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15 September 2006
ORBITAL SETTLES R & D SYNDICATE
DISPUTE WITH COLES MYER
Perth, Australia: This information is
provided as an update to Orbital's announcements on 28 April 2006
and 3 August 2006.
Orbital today announced that it had settled
it's dispute with Coles Myer Ltd and subsidiaries ("CML")
concerning the joint venture R & D syndicated arrangements Orbital
and CML entered into in 1995 and 1996.
Orbital Corporation Ltd and subsidiaries ("Orbital")
entered into joint venture R & D syndicated arrangements with
CML to undertake research and development relating to production
of vehicles using Orbital's technology. The JV arrangements required
payment of licence fees for the use of Orbital's technology by the
CML/Orbital JV and this provided CML with reductions in tax in the
vicinity of $21.0 million.
Earlier this year CML informed Orbital that
the Australian Taxation Office (ATO) were reassessing the tax deductions
given to CML. CML has identified provisions of the relevant Transaction
Documents that it asserts are a warranty by Orbital that CML would
be entitled to tax deductions for licence fees paid by CML in the
R&D transactions. It has further asserted that any reassessment
of CML by the ATO would be a breach of that asserted warranty. CML
and the Commissioner of taxation have now reached agreement to settle
their tax dispute upon the basis that CML has been denied part of
the tax deductions for the 1994/1995 and 1995/1996 financial years.
Orbital denies any liability with respect to
the CML assertions. The commercial settlement comes after an already
expensive review process with our advisors and in order to avoid
further legal costs, wasted management time and uncertainty in the
market place Orbital has agreed to pay CML $500,000 in full and
final settlement of the Orbital/CML dispute.
At all stages Orbital took advice from and
relied on reputable experts and advisors in relation to the JV transactions.
Orbital will seek contribution from those third party advisers,
with respect to the above settlement with CML.
Forward Looking Statements
This release includes forward-looking statements
that involve risks and uncertainties. These forward-looking statements
are based upon management's expectations and beliefs concerning
future events. Forward-looking statements are necessarily subject
to risks, uncertainties and other factors, many of which are outside
the control of the Company, that could cause actual results to differ
materially from such statements. Actual results and events may differ
significantly from those projected in the forward-looking statements
as a result of a number of factors including, but not limited to,
those detailed from time to time in the Company's Form 20-F filings
with the US Securities and Exchange Commission. Orbital makes no
undertaking to subsequently update or revise the forward-looking
statements made in this release to reflect events or circumstances
after the date of this release.
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