro forma historical consolidated balance sheet
NEC’s pro forma balance sheet following Completion, including details of the pro forma adjustments is set out in Section 4.5.
7.1.4 Capitalisation and indebtedness
NEC’s capitalisation and indebtedness as at 30 June 2013, before and following the completion of the Offer, is set out in Section 4.5.2.
7.1.5 Shareholding structure
The details of the ownership of Shares on Completion of the Offer are set out below:
Shares at Original
Prospectus Date % pre-IPO
Shares issued/acquired/ (sold) Shares immediately post-IPO6 % Post-IPO7
Oaktree 222.6 million 27.8% (89.1) million 133.6 million 14.3%
Apollo 205.1 million 25.6% Nil 205.1 million 22.0%
Other Existing
Shareholders 372.2 million 46.5% (90.6) million 281.6 million 30.2%
New Shares to be issued under the Offer or at Completion8
– – 131.0 million 131.0 million 14.1%
Existing Shares to be
sold under the Offer – – 179.7 million 179.7 million 19.3%
Total 800.0 million 100.0% 131.0 million 931.0 million 100.0%
Each of the Existing Shareholders who is an Institutional Investor will be entitled to lodge a bid during the bookbuild process under the Institutional Offer which may result in their post-Completion Shareholding being above those numbers shown in the table above.
All Selling Shareholders (except for Apollo and Oaktree) who are entitled to bid into the bookbuild by virtue of being Institutional Investors will receive preferential treatment under the bookbuild on the basis disclosed in Section 7.4.4. This preferential
treatment does not guarantee any allocation to a Selling Shareholder and will be determined by the Joint Lead Managers and NEC in their sole discretion.
7.1.6 Control implications of the Offer
The Directors do not expect any Shareholder to control NEC on Completion.
7.1.7 Potential effect of the fundraising on the future of NEC
The Directors believe that on Completion, NEC will have sufficient funds available from the cash proceeds of the Offer to fulfil the purposes of the Offer and meet NEC’s stated business objectives.
5. Assumes Final Price is the midpoint of the Indicative Price Range.
6. Shareholding shown may vary to the extent that an Existing Shareholder bids for Shares in the Institutional Offer and receives an allocation of Shares. 7. Percentage shown may vary to the extent that an Existing Shareholder bids for Shares in the Institutional Offer and receives an allocation of Shares.
8. This includes 125.0 million New Shares under the primary Offer, the 1.1 million Shares to be issued under the Employee Gift Offer assuming all Eligible Participants accept their offers (as described in Section 7.3.2) and the total of 4.9 million Shares to be issued to the Non-Executive Director Shareholders (as described in Section 6.3.2.3) and to two Senior Managers (as described in Section 6.3.2.4), in each case, assuming that the Final Price is at the midpoint of the Indicative Price Range.