Atlantic Gold NL, in the matter of Atlantic Gold NL (No 2) [2014] FCA 869

THE COURT ORDERS THAT:

Pursuant to paragraph 411(4)(b) and subsection 411(6) of the Corporations Act 2001 (Cth) (Act), the scheme of arrangement between the plaintiff (Atlantic) and the holders of fully paid and partly paid ordinary shares in Atlantic (Atlantic Shareholders), in the form of Annexure G to the scheme booklet behind Tab 2 of Exhibit WRB-1 to the affidavit of Walter Ralph Bucknell sworn 24 June 2014 and filed in this proceeding, be approved, subject to the following alterations: (a) deletion of the words "(other than statements of holding in favour of any Excluded Shareholders)" and "(other than entries on the Atlantic Share Register in respect of any Excluded Shareholders)" in clause 7.2(d) to the scheme of arrangement; (b) deletion of the definition of "Excluded Shareholder" in Schedule 1 to the scheme of arrangement; (c) deletion of the words "(other than the Excluded Shareholders)" from the definition of "Scheme Meeting" in Schedule 1 to the scheme of arrangement; (d) deletion of the words "(other than an Atlantic Fully Paid Share held by an Excluded Shareholder)" from the definitions of "Scheme Share Category 1" in Schedule 1 to the scheme of arrangement; and (e) deletion of the words "(other than an Atlantic Partly Paid Share held by an Excluded Shareholder)" from the definition of "Scheme Share Category 2" in Schedule 1 to the scheme of arrangement; and (f) Deletion of the words "(other than an Excluded Shareholder") from the definitions of "Scheme Shareholder Category 1" and "Scheme Shareholder Category 2" in Schedule 1 to the scheme of arrangement, so that the scheme of arrangement as altered and approved is in the form of Exhibit 1 in the proceeding (Scheme).

REASONS FOR JUDGMENT 1 This is the second court hearing of an application by Atlantic Gold NL brought under s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth) to approve a scheme of arrangement between Atlantic and its shareholders with certain alterations to which I will refer later. 2 The terms of the scheme were set out in Atlantic Gold NL, in the matter of Atlantic Gold NL [2014] FCA 697 and it is unnecessary to say anything further about them in the present reasons. The scheme meeting was held on 31 July 2014. The statutory majorities in favour of the scheme were obtained by a very comfortable margin. The principles to be applied in the exercise of the Court's discretion to approve a scheme are well established and need not be further discussed in the present matter. An example of the approach taken by the Court, referring in particular to the seminal authorities, is to be found in my judgment in Re Solution 6 Holdings Limited [2004] FCA 1049 at [18] - [24]; (2004) 50 ACSR 113 at 16 - 17. 3 At the scheme meeting, the votes of the partly paid shareholders were tagged in accordance with the approach referred to in my earlier judgment. The poll report which was in evidence indicates that by treating the partly paid shareholders notionally as a separate class, the requisite statutory majorities were obtained. That is to say, the statutory majorities were obtained amongst the fully paid shareholders themselves (if the votes of the partly paid shareholders were excluded) and also amongst the partly paid shareholders themselves (if the votes of the fully paid shareholders were excluded). So much appears from the evidence contained in the affidavit of Ms Liapis, sworn on 1 August 2014. 4 Two issues arise today. The first is that I am asked to approve the scheme subject to certain alterations in accordance with s 411(6). The principal alteration is to remove the references to excluded shareholders in the previous description contained in the draft scheme. 5 The approach to the making of an order under s 411, which deals with excluded shareholders, was referred to by Barrett J in Re Prime Infrastructure Holdings Limited [2010] NSWSC 1337 at [3]-[11]. His Honour indicated that it was undesirable to make an order in those terms unless and until the excluded shareholders were sufficiently identified. However, the issue does not arise in the present case because the evidence satisfies me that Spur holds no shares in Atlantic and it is therefore appropriate to delete the references to excluded shareholders thereby altering the terms of the scheme pursuant to s 411(6). 6 The only other alterations that are proposed are of a very minor nature. The principles to be applied in relation to alterations were stated in a number of propositions by Gyles J in Re Investorinfo Limited [2005] FCA 1848 at [6], [7]; (2006) 24 ACLC 44 at 46. I am satisfied in the present case that the proposed alterations fall within propositions 1, 3 and 5 of Gyles J's categories and I therefore propose to make an order in the terms sought. 7 The second matter is the so called "DUET order". I referred to the circumstances in which the need for such an order was required in my earlier judgment. It arises because of the fact that a large number of shares in the scheme company are held by Malaysian shareholders who were not provided with the explanatory memorandum and scheme booklet. However, as I said in my earlier judgment, the course which is proposed is in accordance with that which was followed by the Supreme Court of New South Wales in Re DUET Management Company 1 Limited [2013] NSWSC 817; (2013) 95 ASCR 34 and Re DUET Management Company 1 Limited (No 2) [2013] NSWSC 1060. The proposed order is in identical terms to the corresponding order made by the Supreme Court at the final hearing in the DUET matter. 8 One other matter needs to be mentioned this afternoon. As I said in my judgment at the first court hearing, Spur intends to issue securities which constitute the scheme consideration to US shareholders in reliance upon the exemption from registration requirements of the United States Securities Act 1933. The exemption is set out in s 3(a)(10) of that Act. The principles which apply and the approach which has been adopted by the Court were summarised by me in Re Solution 6 Holdings Limited at [37]-[44]. The approach which I propose to take in the present case is in accordance with the approach to which I referred in Solution 6. Importantly, that approach was based on a number of authorities which are generally regarded as the seminal authorities on this question. In accordance with that approach, it is appropriate to note the following: the scheme contemplates the issue of Spur securities as a scheme consideration; the Court was advised before commencement of the approval hearing that Atlantic and Spur would rely on the s 3(a)(10) of the US Securities Act exemption on the basis of the Court's approval of the scheme; the Court was informed of the manner in which the scheme consideration will be calculated and was informed of the securities to be offered as scheme consideration. An independent expert report sworn by the expert concluded that the proposal is in the best interests of Atlantic shareholders. The Court has taken that evidence into account in determining whether the scheme is fair and thus should be approved; the Court, as it is statutorily required to do, held a hearing to consider the fairness and reasonableness of the proposed scheme; and that hearing has been open to the public and any person to whom Spur Securities are to be issued has standing to appear. Notice of the date of the hearing was included in the scheme booklet sent to all shareholders of Atlantic prior to the proposal being considered by the meeting of those shareholders and was advertised in a daily newspaper circulating throughout the country. There was no appearance by any shareholder. 9 I was requested to make a note to the effect that Spur will rely on the Court's approval of the scheme for the purposes of qualifying for the exemption from registration requirements of the US Securities Act provided for by s 3(a)(10). I propose to record that note in the orders which I am about to make. For the reasons set out above and taking into account the submissions comprehensively recorded in the plaintiff's written submissions for the second court hearing, which I will mark as "MFI 4", I will make orders in accordance with the draft short minutes of order which I will sign, date and place with the court papers. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

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