Anzon Energy Limited, in the matter of Anzon Energy Limited [2008] FCA 310

Federal Court of Australia|2008-03-05|Before: Lindgren J

Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (Corporations Act): (a) Anzon Energy Limited ABN 43 097 972 364 (Anzon Energy) convene a meeting (Scheme Meeting) of the holders of ordinary shares in Anzon Energy, other than the holders of Excluded Shares in respect of those Excluded Shares (Anzon Energy Shareholders), for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed to be made between Anzon Energy and Anzon Energy Shareholders (Scheme), being the scheme substantially in the form of the draft contained in section 19 of the scheme booklet containing the explanatory statement in relation to the Scheme, being Exhibit "A" in these proceedings (Scheme Booklet). (b) The Scheme Meeting be held at 12 noon on 18 April 2008 at the offices of Deacons, Level 18 Grosvenor Place, 225 George Street, Sydney, New South Wales. (c) The Chairperson of the Scheme Meeting be Michael Norman Arnett and in his absence Andrew Alexander Young. (d) The Chairperson appointed to the Scheme Meeting has the power to adjourn the Scheme Meeting in his absolute discretion. (e) All voting at the Scheme Meeting be by poll as declared by the Chairperson. (f) At the Scheme Meeting, a person will be entitled to one vote for each Anzon Energy share they are registered as holding at 12 noon (Australian Eastern Standard Time) on 17 April 2008. (g) The explanatory statement in the Scheme Booklet for the Scheme be approved for distribution to Anzon Energy Shareholders. (h) There be dispatched or personally served: (i) a document substantially in the form of the Scheme Booklet; (ii) a covering letter; (iii) a proxy form for the Scheme Meeting; (iv) an election form for the scheme consideration; (v) a reply paid (for use in Australia only) envelope addressed to Computershare Investor Services Pty Limited for the return of the proxy form; and (vi) a reply paid (for use in Australia only) envelope addressed to Computershare Investor Services Pty Limited for the return of the election form, in the case of each Anzon Energy Shareholder who has a registered address in Australia, by prepaid post and, in the case of each Anzon Energy Shareholder who has a registered address outside Australia, by prepaid airmail or air courier, in each case addressed to the relevant address set out in the Anzon Energy register of members. (i) The time by which the Anzon Energy Shareholders must return their proxy forms for the Scheme Meeting be 12 noon (Australian Eastern Standard Time) on 17 April 2008.

(j) Anzon Energy place an advertisement in The Australian newspaper, substantially in the form of "Annexure A" to these Orders, on or before 14 April 2008 and Anzon Energy shall otherwise be exempted from compliance with the requirement to publish such notice at least 5 days before the date fixed for hearing of the application pursuant to Rule 3.4(3)(b) of the Federal Court (Corporations) Rules 2000 (Cth). (k) The proposed AIM announcement in the terms proposed and in the circumstances stated in paragraph 25 of the affidavit of Anthony James Strasser affirmed 4 March 2008 be approved. 2. Pursuant to section 1319 of the Corporations Act, Anzon Energy be exempted from compliance with the requirements of rule 2.15 of the Federal Court (Corporations) Rules 2000 save that regulation 5.6.13 of the Corporations Regulations 2001 shall apply to the Anzon Energy Scheme Meeting. 3. The plaintiff exercise the liberty to apply referred to in Order 5 if the plaintiff proposes to advise the Anzon Energy Shareholders of any material change in the estimated Anzon Energy Offer Price (as defined in the Scheme Booklet). 4. The proceedings be stood over to 22 April 2008 at 9.00 am before Justice Lindgren for the hearing of any application to approve the Scheme. 5. Liberty to restore to the list. 6. These orders to be entered forthwith. In these orders, an Excluded Share is a fully paid ordinary share in Anzon Energy held by Nexus Energy Limited ABN 64 058 818 278 or its Related Bodies Corporate (as defined in section 50 of the Corporations Act). Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ANNEXURE A Anzon Energy Limited ABN 43 097 972 364 Notice of hearing to approve compromise or arrangement TO all the creditors and members of Anzon Energy Limited ABN 43 097 972 364 (Anzon Energy). TAKE NOTICE that at 9.00 am on 22 April 2008 the Federal Court of Australia at Law Courts Building, Queens Square, Sydney, NSW, 2000 will hear an application by Anzon Energy seeking the approval of an arrangement between Anzon Energy and its members, if agreed to by resolution to be considered by the members of Anzon Energy at a meeting of such members to be held on 18 April 2008 at the offices of Deacons, Level 18 Grosvenor Place, 225 George Street, Sydney, New South Walesat 12 noon (Sydney time). If you wish to oppose the approval of the arrangement, you must file and serve on Anzon Energy a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Anzon Energy at its address for service at least 1 day before the date fixed for the hearing of the application. The address for service on Anzon Energy is, c/o Corrs Chambers Westgarth, Level 32, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000 (Reference: Stan Lewis). Tony Strasser Company Secretary Anzon Energy Limited IN THE FEDERAL COURT OF AUSTRALIA

IN THE MATTER OF ANZON ENERGY LIMITED (abn 43 097 972 364) BETWEEN: ANZON ENERGY LIMITED

INTRODUCTION 1 On 5 March 2008 I made an order pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act) on the application of the plaintiff, Anzon Energy Limited (Anzon Energy) that Anzon Energy convene a meeting of its ordinary shareholders, other than the holders of Excluded Shares, for the purpose of their considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement between Anzon Energy and its shareholders (Scheme Meeting, Shareholders and Scheme respectively). An Excluded Share is a fully paid ordinary share in Anzon Energy held by Nexus Energy Limited (Nexus) or its related Bodies Corporate as defined in s 50 of the Act. 2 I also made an order pursuant to s 411(1) of the Act approving the explanatory statement required by s 412(1)(a) of the Act to accompany the notice convening the Scheme Meeting for distribution to the Shareholders. 3 These are the reasons why I made those orders. 4 Earlier, on 14 December 2007, I had made similar orders in connection with a then proposed scheme (ARC Scheme) by which ARC Energy Limited (ARC) was proposing to acquire the shares in Anzon Energy other than fully paid ordinary shares held by ARC or its Related Bodies Corporate as defined in s 50 of the Act: see Anzon Energy Limited, in the matter of Anzon Energy Limited [2007] FCA 2080 (earlier Reasons). What has happened is that Nexus has made a superior proposal, and the directors of Anzon Energy have ceased to support the ARC Scheme in favour of supporting the Nexus Scheme.

REASONING 5 The Nexus Scheme is very similar to the earlier ARC scheme. In these circumstances, I have decided not to set out extensively my reasons for my making of the orders of 5 March 2008. I will ensure that a copy of the submissions dated 4 March 2008 of Senior Counsel for Anzon Energy is placed on the Court file. Those submissions reflect in substance my reasons. I will refer here only to particular aspects of the Nexus Scheme and of the evidence that appear to call for comment.

Break fee 6 Anzon Energy has paid to ARC the break fee of $2.5 million that was provided for in cl 10 of the Merger Implementation Deed (MID) relating to the ARC Scheme: see the earlier Reasons at [21]-[24]. Anzon Energy's liability to pay that amount arose due to the fact that the directors of Anzon Energy withdrew their support for the ARC Scheme in favour of supporting the Nexus Scheme. 7 Clause 10 of the MID for the Nexus Scheme provides for payment of a break fee by each of Anzon Energy or Nexus in the amount of $2.5 million should certain events occur. Accordingly, the break fees are "reciprocal" or "mutual". The break fee payable by Anzon Energy is not a "naked no vote" break fee: cf Bolnisi Gold NL (No 2) [2007] FCA 2078. The amount of $2.5 million is less than the 1% "guidance ceiling" accepted by the Takeover Panel. There is evidence before the Court of a kind to which I referred in Re APN News & Media Ltd (2007) 62 ACSR 400 at [55].

A related scheme 8 Anzon Energy holds approximately 53% of the shares in Anzon Australia Limited (Anzon Australia). Nexus has proposed a scheme of arrangement in respect of Anzon Australia and on 4 March 2008 I ordered Anzon Australia to convene a meeting of its shareholders to consider that scheme: see Anzon Australia Limited, in the matter of Anzon Australia Limited [2008] FCA 309. The Nexus Scheme and the Anzon Australia scheme are not inter-conditional.

Independent Expert's Report 9 In relation to the earlier ARC Scheme, Deloitte Corporate Finance Pty Ltd (Deloitte), an independent expert retained by the board of directors of Anzon Energy, assessed the then proposed ARC Scheme and concluded that that the ARC Scheme was in the best interests of the shareholders in the absence of a superior proposal. Deloitte has now performed a similar exercise in relation to the Nexus Scheme. In summary, Deloitte has assessed the fair market value of each share in Anzon Energy as lying between $2.25 (₤1.03) and $2.50 (₤1.15), and has estimated the fair market value of the consideration offered by Nexus as being $2.84 (₤1.31). Under the earlier proposed ARC Scheme, Deloitte had estimated the fair market value of an Anzon Energy share to be between ₤1.00 and ₤1.10, and had estimated the fair market value of the ARC Scheme consideration to be between ₤1.20 and ₤1.29 per Anzon Energy share: see the earlier Reasons at [18].

Announcement of further financial results by Nexus 10 Nexus intends to release its half year financial results to 31 December 2007 on 14 March 2008. Anzon Energy expects to announce its full year financial results to 31 December 2007 by 31 March 2008. This financial information will represent an update of the financial information for Nexus and Anzon Energy contained in the Scheme Booklet. 11 Following the release of those financial results, Anzon Energy will instruct Deloitte to confirm that, taking the results into account, its opinion that the Nexus Scheme is fair and reasonable and therefore in the best interests of the Shareholders has not changed. That confirmation, assuming that it is forthcoming, will be publicised in advance of the Scheme Meeting.

CONCLUSION 12 It was for the above reasons and the additional reasons set out in Senior Counsel's submissions to which I referred, that I was of the opinion that the Shareholders should have the opportunity of voting on the Nexus Scheme and that I ordered Anzon Energy to convene the Scheme Meeting. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Associate: Dated: 11 March 2008 Counsel for the plaintiff: Mr T F Bathurst QC

Solicitor for the plaintiff: Corrs Chambers Westgarth

Counsel for Nexus Energy Limited: Mr I M Jackman SC

Solicitor for Nexus Energy Limited: Baker & McKenzie

Date of Hearing: 4, 5 March 2008

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