Austar's bid to acquire eisa has failed after several eisa shareholders refused to accept Austar's bid of 20 cents per share for the troubled ISP.
But the saga is not over for Austar and eisa - Austar has indicated that it is still interested in buying the broke ISP, whether it be through the purchase of shares or assets. The most likely scenario is for eisa to be split up by administrators after Austar received 87 per cent acceptance from eisa shareholders, just 3 per cent short of the 90 per cent Austar needs to complete the acquisition. Austar will then take what businesses of eisa are up for grabs.
The drama for eisa began with its failed bid to acquire OzEmail earlier this year. In a statement to the ASX several weeks ago, eisa's CEO Ian Timmis warned shareholders that approval of Austar's acquisition was the only lifeline left for the ISP, which predicted a half-yearly loss in excess of $40 million for the six months to 30 June 2000.
Chris Grover, eisa company secretary, told ARN at the time that if the Austar deal did not go ahead, the directors of eisa would "seriously consider" moving into voluntary administration.
"Shareholders are not likely to receive anything on their shares if this goes into administration," he said. "It's 20 cents from Austar or nothing at all." Nothing at all, it seems, is what the shareholders will get.
The Austar offer closed on Friday 15 September and with it any chance of an eisa revival. Falling short of the required 90 per cent shareholder acceptance, the bid failed and Austar lost its patience with eisa shareholders.
"We are not willing to wait any longer," said Bruce Meagher, head of corporate affairs for Austar.
On the Monday following the closing date, Austar announced in an ASX statement that it would not proceed with its full bid, "Austar is not in a position, and does not intend to compulsorily acquire the shares of eisa," the statement read.
Within hours eisa had requested that the ASX halt the trading of eisa shares, "in order to prevent trading in an uninformed market". Austar's Bruce Meagher has indicated that even if a shareholder with the required holding to tip the balance over the 90 per cent mark approached Austar to complete the bid, it could not go ahead.
"Legally, it can't," he said. "We would have to make a whole new offer. I don't think eisa could continue to trade through such a process." But this does not mean that Austar's interest in the ISP is over. Far from it, Meagher believes his company may acquire those elements of eisa it always intended to, regardless of whether it buys shares or assets.
Austar released a statement the day after the failed bid was confirmed, highlighting that it was still interested in eisa's assets.
"Austar still believes that eisa's assets are attractive and offer a strategic fit with Austar's," said Austar chief executive, John Porter. "Therefore, we intend to continue discussions with eisa with a view to acquiring the eisa business.
"My understanding is that eisa will move to a point of voluntary administration, as it had indicated earlier," Meagher told ARN. "We would then look into talking with the administrator about what assets we could acquire if [eisa] chooses to sell them."
Austar's interest in eisa has always revolved around the three regional ISPs that eisa acquired 12 months ago. These ISPs, based in Darwin, Cairns and Canberra, have a subscriber base of around 25,000, and would be a prime target for Austar if eisa moves into administration.
"Given the regional nature of our existing business, these would fit in quite well," Meagher said. "The remainder of eisa as a business is also interesting. We are assessing what parts of the business would be interesting to acquire.
"We are hopeful that we can come out of this with as much as we first sought," he said.