Earlier this month, Pepper announced that it had entered into a scheme implementation deed with an entity owned by California-based KKR Credit Advisors.
The KKR entity, known as Red Hot Australia Bidco, has proposed to acquire all of Pepper’s shares. If granted, Pepper shareholders will receive a cash payment of $3.60 per Pepper share plus a 3 cent dividend.
With more than 181 million shares on issue, KKR will acquire Pepper for close to $675.9 million, $37 million more than the current market cap of $638 million. Pepper shares were valued at $3.43 before the market opened this morning.
"After careful consideration, we believe this offer is consistent with the board’s efforts to deliver maximum value for shareholders,” Pepper group chairman Seumas Dawes said at the time.
“We believe it represents a compelling opportunity for shareholders, allowing them to choose to either obtain liquidity for their shares at an attractive valuation or remain invested in the Pepper business.”
The company has now revealed that if the transaction were to complete, Pepper Group would de-list from the Australian Securities Exchange and return to private ownership.
While Pepper shareholders will be given the opportunity to vote on the scheme at the shareholder meeting, which is expected to be held in November 2017, it has been revealed that the directors of the company have unanimously recommended that shareholders vote in favour of the scheme in the absence of a superior proposals and subject to an "independent expert" concluding (and continuing to conclude) that the scheme is in the best interests of Pepper shareholders.
Documents relating to that meeting will be sent out in October.
[Related: Pepper to consolidate rather than invest]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.