APA Group (ASX:APA) today lodged a Second Supplementary Bidder's Statement to address a number of serious flaws and deficiencies in Hastings Diversified Utilities Fund's Target's Statement and to further highlight why HDF securityholders should accept APA's offer.

Managing Director Mick McCormack said: "The directors of Hastings (as the HDF responsible entity) have labelled APA's offer as undervalued, however have not provided their own views on HDF's value, nor have they sought the views of an independent expert to provide a detailed analysis.

"The lack of disclosure raises questions about whether break fees from the mezzanine debt and the continuing payment of multi-million dollar performance fees will have a material impact on HDF's valuation.

Mr McCormack said the mezzanine debt appears to be unusual in its terms and conditions and, in APA's view, is likely to include break costs that will have a significant negative impact on the value of HDF securities. "The Hastings board has not provided any information to assess the value impacts of the mezzanine debt on HDF's business.

"HDF securityholders are the ones who will decide on this takeover offer, and they deserve to be informed by the Hastings board of important information that affects value.

The Second Supplementary Bidder's Statement notes that HDF's directors have failed to provide adequate information about the continuing payment of performance fees to Hastings Funds Management, who this month were paid $31.5 million in cash by HDF.

Mr McCormack also said that while Hastings had outlined several potential growth opportunities in its Target's Statement, no explanation has been provided as to how those opportunities are achievable, nor has any value been ascribed to the opportunities other than references to their potential.

In addition, APA was concerned about the validity of the financial performance comparisons used in the Target's Statement. Mr McCormack said: "The directors of Hastings have adjusted the benchmark indices to suit themselves, while the reality is HDF securities are trading below its offer price seven years ago.

Mr McCormack said there were a number of other incorrect or inadequate statements in the Target's Statement, which are addressed in APA's Second Supplementary Bidder's Statement.

"HDF securityholders should carefully read the Second Supplementary Bidder's Statement and urge the Hastings board to correct these deficiencies.

Since the offer was first announced on 14 December 2011, APA has continued to demonstrate its consistent delivery of strategy and robust financing capability. This is covered in detail in the Second Supplementary Bidder's Statement.

This includes the announcement of two committed expansion projects on the Goldfields Gas Pipeline and the issuance of a JPY10billion (A$126m) medium term note at competitive market rates. This brings the total amount of debt raised by APA since 30 June 2011 to over $2 billion.

Mr McCormack said: "This performance further highlights why HDF securityholders should accept APA's offer.