Council agrees to sell its Southern Phone shares

A report was presented to Councillors today (26/11/2019) seeking endorsement for the sale of its shares in Southern Phone to AGL. Southern Phone, one of the largest telecommunications companies in regional Australia was established in 2002 after receiving $4.77 million in funding from the Australian Government’s Networking the Nation scheme. Its vision was to deliver more affordable telecommunications services to regional communities and to share its success with those communities. Under its Constitution, only Australian Local Government Councils could hold shares in Southern Phone Company Ltd. The dividends were paid to the 35 Local Government shareholders. Since its inception, Council has received $2,122,441 in dividends. The last dividend was paid in 2018. There was no dividend paid in 2019. On 16 October 2019 Southern Phone entered into a conditional agreement under which AGL Energy Limited (AGL) is proposing to acquire 100% of the company. The AGL offer is an all cash offer of $27.5 million, delivering a return of $785,714 plus a cash dividend estimated of $40,000 on each shareholder’s total investment of $2. Councillors had already received a detailed information pack from Southern Phone and a comprehensive briefing from the CEO of Southern Phone, David Joss. Mr Joss addressed the Councillors again today during Public Forum taking questions from councillors around the proposed sale of the shares. The offer from AGL is time limited and the Board is seeking shareholder views by the 29th November 2019. The Southern Phone’s Board unanimously recommends that shareholders accept the AGL Offer. During discussion Councillor McGinlay paid respect to the presentation by Jude Manahan, secretary of the Moruya Chamber of Commerce and moved that council sequester the proceeds of the sale for future job creation initiatives in the shire rather than to see the windfall frittered away and be lost in the inevitable cost blowout of the Mackay Park. In the end his amendment was diluted down to receiving a report in time as to what to do with the money.