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Australian Casino Rules Scrutinized

14 July 2004

AUSTRALIA – As reported by the Australian: "With two days till the Packer family's PBL discloses whether it will extend or close its takeover bid for West Australian casino operator Burswood, it's time to consider whether constraints should apply to PBL's tactics.

"Three weeks ago PBL declared its $1.30 a share cash offer unconditional but said it would increase the bid price to $1.36 if it obtained 90 per cent of Burswood and the target directors unanimously recommended acceptance.

"PBL also declared $1.36 its final offer price.

"…PBL's tactic effectively introduced a 90 per cent minimum acceptance condition but with the difference that any acceptances before that condition is satisfied are binding and at the lower bid price of $1.30. Target holders run the risk that they may accept in order to obtain $1.36 but only get $1.30.

"If they accepted a conditional bid and the condition wasn't satisfied or waived, they would get their scrip back.

"…The dilemma for target holders is the risk that if they don't accept, PBL may reach effective control -- 40 to 50 per cent -- and allow the bid to close. Remaining holders would miss out on $1.30, the market price of Burswood shares would fall and it would be controlled by PBL, which might stop dividend payments…"

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