NetComm postpones sale to Casa Systems

Australian networking equipment company NetComm Wireless has postponed its proposed sale to Casa Systems.

The company called a trading halt (PDF) late last week before issuing a Further Supplementary Disclosure (PDF) in an attempt to secure shareholder approval after its planned acquisition by Casa Systems hit turbulence.

The extra information came after the company postponed (PDF) the 7 June meeting at which shareholders would be asked to approve the CASA deal, to give them time to “consider the supplementary disclosure that NetComm proposes to make in response to matters raised by some NetComm shareholders and ASIC.”

That information became necessary due to shareholder unrest about the deal, in part because on 29 May the company issued a document (PDF) titled “Proxy Advisers recommend Scheme of Arrangement” proclaiming that advisors CGI Glass Lewis and Institutional Shareholders Inc both recommended shareholders agree to the Casa deal.

That statement came after a 27 May letter to shareholders (PDF) in which company chair Justin Milne rejected arguments in a letter (PDF) from shareholder Tas Davies, titled “WHY DOES THE NetComm BOARD WANT YOU TO SELL YOUR SHARES FOR HALF THEIR FAIR VALUE?” that was highly critical of the Casa deal.

A 6 June ASX statement (PDF) retracted the “Proxy Advisers” document on grounds that issuing it without detailed rationale “may be misleading.”

Next came the 7 June trading halt and then, late on the 7th, the Supplementary Disclosure (PDF) landed.

In the new document the directors again recommend the Casa transaction, because it “crystallises value now by way of all-cash consideration at a substantial premium, which represents an attractive alternative to waiting for the NetComm share price to reflect value that may be created by the execution of NetComm’s long term strategy”.

While the company is on track for strong earnings, the new document says, the telco caper remains uncertain. So shareholders should get in while they can!

The directors refer investors to section 2.2 of the original scheme document, which offers reasons not to vote for the deal including belief that NetComm can do better or that selling now could cause tax complications for individual investors.

The matter should be settled one way or another on 18 June, the day picked for the shareholder vote.