No Response from Hutson to Audiology Buy/Sell Proposal

On 8 October 2013, Abano proposed a “buy/sell” mechanism to Peter Hutson and his associated interests under which Hutson interests would nominate the price for a 50% shareholding in Bay International Limited, and Abano would choose whether to buy the Hutson 50% interest or sell Abano’s 50% interest at that nominated price.

Abano’s intention in making that proposal was to address Peter Hutson’s conflicts of interest and provide a basis on which a true market value was able to be set for the audiology business, rather than the “nominal value” ascribed to it by the Archer/Reeves/Hutson consortium’s proposal. The Archer/Reeves/Hutson proposal involves a material value transfer from Abano and its shareholders to Peter Hutson and his interests.

Abano is disappointed and concerned that the buy/sell proposal has not been responded to by Peter Hutson or his interests. Abano considers the proposal a worthy one and can see no reasonable basis for it not being progressed. This lack of any response further reinforces the conflicts of interest inherent in the Archer/Reeves/Hutson consortium proposal.

The impasse between the parties as to the nature and extent of Hutson’s conflicts, the value of the audiology business, appropriate management and governance protocols for Hutson, and long term strategic direction of Abano are not ingredients in a recipe for a sustainable business relationship. Abano’s offer represents a solution, at fair value, that avoids any continuing impasse and the resultant prospect of value loss for all Abano shareholders.

Abano understands that the Archer/Reeves/Hutson interests continue to communicate selectively with Abano’s major shareholders – and are receiving a consistent message of no support for their proposal. We note that institutions both publically and privately, as well as private shareholders, are supporting Abano’s stance, which once again, calls on the Archer/Reeves/Hutson consortium to:

(a)respond to Abano’s buy/sell proposal in a constructive manner;

(b)proceed with a code compliant offer, which offers minority shareholder protection, or withdraw.

Abano will not provide the requested due diligence access in response to a patently unsatisfactory proposal, rife with insider elements. If, as Archer is reported as saying, its funding and governance constraints preclude it from making a formal offer absent due diligence, then it should withdraw forthwith.

Trevor Janes