ABB: ABB & OTW sign Scheme Implementation Deed

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ASX Announcement

2 December 2021

Aussie Broadband proposes to acquire Over the Wire in a recommended transaction

Highlights

• ABB has entered into a Scheme Implementation Deed with OTW under which it is proposed that ABB will acquire 100% of the share capital in OTW by way of a recommended scheme of arrangement.
• Scheme Consideration with an implied value of $5.75 per OTW share which comprises $5.75 cash, or 1.1500 ABB shares1 or a combination of cash and ABB shares.
• The implied offer value of $5.75 per OTW share represents:

1. total equity value of $344.0 million and an enterprise value of $390.4 million2.

• 1. an acquisition multiple of 11.8x EV / FY22E EBITDA2 based on OTW's FY22 EBITDA guidance of $33.0 million.
• The combination is anticipated to deliver annual cost synergies of between $8-12 million within 3 years and ongoing replacement capital expenditure savings, in addition to significant strategic and other benefits.
• The transaction is expected to be EPS accretive on a pre and post synergy pro-forma statutory FY21 basis.
• OTW directors unanimously recommend that OTW shareholders vote in favour of the Scheme and will vote their interests in favour of the Scheme, subject to an independent expert concluding that the Scheme is in the best interests of OTW shareholders and in the absence of a superior proposal.

Aussie Broadband Limited (ABB) is pleased to announce that it has entered into a Scheme Implementation Deed with Over the Wire Limited (OTW) under which ABB has agreed to acquire all of the issued shares in OTW by way of a scheme of arrangement (Scheme or Proposal).

The Scheme is unanimously recommended by the Board of OTW and each OTW director intends to cause any OTW shares which they own or control to be voted in favour of the Scheme, subject to an independent expert concluding that the Scheme is in the best interests of OTW shareholders and in the absence of a superior proposal.

Founded in 2005, Over the Wire is a technology company and integrated platform provider, with offices across Australia, with a stated purpose to simplify technology to empower business.

ABB co-founder and Managing Director, Phillip Britt, said the company is thrilled to reach this milestone. "We believe Over the Wire is a great match to complement our current range of services. It's a high quality business in a large and growing segment of the Australian telecommunications market.

"After several weeks of getting to know the company's senior team, we very much look forward to welcoming OTW to the Aussie Broadband family".

1. Assumes $5.00 per ABB share.
2. Enterprise value calculated on an implied fully diluted market capitalisation (Equity Value) of approximately $344.0m (59,820,564 OTW fully diluted shares outstanding (inclusive of vested performance rights, unvested performance rights, 2021 employee share option plan grants and FY22 performance rights grants) multiplied by $5.75 per OTW share) plus net debt of $46.4m as at 31 June 21 (inclusive of lease liabilities and deferred consideration).

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OTW Chair, Stephe Wilks said "We admire the Aussie Broadband business' strong ambitions and proven execution, and we are excited about the compelling customer propositions that OTW and ABB can bring to market together".

Having co-founded the business in 2005, Michael Omeros, Managing Director and Group CEO of OTW said "This is an exciting next step in the OTW journey, and I am very proud of what the OTW team has built over the years which is reflected in this compelling proposal for the company".

Overview of the Scheme

Under the terms of the Scheme, OTW shareholders will have the option to receive consideration representing an implied value of $5.75 per OTW share (Scheme Consideration) in one of four ways:

• 80% cash consideration and 20% scrip consideration (Default Option) equating to $4.60 cash and 0.2300 ABB shares for each OTW share;
• 100% cash consideration equating to $5.75 cash per OTW share (Cash Consideration);
• 100% scrip consideration equating to 1.1500 ABB shares for each OTW share (Scrip Consideration); or
• at least 1% but less than 100% scrip consideration with the balance payable as cash consideration (Mix and Match Consideration)

OTW shareholders who do not make an election or who make an invalid election, will receive the Default Option.

The value of ABB shares for the purposes of determining the number of ABB shares to be issued under the Default Option, Scrip Consideration and Mix and Match Consideration options above has been agreed at $5.00 per ABB share.

The Scheme Consideration is subject to the maximum total cash consideration payable by ABB not exceeding approximately $275.2 million (Maximum Cash Consideration) representing 80% of the total Scheme Consideration and the maximum total ABB scrip consideration not exceeding approximately

39.6 million ABB shares (Maximum Scrip Consideration) representing 57.5% of the total Scheme Consideration.

If OTW shareholders elect (or are deemed to have elected) to receive Scheme Consideration comprising aggregate total cash consideration that exceeds the Maximum Cash Consideration, then each OTW shareholder that has elected to receive cash (or is deemed to have elected to receive cash) will have their cash consideration scaled back and receive approximately 0.0020 ABB shares for each 1 cent of cash scaled back.3

Alternatively, if OTW shareholders elect (or are deemed to have elected) to receive Scheme Consideration comprising aggregate total scrip consideration that exceeds the Maximum Scrip Consideration, then each OTW shareholder who elects to receive scrip (or is deemed to have elected to receive scrip) will have their scrip consideration scaled back and receive approximately 1 cent of cash for each 0.0020 ABB shares scaled back.

Strategic rationale

The transaction provides the ability to integrate the OTW and ABB networks to achieve operational and financial scale, efficacy, improved margins and is EPS accretive on a pre and post synergy pro-forma statutory FY21 basis.

For ABB shareholders, the acquisition of OTW is expected to provide the following benefits:

• exposure to a significantly larger and diversified telecommunications company, with a strong combined growth profile and customer mix, including approximately 410,000 residential customers and 28,000 business customers of ABB with approximately 16,000 OTW business, enterprise and government customers;
• accelerates product and skills capability in the Aussie Broadband business segment with the addition of recurring and contracted revenue derived from the OTW customer base;

3 Excluding Foreign Scheme Shareholders as defined in the Scheme Implementation Deed.

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• the ability to share in the value creation from synergies as a result of the combination of two highly complementary business, noting that the transaction is expected to deliver annual cost synergies of $8 - $12 million within 3 years and meaningful maintenance capital expenditure savings; and
• enhanced trading liquidity through a broadened shareholder base, and potential for enhanced analyst coverage and inclusion in the S&P/ASX200 index.

Governance

Michael Omeros, current Managing Director and Group CEO of OTW, will join the ABB Board upon completion of the transaction, replacing John Reisinger who will step down as a director at the completion of transaction, but will remain as a senior executive with ABB.

The combined group will benefit from a highly experienced Board and a senior executive team that draws on the breadth of both companies' skills and expertise.

Scheme Implementation Agreement

OTW and ABB have entered into the attached Scheme Implementation Deed which contains customary terms and conditions on which OTW and ABB will implement the transaction. The conditions to the Scheme include OTW shareholder approval, Court approval, the independent expert concluding the Scheme is in the best interests of OTW shareholders, no material adverse change affecting OTW, no prescribed occurrence in relation to either OTW or ABB, OTW maintaining certain key customers and management and other customary conditions.

The Scheme Implementation Deed may be terminated in certain circumstances, including by OTW if ABB's share price falls by 17.5%4 or more after the date of the Scheme Implementation Deed relative to movements in the S&P/ASX 200 index and subject to minimum volumes of ABB shares being traded.

The Scheme Implementation Deed also includes customary exclusivity arrangements in favour of ABB (including "no shop", "no talk" and "no due diligence" restrictions and notification provisions, with the "no talk" and "no due diligence" restrictions subject to a fiduciary out where required), and certain matching rights for ABB.

It is anticipated that the Scheme will be completed in the first quarter of calendar year 2022. Please refer to the attached Scheme implementation Deed for further information.

Scheme Consideration Funding

The acquisition will be funded partly with the issue of new ABB shares as described above, with the balance funded by existing cash, new debt facilities totalling $175.0 million, inclusive of a new 3 year senior debt facility, bridging facility (if required and dependent on OTW aggregate scrip elections) and a new working capital facility.

Advisers

ABB is being advised by Findex Corporate Finance as financial adviser and Gadens as legal counsel.

OTW is being advised by Macquarie Capital (Australia) Limited as exclusive financial adviser and McCullough Robertson as legal counsel.

ENDS

Authorised for release by the Aussie Broadband Board.

4 Relative to an ABB share price of $5.00.

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Media enquiries contact Katrina Salhioui on 0448 110 962 Registry queries contact Link Market Services on 1300 554 474

For feedback and enquiries email [e-mail]

About Aussie Broadband Limited:

Aussie Broadband is an Australian owned and operated telecommunications company that was formed in 2008 and is based in Morwell Victoria, Australia.

The company's main focus is nbn™ (NBN) subscription plans and bundles to residential homes, small businesses, not-for-profits, corporate/enterprise and managed service providers.

As a licensed carrier, the company provides these services through a wholesale agreement with NBN Co, a mix of leased backhaul infrastructure from third parties and its own network equipment.

The company also offers a range of other telecommunications services including VOIP, mobile plans and handsets, entertainment bundles through its partnership with Fetch TV and connections through its own fibre, the Opticomm network and its white label platform.

DocuSign Envelope ID: 00D17D60-5D4F-435F-B42B-CAE71DE3354E

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Scheme Implementation Deed

Aussie Broadband Limited

Over The Wire Holdings Limited

Level 13, Collins Arch

447 Collins Street

Melbourne VIC 3000

Australia

1. [phone] F [phone]

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