Coates Hire Limited (ACN 073 603 586) No 2, in the matter of Coates Hire Limited (ACN 073 603 586) [2007] FCA 2105

1.1 Definitions The following definitions apply unless the context requires otherwise. ASIC means the Australian Securities and Investments Commission. ASX means ASX Limited (ABN 98 008 624 691) or, as the context requires, the financial market operated by it. ASX Listing Rules means the official listing rules of ASX. Bidco means Ned Group Holdings Pty Limited (ACN 126 739 240). Business Day has the meaning given in the ASX Listing Rules. CHESS means the clearing house electronic sub-register system of share transfers operated by ASX Settlement and Transfer Corporation Pty Limited (ACN 008 504 532). Coates Shareholder means a person who is recorded in the Register as the holder of Coates Shares. Coates Shares means fully paid ordinary shares in the capital of Coates. Corporations Act means the Corporations Act 2001 (Cth). Court means a court of competent jurisdiction under the Corporations Act. Covenantor means Ned Operations Pty Limited(ACN 126 069 341). Deed Poll means the Deed Poll executed by Bidco and the Covenantor on 9 November 2007 in favour of Scheme Participants. End Date means 29 February 2008, or such later date as Coates and Bidco may agree in writing. Effectivemeans the coming into effect, pursuant to section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) in relation to the Scheme. Effective Date means the date on which the Scheme becomes Effective. Guarantor means CAP Orange Holding B.V. of 8 Queensway, 2 Pacific Place, Hong Kong. Implementation Agreement means the Scheme Implementation Agreement dated 2 October 2007 between Coates, Bidco, the Covenantor and the Guarantor relating to the implementation of the Scheme. Implementation Date means the fifth Business Day following the Record Date. Record Datemeans 5.00pm on 2 January 2008, or such other date as notified by Coates to the ASX. Register means the register of members of Coates. Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Coates and the Coates Shareholders as set out in this document, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act. Scheme Consideration means $6.06 cash for each Coates Share held by a Scheme Participant as at the Record Date. Scheme Participant means a person who is a Coates Shareholder as at the Record Date (other than Bidco to the extent that it holds Coates Shares). Second Court Datemeans the first day on which the application made to the Court for an order pursuant to section 411(4)(b) of the Corporations Act approving the Scheme is heard or, if the application is adjourned for any reason, the first day on which the adjourned application is heard. Special Dividend means a fully franked cash dividend of $0.53 for each Coates Share held by a Scheme Participant as at the Special Dividend Record Date. Special Dividend Record Date means 5.00pm on 2 January 2008, or such other date as notified by Coates to the ASX.

1.2 Interpretation Headings are for convenience only and do not affect interpretation. The following rules of interpretation apply unless the context requires otherwise.

(a) Words importing the singular include the plural and vice versa.

(c) An expression importing a natural person includes any company, partnership, joint venture, association, corporation or other body corporate.

(d) A reference to a clause is a reference to a clause of this Scheme.

(e) A reference to a statute, regulation, proclamation, ordinance or by‑law includes all statutes, regulations, proclamations, ordinances or by‑laws amending, consolidating or replacing it, whether passed by the same or another governmental agency with legal power to do so, and a reference to a statute includes all regulations, proclamations, ordinances and by‑laws issued under that statute.

(i) all amendments or supplements to, or replacements or novations of, that document; and

(ii) any agreement in writing, or any certificate, notice, instrument or other document of any kind whether stored or provided in paper or electronic form.

(g) Where a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning.

(h) The word "includes" in any form is not a word of limitation.

(i) A reference to "$" or "dollar" is to Australian currency.

(j) A reference to any time is a reference to that time in Sydney, Australia.

1.3 Business Day Except where otherwise expressly provided, where under this Scheme the day on which any act, matter or thing is to be done is a day other than a Business Day, such act, matter or thing will be done on the next Business Day.

(a) Coates is a public company registered in New South Wales and is a company limited by shares. Coates is admitted to the official list of the ASX and Coates Shares are officially quoted on the ASX.

(b) As at 26 October 2007, there were 251,661,148 Coates Shares on issue.

(c) Bidco is a proprietary company registered in Victoria, Australia and is a company limited by shares.

(i) all the Coates Shares will be transferred to Bidco, and Bidco will pay the Scheme Consideration to Scheme Participants in accordance with the provisions of the Scheme and the Deed Poll; and

(ii) Coates shall enter the name of Bidco in the Register in respect of all the Coates Shares.

(e) Coates, Bidco, and the Covenantor have agreed by executing the Implementation Agreement, to implement this Scheme.

(f) Bidco and the Covenantor have entered into a Deed Poll in favour of Scheme Participants pursuant to which:

(i) Bidco has covenanted to perform its obligations under the Implementation Agreement, including to pay the Scheme Consideration in accordance with the terms of the Deed Poll; and

(ii) the Covenantor has covenanted to perform their obligations under the Implementation Agreement, and to procure that Bidco performs its obligations under the Implementation Agreement and the Deed Poll.

3.1 Conditions precedent to Scheme The Scheme is conditional upon satisfaction of each of the following conditions:

(a) as at 8.00am on the Second Court Date each of the conditions precedent set out in clause 3.1 of the Implementation Agreement has been satisfied or, where permitted, waived in accordance with clause 3 of the Implementation Agreement;

(b) as at 8.00am on the Second Court Date the Implementation Agreement has not been terminated; and

(c) the Court has approved this Scheme for the purposes of section 411(4)(b) of the Corporations Act with or without modification.

(a) The fulfilment of clause 3.1 of the Implementation Agreement is a condition precedent to the operation of the provisions of clause 4 of this Scheme.

(b) Coates, Bidco and the Covenantor must provide to the Court a certificate confirming whether or not as at 8.00am on the Second Court Date all of the conditions precedent in clause 3.1 of the Implementation Agreement have been satisfied or waived. The certificate constitutes conclusive evidence that such conditions precedent are satisfied, waived or taken to be waived.

(c) The Scheme will lapse and be of no further effect if the Effective Date has not occurred on or before the End Date or such later date as Coates and Bidco may agree in writing.

As soon as practicable, following approval of the Scheme by the Court in accordance with section 411(4)(b) of the Corporations Act, and in any event by no later than 10.00 am on the Business Day following that approval, Coates will lodge with ASIC an office copy of the Court order under section 411(10) of the Corporations Act approving the Scheme. The Court order is taken to have effect on and from the time and date specified in that order.

(i) subject to Bidco having deposited the requisite funds into the trust account as referred to in clause 4.2(a)(ii), all of the Coates Shares (together with all rights and entitlements attaching to the Coates Shares as at the Implementation Date) will be transferred to Bidco without the need for any further act by any Scheme Participant (other than acts performed by Coates or its directors or officers as attorney and agent for the Scheme Participants under clause 7.8) and the transfer will be deemed to be effective on the Implementation Date;

(ii) in consideration for the transfer of the Coates Shares to Bidco, Coates must procure that Bidco, in accordance with the Deed Poll, deposits or procures the deposit, of an amount equal to the aggregate amount of the Scheme Consideration payable to the Scheme Participants, into a trust account operated by Coates as trustee for the Scheme Participants; and

(iii) subject to Bidco having deposited the requisite funds into the trust account as referred to in clause 4.2(a)(ii), Coates must pay or procure the payment of the Scheme Consideration to each Scheme Participant from the trust account referred to in clause 4.2(a)(ii).

(b) The obligation of Coates under clause 4.2(a)(iii) will be satisfied by Coates on the Implementation Date, dispatching, or procuring the dispatch, to each Scheme Participant by pre-paid post to his or her address recorded in the Register at the Record Date, a pre-printed cheque for the Scheme Consideration in the name of the Scheme Participant or by payment to a Scheme Participant by electronic funds transfer. In the case of joint holders of Coates Shares, the cheque shall be payable to and be forwarded to, or the electronic funds transfer will be made to, the holder whose name appears first in the Register at the Record Date.

(c) Subject to Bidco having deposited the requisite funds into the trust account as referred to in clause 4.2(a)(ii):

(i) on the Implementation Date, Coates must (as attorney and agent for the Scheme Participants under clause 6.8) deliver to Bidco a duly completed and executed share transfer form or forms to transfer all of the Coates Shares to Bidco; and

(ii) immediately following receipt of the share transfer form(s) in respect of the Coates Shares executed by Bidco, Coates must enter the name of Bidco in the Register in respect of all of the Coates Shares.

(d) The Scheme Participants agree to the transfer of their Coates Shares (together with all rights and entitlements attaching to their Coates Shares) in accordance with the Scheme.

(e) Upon the Scheme becoming Effective and until Coates registers Bidco as the holder of all the Coates Shares in the Register, each Scheme Participant:

(i) is deemed to have appointed Bidco and each of its directors and officers (jointly and severally) as its attorney and agent (and directed Bidco and each of its directors and officers (jointly and severally) in such capacity to appoint a director of Bidco as its sole proxy and, where applicable, corporate representative to attend shareholders' meetings, exercise the votes attaching to the Coates Shares registered in its name and sign any shareholders' resolution, and no Scheme Participant may itself attend or vote at any of those meetings or sign any resolutions, whether in person, by proxy or by corporate representative (other than pursuant to this clause 4.2(e)); and

(ii) must take all other actions in the capacity of a registered holder of Coates Shares as Bidco reasonably directs.

5. Special Dividend On the Implementation Date, Coates will pay the Special Dividend to applicable Scheme Participants.

6.1 Dealings For the purpose of establishing who are Scheme Participants, dealings in Coates Shares will only be recognised if:

(a) in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Register as the holder of the relevant Coates Shares by the Record Date; and

(b) in all other cases, if registrable transmission applications or transfers in respect of those dealings are received on or before the Record Date at the place where the Register is kept.

(a) Coates must register registrable transmission applications or transfers in respect of those dealings which are received on or before the Record Date at the place where the Register is kept provided that nothing in this clause 6.2(a) requires Coates to register a transfer that would result in a Coates Shareholder holding a parcel of Coates Shares that is less than a Marketable Parcel (as defined in the ASX Market Rules).

(b) Coates will not accept for registration or recognise for any purpose any transmission application or transfer in respect of Coates Shares received after the Record Date (except a transfer to Bidco pursuant to this Scheme and any subsequent transfer by Bidco, or its successors in title).

(c) For the purpose of determining entitlements to the Scheme Consideration, Coates will, until the Scheme Consideration has been paid, maintain the Register in accordance with the provisions of this clause 5 and the Register in this form will solely determine entitlements to the Scheme Consideration.

(d) Coates must procure that on the Record Date, details of the names, registered addresses and holdings of Coates Shares of every Scheme Participant as shown in the Register at the Record Date are available to Bidco in such form as Bidco may reasonably require. As from the Record Date (and other than for Bidco, or its successors in title), all share certificates and holding statements for the Coates Shares will cease to have effect as documents of title, and each entry on the Register at that date will cease to have any effect other than as evidence of entitlement to the Scheme Consideration.

7.1 Amendments to Scheme Should the Court propose to approve the Scheme subject to any variations, alterations or conditions, Coates may, with the consent of Bidco, by its counsel or solicitor consent on behalf of all persons concerned to those variations, alterations or conditions to which Bidco has consented (which consent by Bidco cannot be unreasonably withheld).

7.2 Notices Where a notice, transfer, transmission application, direction or other communication referred to in the Scheme is sent by post to Coates, it shall not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at Coates' registered office or at its share registry.

7.3 Agreement by Scheme Participants The Scheme Participants:

(a) agree to the transfer of their Coates Shares to Bidco in accordance with the terms of the Scheme and agrees to the variation, cancellation and modification of the rights attached to their Coates Shares constituted by or resulting from the Scheme; and

(b) acknowledge that the Scheme binds Coates and all Scheme Participants (including those who do not attend the Scheme Meeting or do not vote at that meeting or vote against the Scheme at that meeting).

7.4 Warranty by Scheme Participants The Scheme Participants are deemed to have warranted to Bidco, that all their Coates Shares (including any rights and entitlements attaching to those shares) which are transferred to Bidco under the Scheme will, at the date of the transfer of them to Bidco, be fully paid and free from all mortgages, charges, liens, encumbrances and interests of third parties of any kind, whether legal or otherwise, and restrictions on transfer of any kind, and that they have full power and capacity to sell and to transfer their Coates Shares together with any rights attaching to such shares.

7.5 Title to Coates Shares Bidco shall be beneficially entitled to the Coates Shares (together with all rights and entitlements attached to the Coates Shares) transferred to it under the Scheme pending registration by Coates of Bidco in the Register as the holder of the Coates Shares.

7.6 Scheme Participant's consent The Scheme Participants consent to Coates doing all things necessary, expedient or incidental to the implementation of the Scheme.

7.7 Further acts Coates will execute all documents and do all acts and things necessary for the implementation and performance of its obligations under the Scheme.

7.8 Appointment of agent and attorney Upon the Scheme becoming Effective, each Scheme Participant, without the need for any further act, irrevocably appoints Coates and all of its directors and officers (jointly and severally) as its attorney and agent for the purposes of:

(a) executing any document necessary or expedient to give effect to the Scheme including without limitation:

(i) a proper instrument of transfer of its Coates Shares for the purposes of section 1071B of the Corporations Act which may be a master transfer of all the Coates Shares; and

(ii) any instrument appointing Bidco as sole proxy for or, where applicable, corporate representative of each Scheme Participant as contemplated by clause 4.2(e); and

(b) enforcing the Deed Poll against Bidco and the Covenantor.

7.9 Stamp duty Bidco will pay all stamp duties and any related fines and penalties in respect of the Scheme (including, without limitation, in connection with the transfer of Coates Shares to Bidco in accordance with the terms of the Scheme).

7.10 Inconsistencies To the extent of inconsistencies between the Scheme and Coates' constitution, and to the extent permitted by law, this Scheme overrides Coates' constitution and binds Coates and all Coates Shareholders.

7.11 Governing law The proper law of the Scheme is the law of the State of New South Wales. The parties submit to the non-exclusive jurisdiction of the courts exercising jurisdiction in New South Wales.

IN THE MATTER OF COATES HIRE LIMITED (ACN 073 603 586) COATES HIRE LIMITED (ACN 073 603 586)

REASONS FOR JUDGMENT 1 On 9 November 2007 the Court made orders that the plaintiff, Coates Hire Limited (the Company), convene a meeting of its members for the purpose of considering a proposed scheme of arrangement involving the disposition of all of the issued shares in the capital of the Company. 2 The meeting was convened and held on 17 December 2007. The meeting was convened in accordance with the directions given by the Court, subject to several matters to which I shall refer. At the meeting the resolution that was put to the members was passed. 94.86% of the votes were cast in favour of the motion, and 5.14% were cast against. The votes in favour represented 89.21% of shareholders who voted. Accordingly, the resolution in favour of the Scheme of Arrangement has been passed by the requisite majority referred to in s 411(4) of the Corporations Act 2001 (Cth) (the Act). 3 Order 9 made on 9 November 2007 required documents to be sent to the Company's shareholders, as recorded in the register of members on 9 November 2007. A mailing list was initially prepared as at the close of business on 7 November. However, a secondary mailing process was carried out to ensure that any person who acquired shares after that date, but before 4 December 2007, received the relevant materials. 4 Secondly, certain individuals who held shares pursuant to the Company's Employee Share Plan, as well as ordinary shares, did not receive proxy forms with the other scheme documents. That omission was rectified within 24 hours or so. 5 In relation to the Coates Hire Performance Share Plan, the Company has passed a resolution whereby vesting conditions under the plan were released on 17 December 2007. Accordingly, any unvested shares will vest automatically without any need to lodge a notice of withdrawal, as was referred to in section 6.3(a) of the Scheme Booklet. 6 Finally, the materials that were sent to shareholders included covering letters from the chairman of the Company. Where the Court orders that a document in a particular form be sent to shareholders, the documents should not be accompanied by any further document that has not itself been approved by the Court. If it is proposed that other documents, such as covering letters, be sent, a draft of those other documents should be put before the Court at the time of the application for the order that the meeting be convened. The other documents can then be incorporated into the Court's order. 7 The materials sent to shareholders included letters that had not been brought to the attention of the Court prior to the making of the orders on 9 November 2007. I am satisfied that the failure to put those matters before the Court was not intentional and was the result of an oversight. The letters in question are now in evidence. I am satisfied that there is nothing untoward in the contents of those letters that would interfere with the exercise by the Court of its discretion to approve the scheme. 8 On 7 December 2007 the Company informed Australian Securities Exchange Limited of an expected improvement in its comparable operating earnings for the financial year. In an announcement on 29 August 2007 the directors gave some guidance as to the expected financial result for the current year. At that time it was expected that there would be an improvement of some 15% over the comparable operating earnings for the year ended 30 June 2007. In the announcement on 7 December 2007 the directors indicated that it is expected that there will be an improvement of some 20% over the previous year's comparable operating earnings, although it was pointed out that, at that time, only one third of the financial year had elapsed. 9 The scheme booklet contained a report from Mr Craig Edwards of Lonergan Edwards & Associates Limited, in which Mr Edwards gave his opinion that the scheme was fair and reasonable and in the best interests of the shareholders of the Company. Mr Edwards has confirmed that the matters referred to in the announcement do not cause him to alter his opinion that the acquisition of shares in the Company pursuant to the scheme is fair and reasonable and in the best interests of the shareholders, absent any superior proposal. 10 In addition to an affidavit of Mr Edwards of 13 December 2007 I have had regard to affidavits of Raghuram Murphy of 17 December 2007, Rebecca Louise Houguet-Boole of 13 December 2007, Michael Sydney Radziowsky of 19 December 2007, David Simon Karpin of 18 December 2007, Malcolm Stephens of 19 December 2007, Curtis Lyle Buser of 17 December 2007, Raymond John Romano of 19 December 2007, Vincent Leonardo De Santis of 19 December 2007, Stephen Sherwood Donnelley of 19 December 2007. 11 I am satisfied from that evidence that the scheme meeting was advertised in accordance with the orders that were made, and that today's hearing has been advertised in accordance with the orders that were made. Those affidavits also establish that the meeting was conducted in accordance with the directions that I gave. The affidavits also establish to my satisfaction that arrangements are in place for the provision of funding to enable the total consideration to be paid to shareholders. The scheme provides a mechanism whereby beneficial ownership will not pass until the consideration is provided. That mechanism is dealt with in a Deed Poll of 9 December 2007, executed by Ned Group Holdings Pty Limited, and Ned Operations Pty Limited. The Deed Poll is expressed to be executed in favour of each holder of fully paid shares in the capital of the Company. 12 The Scheme Implementation Agreement and the scheme itself are expressed to be subject to certain conditions precedent. I have evidence in the form of certificates on behalf of the relevant parties that all conditions other than the approval of the Court have been, or will be, satisfied. 13 I am satisfied from the terms of a letter from Australian Securities and Investments Commission (the Commission) to the Company's solicitors that there is no impediment by s 411(17) of the Act to the Court approving the scheme. By that letter the Commission says that it has no objection to the Scheme of Arrangement on the basis that it is satisfied that the Scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act. 14 I am also satisfied that it is appropriate to order, pursuant to s 411(12) of the Act, that the Company need not comply with s 411(11) of the Act. In all of the circumstances I consider that it is appropriate for the Court to make an order approving the Scheme. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Solicitor for the Plaintiff: Allens Arthur Robinson