Colorado Group tells shareholders to take no action on bid
20 Jul '06
4 min read
In addition, another consultant to Affinity, Rowan Webb, was directly responsible for Colorado's performance as the Managing Director of the Company from 1999-2006. Both Messrs Webb and MacDonald presided over the operations of Colorado during the period in 2005 when the company issued a succession of profit downgrades. Any reasonable person reviewing this matter would immediately accept that Affinity's earnings condition of $14 million will not be met.
Affinity should immediately clarify whether it will remove or modify this condition or whether the Affinity Offer is spurious and destined to fail.
Colorado was approached by Affinity in April and June 2006 suggesting a possible acquisition of the company. The approaches were, at the request of Affinity confidential and not to be disclosed. Colorado has respected that confidentiality but in light of statements made yesterday by Affinity it is now bound to inform the market of what occurred.
Each approach by Affinity to Colorado was subject to numerous conditions; including financing, due diligence, the requirement that Colorado commit, in advance of due diligence, to a unanimous board recommendation at an implied value regardless of the outcome of due diligence, break fee arrangements and other technical terms and conditions.
The approaches did not provide any commitment from Affinity to actually proceed with an offer to shareholders.
Affinity's approach specifically sought torestrict the Board's capacity to enter into substantive discussions with any other interested parties. The indicative price in the approaches was $4.68 per share cash with discussion on the possibility of using the franking credit balance to increase the value to shareholders.
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