Excel Coal Limited, In the matter of Excel Coal Limited [2006] FCA 1383

REASONS FOR JUDGMENT No 2 (second and third court hearings) 1 These are my reasons for orders I made on 22 September 2006 and 10 October 2006. 2 The proceeding is somewhat unusual, in that instead of the customary two court hearings relating to an arrangement under Pt 5.1 of the Corporations Act 2001 (Cth) ("the Act"), there have been three. The additional one, which took place on 22 September 2006, arose out of a variation of the arrangement to be considered by shareholders. 3 At the first court hearing on 30 August 2006, I made an order under s 411(1) of the Act that the plaintiff, Excel Coal Limited ('Excel'), convene a meeting of its shareholders to consider a scheme of arrangement ('the Scheme'). I published my reasons for the making of those orders on 15 September 2006 (see Excel Coal Limited, In the matter of Excel Coal Limited [2006] FCA 1240). As noted in those reasons, the Scheme is a perfectly straightforward 'acquisition' or 'transfer' scheme under Pt 5.1 of the Act. 4 Under the Scheme in its original form, if implemented, all of the members of Excel were to receive $8.50 cash per share, leaving Peabody Pacific Pty Limited, a subsidiary of Peabody Energy Corporation ('Peabody Energy'), as the holder of their shares. The total consideration payable under the Scheme was to be approximately $1.8 billion. 5 After I made the orders at the first court hearing there were two developments. First, Peabody Energy increased the consideration it was offering by $1.00 per share to $9.50 per share (this increased the total of the Scheme consideration by some $200 million). Secondly, Peabody Energy entered into an agreement to acquire 42,973,730 fully paid ordinary shares, being 19.99 percent of Excel's issued ordinary shares. 6 A Supplementary Scheme Booklet was prepared to reflect these developments and supplied to the Australian Securities and Investments Commission ('ASIC'). A due diligence procedure of the kind carried out in relation to the original Scheme Booklet was carried out in relation to the Supplementary Scheme Booklet. 7 On 22 September 2006, I made orders in relation to amendments to the Scheme that reflected the developments mentioned. For example, I approved the Supplementary Scheme Booklet for distribution to the Excel shareholders, and ordered that the Scheme Meeting be convened in accordance with a revised Notice of Scheme Meeting set out in Annexure A to the Supplementary Scheme Booklet. As well, the orders excluded from the shareholders of Excel who were to meet, Peabody Energy, Peabody Pacific Pty Ltd and any other Excel shareholder who held shares on behalf of, or for the benefit of, Peabody Energy or any of its subsidiaries. 8 Excel's directors, who had supported acceptance of the original offer, naturally supported acceptance of the increased consideration. It was appropriate to make the orders on 22 September 2006 so that the shareholders would have the opportunity of considering the proposed amendments to the Scheme. 9 The Scheme meeting was duly convened and was held on 4 October 2006. Two resolutions were passed by the required majorities. The first resolution was one amending the Scheme to be considered at the meeting. The second resolution was a resolution agreeing to the Scheme as amended. In this respect, the procedure that was followed was that followed in Re Citect Corporation Ltd (2006) 56 ACSR 663. 10 ASIC has provided a statement in writing under s 411(17)(b) of the Act. 11 It was appropriate that the Court make orders pursuant to s 411(4)(b) and 411(6) of the Act approving of the Scheme as amended, as the Court did on 10 October 2006, with one further minor amendment that did not mark a significant departure from the amended Scheme as approved by the shareholders: cf s 411(6) of the Act, and Investorinfo Limited, in the matter of Investorinfo Limited [2005] FCA 1848.