AMP Ltd [2003] FCA 1479

REASONS FOR JUDGMENT 1 On 16 October 2003, I ordered, pursuant to s 411(1) of the Corporations Act 2001 (Cth) ('the Corporations Act') that a meeting of the members of the plaintiff, AMP Limited ('AMP'), be convened for the purposes of considering and, if thought fit, agreeing to an arrangement between AMP and its members: see In the matter of AMP Ltd [2003] FCA 1465. I now have before me an application by AMP for an order, pursuant to s 411(4)(b) of the Corporations Act, approving the arrangement comprised in the scheme which has been agreed to at the meeting of members so convened. 2 By the operation of s 411(10), any order made for the purposes of s 411(4)(b) will not have any effect until an office copy of the order is lodged with the Australian Securities and Investments Commission ('the Commission'). Further, under s 411(17), the Court must not approve an arrangement pursuant to s 411 unless either the Court is satisfied that the arrangement has not been proposed for the purpose of enabling any person to avoid the operation of Ch 6 of the Corporations Act (which deals with takeovers) or there is produced to the Court a statement in writing by the Commission that the Commission has no objection to the arrangement. 3 I am satisfied from the evidence contained in the affidavits read on the hearing of this application that a meeting of the members of AMP was convened in accordance with my order of 16 October 2003. In that regard, I have considered affidavits relating to activities of the following service providers in relation to the convening of the meeting:

The Supplement was released to ASX on 28 November 2003 and, on the same day, AMP placed the Supplement on its internet web site. The Supplement was published in full on 29 November 2003 in The Australian Financial Review, The Australian, The Daily Telegraph and The Times (London) newspapers and in major New Zealand daily newspapers. 9 The Supplement describes the more significant of the matters set out in the listing particulars published by HHG with the United Kingdom Listing Authority to facilitate the listing of HHG on the London stock exchange. Those matters included:

a proposed HHG equity raising;
HHG's regulatory capital position;
the consequences of a consultation paper relating to the United Kingdom regulatory capital requirements applying to the businesses of HHG; and
the fact that there will be insufficient cash earnings to facilitate the payment of a dividend by HHG in the near future. 10 The Explanatory Memorandum made reference to the Income Securities of AMP. The Explanatory Memorandum contained a statement that AMP did not consider that in an event of default had or would occur under the terms of the Income Securities as a result of the announcement or implementation of the Demerger. The Explanatory Memorandum also stated that, if such an event of default were to occur, then the trustee for the holders of the Income Securities, or any holder in relation to that holder's Income Securities may declare the outstanding principal amount of the Income Securities, to be due and payable by AMP Group Finance Services Ltd. If such a declaration were valid, AMP would need to repay or refinance all or some of the Income Securities. 11 On 28 November 2003, Perpetual commenced a proceeding in the Equity Division of the Supreme Court of New South Wales seeking advice that Perpetual was justified in acting on the basis that the implementation of the Demerger would not constitute an event of default in relation to the terms of the Income Securities. On 3 December 2003, Perpetual filed an amended summons seeking advice that Perpetual was justified in proceeding for the time being on the basis that no event of default under the terms of the Income Securities would occur if the scheme was approved by shareholders of AMP and the Demerger was implemented. The proceeding in the Equity Division was listed for hearing before Young CJ in Eq on 1 December 2003 and 3 December 2003. On the latter date, Young CJ in Eq concluded that it was not necessary for the Court to give any advice at that point and adjourned the matter to 18 December 2003. 12 AMP has AUD $1.24 billion of Income Securities on issue. If, contrary to the views expressed in the Explanatory Memorandum, the application for judicial advice results in the Equity Division concluding that a default event has occurred, then, under the terms of the Income Securities, AMP could be required to redeem or refinance all of the Income Securities at their face value. Against that possibility, which AMP does not believe is likely, AMP has taken steps to secure a bridging facility for up to AUD $2.7 billion, which exceeds its current combined indebtedness under the Income Securities and other debt securities. 13 In an affidavit sworn on 11 December 2003, Mr Paul Donald Leaming, the Chief Financial Officer of AMP, expressed the opinion that, in the event that AMP is required to draw down under that bridging facility, to redeem the Income Securities or other debt securities, the additional interest expense and costs that would be incurred in doing so would not have a material adverse effect on AMP's financial position, performance or prospects and, if it were necessary to draw down under the bridging facility, that would not have a material adverse affect on AMP because it would amount to the substitution of one form of debt for another form of debt. 14 The term of the bridging facility is twelve months to allow AMP sufficient time to put in place longer-term funding arrangements at a lower cost than a bridging facility. Any draw down by AMP under the bridging facility is subject to conditions that are designed to ensure that AMP's condition is such that longer-term refinancing of the bridging facility can be completed successfully. I also have evidence before me in the form of an affidavit of Jonathan Gidney, who has had significant experience in relation to capital raisings by listed companies. Mr Gidney says that he is confident that AMP would be able to refinance the bridging facility for up to AUD $2.7 billion at the end of its 364 day term, if required to do so. Mr Leaming is also confident that AMP will be able to refinance the bridging facility within the 12 month period. 15 I do not consider that the matters referred to in the Supplement constitute a reason why the Court should not approve the Scheme pursuant to s 441(4)(b) of the Corporations Act. 16 On 16 October 2003, I ordered that compliance with certain provisions of the Federal Court (Corporations) Rules 2000 be dispensed with. However, I ordered that, not later than 5 December 2003, AMP's application for orders under s 411(4)(b) be advertised once in The Australian newspaper. The form of advertisement pursuant to that order stated that anyone who wished to oppose the approval must file a notice of appearance by 4 pm on 10 December 2003. I am satisfied by the evidence of Mr Ashley John Black, a partner of AMP's solicitors, Mallesons Stephens Jaques, that no notice of appearance has been filed on behalf of any person intending to oppose the making of orders pursuant to s 411(4)(b) of the Corporations Act. 17 In the circumstances, I consider that it is appropriate to make an order in accordance with s 411(4)(b) of the Corporations Act approving the Scheme as agreed to at the meeting of members of AMP convened on 9 December 2003, pursuant to the orders made by me on 16 October 2003. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

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