Felix Resources Pty Ltd; in the matter of Felix Resources Pty Ltd [2009] FCA 1182

REASONS FOR JUDGMENT 1 This is an application pursuant to s 411 of the Corporations Act 2001 (Cth) (the "Corporations Act") for an order convening a meeting of shareholders to consider a proposal for the acquisition of shares in the capital of the company Felix Resources Limited. The offer to acquire such shares has been made by Yanzhou Coal Mining Company Ltd through its wholly owned subsidiary Austar Coal Mine Pty Ltd. 2 The offer is to acquire the shares for $16.95 each, following the declaration of dividends totalling $1 per share, the first 50 cents of which is to be declared on 30 August 2009, and the further dividend no later than three months after the implementation date proposed in connection with the present scheme. As I understand it, Yanzhou or its subsidiaries presently hold shares in Felix Resources, but those shares are obviously not the subject of the offer. 3 Felix presently has an issued capital of 196,455,038 ordinary shares, together with 170,000 rights to the issued options in the company. It is expected that the options will be exercised and the shares issued prior to the public offer. It will be necessary that issue of the shares be notified to the stock exchange and, therefore, to the shareholders. That matter caused me some concern in the course of proceedings. However I am satisfied that such notification will be sufficient to exclude such information from the operation of s 412(1) of the Corporations Act. 4 The directors have obtained independent advice from Deloittes concerning the fairness of the offer. Their advice supports it. In those circumstances, the directors propose to recommend its acceptance by shareholders. I have been taken through the expert advice. It seems to be fair and reasonably comprehensible by a lay shareholder. I am satisfied that the offer is one which individual shareholders might, in exercise of their commercial judgment, reasonably accept. 5 It was drawn to my attention that the arrangements concerning the declaration of dividends might, in certain circumstances, be seen as being inconsistent with the provisions of s 260A of the Corporations Act in that they may be seen as offering financial assistance in the acquisition of shares. However I am satisfied that the dividends, if declared, would not materially prejudice the interests of the company or its shareholders or the company's ability to pay its creditors. 6 I am satisfied that appropriate arrangements have been made by the bidder for the funding of the acquisition, and that arrangements have been made to ensure that there is no likely risk to shareholders in connection with the completion of the scheme and the relevant transfers. 7 Various common provisions of transactions of this kind are features of this proposal, including a provision for a break fee and no-shop/no-talk restrictions. I see no reason for concern in connection with them. 8 I am satisfied that the scheme, as a whole, will not have any adverse impact upon creditors. I make an order in terms of the amended draft, which I will initial and place with the papers. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.