Avalon Minerals Limited - decision of the Takeovers Panel

INTRODUCTION AND CONTEXT

On 9 August 2013, Avalon Minerals Limited announced a 1 for 1 non-renounceable rights issue underwritten by its largest shareholder, Mr Tan Sri Abu, to raise $5.89 million. Sidan Super Pty Ltd, as trustee for the Sidan Superannuation Fund, applied to the Takeovers Panel on the basis that the structure of, and disclosure in relation to, the rights issue was unacceptable, as a result of the following:

• Rights issue fully underwritten by Avalon's largest shareholder who held 19.9% (approx.) of Avalon;
• Non-disclosure of association between Mr Abu and Mr Dato Richard Lim (another substantial shareholder of Avalon);
• Mr Abu requested Mr Lim to subscribe for full entitlement under the rights issue (which was initially funded by Mr Abu) which increased his interest from 8.2% to 11.8% of Avalon;