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Council to consider endorsing sale of Southern Phone share at next meeting

A report is being presented to Eurobodalla Councillors next Tuesday (Nov 26th, 2019) to seek their 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 have now received a detailed information pack from Southern Phone along with a comprehensive briefing from the CEO of Southern Phone with an additional opportunity to participate in a webinar. The offer from AGL is time limited and the Board is seeking shareholder views by 29 November 2019 on if Council supports the purchase. The Southern Phone Board is recommending the sale on advice from legal and financial experts. The Southern Phone’s Board unanimously recommends that shareholders accept the AGL Offer. It is recommended that Councillors give the delegated authority to the General Manager to arrange the sale of shares in Southern Phone and that Council appoints the General Manager as its representative for the purpose of the Share Sale Agreement. They will also be asked to vote on giving Power of Attorney to the General Manager to vote at the Extraordinary Meeting of Southern Phone in favour of a special resolution to update the Southern Phone (Company) constitution, including to permit non-council Shareholders of the Company.

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