3P Learning Limited (3PL) Earnings Call Transcript

Ladies and gentlemen, thank you for standing by 3P Learning Limited scheme meeting. I would now like to hand the conference over to your first speaker for today, Chairman, Sam Weiss. Thank you. Please go ahead.

Thank you, Anuja. Good morning, ladies and gentlemen and fellow shareholders in 3P Learning Limited. For those of you whom I have not met, my name is Sam Weiss, and I'm the Chairman of the Board of 3P Learning. Thank you for joining us today for the scheme meeting relating to the 3P Learning scheme of arrangement, which is being held online using the virtual meeting platform provided by our share registrar, Link Market Services Limited. If we experience any technical issues today, a short recess or an adjournment may be required depending on the number of shareholders being affected. If this occurs, I shall advise you accordingly. The meeting today is being recorded and will be available after the meeting concludes -- or a recording of the meeting will be available after the conclusion on our website. It is now 11 a.m. in Sydney and Liz Wang, our Company Secretary has advised me that a quorum is present, and I declare the meeting open. I'm joined today in the boardroom of 3P Learning by my fellow directors, starting on my left, Rebekah O’Flaherty, our Managing Director and Chief Executive Officer; and on my right, Roger Amos, Chair of our Audit Committee; and next to Roger, Mark Lamont. Joining online is Claire Hatton, Chair of our People and Culture committee. Also in the boardroom is Company Secretary, Liz Wang; and our Chief Financial Officer, Dimitri Aroney. The virtual platform for this meeting enables you to ask questions. Should you wish to ask a question, please click on the Ask a Question button at the top or bottom of the web page. We will review and respond to the questions received via the online platform later in the proceedings. Shareholders can submit their questions now and at any time during the proceeding until we advise you that the -- until we advise the meeting that discussion and time for questions has ended. I encourage those shareholders who have questions to send their questions through as soon as possible. On 14th August of this year, we announced that we had entered into a scheme implementation agreement with IXL Learning Inc. and IXL Australia Proprietary Limited, under which it was proposed that IXL would acquire all of the issued share capital in 3P Learning by way of a scheme of arrangement. If the scheme is implemented, 3P Learning shareholders will receive $1.35 in cash for each share that they hold. Today, shareholders will be asked to consider and vote on a resolution in relation to the proposed acquisition, which requires your approval for it to proceed. Firstly, I will provide an overview of the directors' recommendation, our independent experts' conclusion -- and our independent experts' conclusion in regard to the scheme. I will then present the scheme resolution to be considered, following which, there will be time for questions and answers. Immediately after the question-and-answer session, we will display the proxy votes received for the scheme resolution, and we will take a vote by poll on the resolution. The results of the scheme meeting will be announced to the ASX and posted on our website later today. All shareholders have received either an e-mail or a hard copy letter containing instructions on how to access the scheme booklet that was sent out on October 21, electronically. And it had a link to submit a proxy or a direct vote if you elected to receive communications electronically or, if not, you will have been sent a hard copy personalized voting form. The scheme booklet, which we will take as read includes a notice convening today's meeting, an overview of the scheme, the key considerations relevant to each vote, frequently asked questions and information about 3P Learning and IXL. The directors unanimously recommend that 3P Learning shareholders approve the scheme by voting in favor of the scheme resolution, subject to no superior proposal being made to acquire 3P Learning and the independent experts concluding and continuing to conclude that the scheme is in the best interest of 3P shareholders. All of my fellow directors and I intend to vote all of the 3P Learning shares held or controlled by us in favor of the scheme. The details for the basis of our recommendation and the reasons to vote in favor of the scheme or to vote against it were set out in section 1 of the scheme booklet. We appointed Lonergan Edwards & Associates Limited as an independent expert to assess the merits of the scheme. A copy of their report is included in the scheme booklet. The independent expert has concluded that the scheme is fair and reasonable and, therefore, in the best interest of 3P Learning shareholders taken as a whole in the absence of a superior proposal. The scheme contains a number of conditions precedent. The key conditions, which remain outstanding are shareholder approval of the scheme today and final approval by the Supreme Court of New South Wales at a second court hearing scheduled for Monday, the 23rd of November. Nothing has occurred to date which would prevent those conditions from being satisfied. Directors can confirm that, as of the date of this meeting, no superior proposal has been received by the company since the announcement of the scheme implementation agreement on 14th August. The independent expert has not changed its opinion that the scheme is fair and reasonable and, therefore, in the best interest of 3P shareholders taken as a whole in the absence of a superior proposal. You should all note that we announced on the 12th of November that we had received a nonbinding indicative proposal from Think & Learn Private Limited, which operates under the name BYJU. BYJU is a private ed tech company based in India. Subsequent to that, on the 18th of November, we announced the receipt of a revised nonbinding indicative proposal. You should refer to these announcements, which were posted on the ASX website and all subsequent ASX announcements for more information about the BYJU's proposal. Consistent with our obligations under the scheme, we have agreed to allow BYJU to undertake a period of due diligence and have provided data room access to BYJU to allow them to progress their revised indicative proposal. However, there is no certainty that the revised indicative proposal will [Audio Gap] in a binding offer from BYJU. And at this time, no such finding offer has been made. Given the conditionality attached to the revised indicative proposal, including completion of satisfactory confirmatory due diligence, unanimous Board recommendation and entry into a scheme implementation agreement, we are of the view that the revised indicative proposal is not, at this point in time, a superior proposal under the scheme implementation agreement that we entered into with IXL. Pursuant to the terms of the scheme, the directors continue to recommend shareholders to vote in favor of the scheme and to cast their votes in favor of it unless there is a superior proposal or there is a change in recommendation by the independent expert. As the scheme is conditional on 3P Learning shareholder approval, the scheme resolution needs to be approved by the requisite majorities of shareholders, which are at least 75% of the total number of votes cast on the scheme resolution at today's virtual meeting by direct vote or by proxy, attorney or corporate representative and a majority in number being more than 50% of shareholders present and voting at today's virtual meeting by direct vote, proxy, attorney or corporate representative. If the scheme resolution is passed by shareholders in the requisite majorities, the second court hearing will be held on Monday, the 23rd of November. If the court approves the scheme, a copy of the court order approving the scheme will be lodged with the Australian Securities and Investment Commission, and the scheme will become effective. On the implementation date, which is currently expected to be Thursday, December 3, shareholders who are registered on the scheme record date at 5 p.m. Australian Eastern Daylight Time on the 26th of November, will receive a cash consideration of $1.35 for each share that they hold. With this in the background, we shall now move to the formal business of the scheme meeting. We'll start by outlining how the meeting will be conducted. This is a meeting for 3P Learning Limited shareholders. And only shareholders, their proxies, attorneys and corporate representatives are entitled to vote or to ask questions today. As outlined in the notice of scheme meeting, I declare that the scheme resolution to be voted on by shareholders at today's meeting will be the subject of a poll, which will be conducted by our share registry, Link Market Services. The procedure, which we'll now outline -- which we will now follow is to outline the content of the scheme resolution and to allow for appropriate questions and responses and, once that is complete, to call for a poll on the scheme resolution. The results of the voting will be announced to the ASX as soon as possible after today's meeting. Shareholders attending the meeting online will be able to cast their vote on the virtual platform. Please refer to the virtual meeting online guide for further detail or use the health line specified if any assistance is required. Voting will end 5 minutes after the close of the meeting. Shareholders participating can click on the Ask a Question button to submit any questions. I would be grateful if you could include your name with each question. Each shareholder will have a reasonable opportunity to ask questions. However, we do reserve the right to rule out of order any questions considered to be repetitive, or we will group them together for a single answer, or outside of the scope of the meeting or the item of business under consideration today. The purpose of this meeting is to consider and, if thought fit, to approve the proposed scheme as set out in the scheme booklet. And I trust that you can all see the resolution on the slide show in front of you. I shall read it. Resolution, approval of the scheme of arrangement, that pursuant to and in accordance with Section 4.11 of the Corporations Act, the scheme of arrangement proposed between 3P Learning limited and [Audio Gap] its fully paid ordinary shares, the terms of which are contained in and more particularly described in the scheme booklet is approved with or without any modifications, alterations or conditions agreed in writing between 3P Learning and IXL and approved by the court or any modifications, alterations or conditions as thought just by the court to which 3PL and IXL agree in writing, and the directors of 3P Learning are authorized, subject to the terms of the scheme implementation agreement, to agree to any modifications, alterations or conditions with IXL, to agree to any modifications, alterations or conditions as are thought just by the court and, subject to approval of the scheme by the court, to implement the scheme with any such modifications, alterations or conditions. The notice of the scheme meeting was made electronically. It was made electronically available to all 3P shareholders and will be taken as read. The scheme resolution is now open for discussion. To submit your questions, please ask the Ask a Question button. I encourage shareholders who have questions to send their questions through now if you have not already done so. We'll pause for a moment in order to review the questions and to provide answers.

We have a question from shareholder, [ Elizabeth Seedcoat ]. Elizabeth, thank you very much for submitting your question which is, are 3P Learning accepting the first offer or the higher bid? Now I presume, Elizabeth, that the question is, are we accepting the offer from IXL of $1.35 or the revise -- the indicative offer from BYJU, which was first at $1.45 and is now at $1.50. And the answer to that question is that, the purpose of today's meeting is to vote on the offer from IXL. And under the terms of the scheme implementation agreement, the directors are recommending that shareholders vote on this offer and the directors themselves are voting in favor of it. We recognize that there is a separate offer from BYJU, a separate company, but that offer is not yet in a position to be accepted. It is an indicative proposal that is subject to various conditions. And as I mentioned earlier today, the Board is working with that company. However, we have a deadline of today to deal with the scheme implementation agreement with IXL, and that is the purpose of today's meeting.

No questions yet. We wait.

I note that there are quite a few people on the call. We'll give you a bit of time if anyone else has any questions. And can shareholders see the running tally of the votes? No. But they can see the proxy. The Company Secretary to confirm whether there are any more questions.

There's no more questions.