The name Vodafone Hutchison Australia is not long for this world after TPG shareholders approved the merger of the two telcos on Wednesday.
TPG said 99.19% of shareholders present in person or via proxy at a remote shareholder meeting voted in favour of the resolution, which equated to 99.99% of the votes. The threshold needed was 75% of shareholders.
Shareholder approval kicks off the final stages of the merger process, with a court hearing for approval set for Friday, and Vodafone Australia to be renamed TPG Telecom Limited as the merger scheme comes into effect on Monday. On the same day, shares of TPG will be delisted from the Australian Securities Exchange (ASX). TPG currently uses the ticker symbol TPM.
The following day, the former Vodafone entity will appear on the ASX under the TPG symbol, with deferred settlements.
The old TPG will also be handing out a special dividend to its shareholders to lower its cash level because its net debt isn't high enough.
As part of the merger agreement, both parties are to come to the table with AU$2.24 billion of debt -- and both companies are approaching it from different directions. Vodafone had AU$6.1 billion in net debt at the end of 2019, and as part of its restructure, part of its debt will be transferred out onto its Vodafone Group and Hutchison Australia owners.
July 13 is pinned as the date implementation will occur and dividends by TPG are paid, all of which will be before the new entity begins regular ASX trading on July 14.
"Today is a significant milestone in the merger process and subject to final court approval, we will be bringing VHA and TPG together in two and a half weeks," Vodafone Australia CEO Inaki Berroeta said.
"The merger will create a leading full-service telecommunications provider which will be well-positioned to drive stronger competition in the market and deliver benefits to customers and shareholders."
While labelled a merger of equals, in accounting terms, Vodafone will swallow TPG and then rename itself to TPG. VHA will acquire 100% of TPG's shares, which will turn TPG into a wholly-owned subsidiary. TPG shareholders will then get back in return one share of the newly-merged company for each TPG share they own.
When complete, VHA shareholders will have 50.1% of the new company and TPG will have the remaining 49.9% of the company. Berroeta will serve as CEO and current TPG chief David Teoh will serve as chair.
TPG has also spun out its Singapore operations as Tuas Limited, which is expected to appear on the ASX under the symbol TUA on June 30.
Ordinary trading of Tuas and the new TPG are expected to start on July 14.
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