Twenty-First Century Fox 2004 Annual Report Download - page 79

Note 10 Proposal to reincorporate in the United States
In April 2004, the Group announced that it would pursue a reorganisation that would change the Group’s place of
incorporation from Australia to the United States. In August 2004, the Group announced that a Special Committee of Non-
executive Directors and the Board of Directors of the Group have unanimously recommended the proposed reorganisation
of the Group.
The proposed reorganisation will be accomplished under Australian law whereby existing holders of the Group’s ordinary
and preferred shares, including those ordinary shares and preferred limited voting ordinary shares represented by
American Depositary Shares (“ADSs”), will have their shares cancelled and receive in exchange shares of voting and non-
voting common stock of a newly formed Delaware corporation (“News Corp U.S.”) at a one-for-two ratio. In connection with
this reorganisation, the Group would acquire from the Murdoch Interests the approximate 58% interest in Queensland Press
Pty Ltd. (“QPL”) not already owned by the Group through the acquisition of the Cruden Group of companies. The Murdoch
Interests are certain trusts, the beneficiaries of which include Mr. Rupert Murdoch, members of his family and certain
charities.
The principal assets of the Cruden Group are shares of the Group and a 58% interest in QPL. QPL owns a publishing
business which includes two metropolitan and eight regional newspapers in Queensland, Australia, as well as shares of
News Corporation.
The Special Committee retained independent legal counsel, and retained UBS as independent financial adviser, to advise
it with respect of the Cruden/QPL transaction and the reincorporation. The Special Committee has unanimously
recommended the transactions to the Board. In reaching its recommendation, the Special Committee considered the
fairness opinion of UBS Australia with respect to the consideration to be paid by the Group in the Cruden/QPL transaction
and financial and market advice given by UBS with respect to the reincorporation.
The proposed reorganisation and the relevant documentation is subject to approval by the Australian Securities and
Investments Commission (ASIC) and the Australian Federal Court for approval to convene a meeting of News Corporation’s
ordinary and preferred shareholders and option holders so that they can formally consider and vote on the proposal.
The Group has appointed Grant Samuel & Associates Pty Ltd as an independent expert to opine on the fairness of the
proposed transactions. If approved, the proposed transactions are expected to be completed by the end of this calendar year.
As a result of the reorganisation, News Corp U.S., which will be called “News Corporation”, will become the new parent
company of the Group. News Corp U.S. will have a primary listing on the New York Stock Exchange and secondary listings
on the Australian Stock Exchange and the London Stock Exchange.
The Special Committee, advised by UBS, and the Murdoch Interests have agreed to a valuation of $2.95 billion for the entire
QPL publishing business, less the net debt of QPL which is estimated to be approximately $488 million at closing plus $21.5
million which is the market value of QPL’s non-publishing assets. The Murdoch Interests will receive voting common stock
in News Corp U.S. in exchange for the value of their 58% pro rata ownership of the QPL publishing business, net of debt,
based on the average closing price of the shares of the Group on the Australian Stock Exchange for the five trading days
ending on 15 July, 2004 ($12.13 per ordinary share and $11.35 per preferred share). In exchange for the Group shares owned
directly through the Cruden Group and indirectly (through QPL) by the Cruden Group, the Murdoch Interests will receive
shares of News Corp U.S. in the same exchange ratio as all other holders of Group shares in the reorganisation. The shares
of News Corp U.S. non-voting stock that the Murdoch Interests receive will be reduced by the number of shares equal in
value to the net debt of the Cruden Group which is being assumed by the Group in the transaction, which is estimated to be
$327 million at closing. After the transactions are completed, the Murdoch Interests will own approximately 29.47% of the
voting shares of News Corp U.S., which is slightly less than the 29.86% of the voting shares of the Group that the Murdoch
Interests currently control.
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NEWS CORPORATION CONCISE REPORT 2004
Notes to and forming part of the Concise Financial Report
(continued)
for the year ended 30 June, 2004