(d) the number (the specified number) of Ampolex Shares to which MEPA is entitled at the end of the Offer Period being not less than 90% of the total number of Ampolex Shares (notwithstanding that the specified number may subsequently become less than that percentage as a result of the issue of further shares of the same class as the Ampolex Shares);
...
(f) one or other of the following having occurred before the end of the Offer Period:
(i) MEPA having received a notice in writing from the Australian Treasurer unconditionally advising that or to the effect that there is no objection under the Australian Government's foreign investment policy or under the Foreign Acquisitions and Takeovers Act 1975 to the proposed acquisition of Ampolex Shares under the Takeover Scheme;
...
(3) Subject to the Corporations Law and to Clause 7(4), MEPA alone is entitled to the benefit of the conditions in Clause 7(1) and any breach or non-fulfilment of any of those conditions may be relied upon only by MEPA.
(4) (a) Subject to the Corporations Law, MEPA may at any time declare this Offer, and any contract resulting from acceptance of this Offer, free from all or any of the conditions in Clause 7(1) by giving written notice to Ampolex except that the declaration must be made not later than seven days before the end of the Offer Period.
(b) In accordance with section 663 of the Corporations Law, if, at the end of the Offer Period any of the conditions in Clause 7(1) have not been fulfilled and MEPA has not declared the Offers free from those conditions..., all contracts resulting from the acceptance of the Offers will be void."
(Emphasis added.)
The original Part A statement recorded that MEPA was entitled,
within the meaning of the Law, to 43,500,000 ordinary shares in Ampolex (14.89% of the total) and 4,242,465 preference shares (7.42%). It was thus entitled to 13.67% of the aggregate number of voting shares in Ampolex. MEPA had also acquired 1,387,400 convertible notes (6.4%), at an average price of $5.16.
The original Part A statement expressed MEPA's intentions with respect to the convertible notes, as follows:
"MEPA will offer (the Unconditional On-Market Offer) to acquire Ampolex Convertible Notes on the Australian Stock Exchange Limited (the Australian Stock Exchange) while the Offers remain open for acceptance. The consideration to be offered under the Unconditional On-Market Offer will be $7.00 for each Ampolex Convertible Note. MEPA reserves the right to increase this price at any time while the Offers remain open for acceptance. Holders of Ampolex Convertible Notes (Noteholders) who wish to accept the Unconditional On-Market Offer will need to instruct a stockbroker to accept the offer. MEPA proposes to send letters to all registered holders of the Ampolex Convertible Notes notifying holders of the existence of the Unconditional On-Market Offer.
In addition, MEPA may at any time after the date of this Statement offer to acquire Ampolex Convertible Notes other than through the Unconditional On-Market Offer by various means including, but not limited to, entering into agreements with individual Noteholders to purchase their Convertible Notes. If MEPA decides to offer to acquire Ampolex Convertible Notes other than through the Unconditional On-Market Offer it proposes to initially offer Noteholders $7.00 for each Ampolex Convertible Note. However, the price and the other terms of any agreement that MEPA may reach with an individual Noteholder would be the subject of negotiation and may vary between Noteholders.
Noteholders who accept the Unconditional On-Market Offer will not be entitled to receive any higher price which MEPA may pay to other Noteholders (whether that higher price is paid by MEPA pursuant to an acquisition of Convertible Notes on the Australian Stock Exchange or pursuant to any other agreement).
The Unconditional On-Market Offer or any other offer to acquire Convertible Notes will not be conditional on MEPA acquiring a particular percentage of Ampolex Shares or Ampolex Preference Shares, or on any Noteholder accepting or agreeing to accept MEPA's offer for any Ampolex Shares or Ampolex Preference Shares which that Noteholder may hold." (Emphasis added.)
The original Part A statement then dealt with how the cash consideration was to be provided. It noted that the total consideration payable was approximately $1.586 billion, assuming that none of the preference shareholders or noteholders converted their securities into ordinary shares and that they accepted the offers made by MEPA for their preference shares or convertible notes. MEPA was to obtain the total cash payment required from a combination of intercompany borrowings and equity contribution from Mobil or its wholly owned subsidiaries.
The original Part A statement also addressed the question of the litigation against GPG. It attached as an Appendix the Chairman's address to the annual general meeting of Ampolex which set out the history of the claim that each note was convertible into 6.6 shares. An extract from the Chairman's address was reproduced in the Part A statement:
"The company is confident that it has taken all proper steps to protect shareholders and has been advised that it has a strong case in maintaining that the company's Convertible Notes should only be capable of conversion into one Ordinary share, that is the basis upon which shareholders originally intended and approved that they should be so converted."
The Part A statement itself discussed the progress of the litigation. It noted that the basis of Ampolex's claim was that the amending deed was effective to effect a conversion ratio of one ordinary share for each note. It also noted that Ampolex claimed that it was entitled to rectification of the trust deed, because the common intention of the parties involved in the issue of the notes in 1988 was that there should be a conversion ratio of one to one and that GPG and Allied were bound by this equity of rectification.
The original Part A statement continued as follows:
"Possible effect of the litigation on Ampolex. Prior to GPG's and Allied's request for conversion, Ampolex had 22.7 million Convertible Notes on issue. As at the date of this Statement, Ampolex had 292,114,263 ordinary shares on issue (including 1,020,000 issued by Ampolex following receipt of the request for conversion from GPG and Allied).
If the Court upholds the claims made by Ampolex and declares that the Convertible Notes are convertible on a one for one basis, the maximum number of shares which Ampolex would be required to issue if all the holders of the Convertible Notes sought to convert their Convertible Notes would be 21,680,000 shares.
If, on the other hand, the Court determines that each Convertible Note converts into 6.6 ordinary shares in Ampolex and upholds the claims by GPG and Allied concerning their entitlement to shares in respect of accrued interest on the 1,020,000 Convertible Notes previously converted, the maximum number of shares which Ampolex would be required to issue if all the holders of Convertible Notes sought to convert their Convertible Notes would be approximately 149,058,808 shares (being 6.6 shares for each of the remaining 21,680,000 Convertible Notes, a further 5.6 shares for each of the 1,020,000 Convertible Notes previously converted by GPG and Allied, and approximately 258,808 shares in respect of GPG's and Allied's alleged accrued interest entitlement).
Shareholders to make their own assessment of the litigation. Shareholders must make their own assessment of the potential outcome of the proceedings commenced by Ampolex. In the Chairman's Address to the 1995 annual general meeting, Mr Anderson, after referring to the claim by GPG that it was entitled to 6.6 ordinary shares for each Convertible Note, stated that:
'This claim, clearly contrary to the basis upon which the notes were issued, is being vigorously contested by the company in the interests of both Ordinary and Preference shareholders who would otherwise be damaged by such a conversion.'"
Section 17 of the Part statement is headed "Other Material Information". The first paragraph of section 17 is as follows:
"There is no other information material to the making of a decision by an offeree whether or not to accept MEPA's Offer (being information that is known to MEPA and has not previously been disclosed to the holders of shares Ampolex) other than as disclosed in this Statement and other than that on 26 February 1996, the Commission executed an exemption, declaration and approval under the Law."
Under the heading "MEPA's Intentions About Business, Assets and Employees of Ampolex", section 18 of the original Part A statement said the following:
"On the basis of the information concerning Ampolex known to MEPA at the date of this Statement, and subject to the matters referred to in this section, it is the intention of MEPA, if the Takeover Scheme is successful, that:
(a) the business of Ampolex be continued in the same manner as it is presently being conducted;
(b) no changes be made in the business of Ampolex and there not be any re-deployment of the fixed assets of Ampolex; and
(c) the employment of the present employees of Ampolex be continued.
If the takeover Scheme is successful, MEPA proposes to discuss with the senior executives and management of Ampolex the best way to utilise the assets and the experience and expertise of employees of Ampolex for the benefit of MEPA and other members of the Mobil Group.
In accordance with usual practices engaged in by MEPA and other exploration and producing (E&P) affiliates of the Mobil Group, as well as other corporations involved in the oil and gas exploration and production industry (including Ampolex), all of Ampolex's assets will be subjected to regular scrutiny and review as to performance and prospectivity.
In relation to Ampolex's assets in the United States of America, MEPA notes the comments made in the Ampolex 1995 Annual Report that:
'The financial contribution of the Company's United States assets is under close scrutiny, with a commitment to improve the value-generation potential and return on funds invested.
Associated with this commitment, a review of existing United States assets has been completed with the steps taken to orientate future activities to achieve maximum value generation and to continue the process, already well advanced, of disposing of lower-contributing and non-core assets. In line with the Company's overall commitment to deploy resources to areas of greatest potential value, the performance of United States assets will be an important determinant of the nature and extent of Ampolex's continued operations in the country.'
MEPA proposes to discuss the review process identified by Ampolex with senior executives and management of Ampolex to determine whether the United States assets should be retained, merged with existing assets of other Mobil E&P affiliates or divested.
MEPA recognises that an issue which will need to be resolved is the rationalisation of functions presently carried on by the respective Australian offices of both Ampolex and MEPA. MEPA intends to identify and realise potential cost savings associated with avoiding duplication of functions." (Emphasis added.)
The Alleged Defects in the Original Part A Statement
On 11 March 1996, the solicitors for Ampolex wrote to MEPA's solicitors identifying seven alleged defects in the original Part
A statement and offer. In summary, the complaints were these:
(i) The condition relating to the approval of MEPA's takeover under the Foreign Acquisitions and Takeovers Act 1975 (Cth) ("FATA") was expressed as a condition subsequent. Ampolex shareholders were not informed that, if they accepted the offer prior to the Treasurer's approval, the resulting agreement might infringe FATA and therefore be unenforceable.
(ii) MEPA's offer was inconsistent with and less favourable than the terms described in Mobil's announcement of 14 February 1996, thereby contravening s.746(4) of the Law. This was because the announcement stated that the offer would be conditional upon "no material change in Ampolex's circumstances", while certain conditions in the offer itself related to disposal or acquisition of assets by Ampolex, where the value of the assets exceeded $50 million. Such a disposal or acquisition would not (it was said) necessarily result in a material or adverse change in Ampolex's circumstances.
(iii) Some of the conditions of the offer were incapable of being fulfilled on the date MEPA lodged the Part A statement. This would be the case, for example, if Ampolex's interim result, announced on 26 February 1996 (a loss of $11.6 million after tax and abnormal items), were regarded as constituting a material adverse change in Ampolex's financial circumstances since 14 February 1996. It would also be the case (it was said) if GPG succeeded in the convertible note litigation. MEPA might therefore have, in effect, a "free option" over the shares of accepting shareholders, in breach of s.662 of the Law.
(iv) In contravention of s.750, Part A, cl.17 of the Law, the Part A statement failed to disclose the fact that, if Ampolex succeeded in the convertible note litigation, this would have a material impact upon the respective values of the convertible notes and ordinary and preferred shares and would affect the amount MEPA would be prepared to pay for each class of securities.
(v) In contravention of s.750, Part A, cl.20, of the Law, the Part A statement contained inadequate disclosure regarding MEPA's intentions about the business, assets and employees of Ampolex.
(vi) In contravention of s.750, Part A, cl.8 of the Law, the Part A statement failed to disclose the terms or proposed terms of the offers or invitations MEPA proposed to send relating to the acquisition of the convertible notes.
(vii) Until the convertible note litigation was resolved, and the "proper conversion rate" for the notes established, any offer to holders of the convertible notes in excess of a one for one conversion ratio, constituted an illegal benefit under s.698 of the Law.
The solicitors for MEPA responded the following day, rejecting all the claims put forward on behalf of Ampolex.
IV THE PROCEEDINGS
The Claim for Interim Relief
On 13 March 1996, Ampolex commenced these proceedings and sought interim orders from the Court, essentially on the grounds identified in the letter of 11 March 1996. Although MEPA's counsel were present in Court on that day, it was not possible to hold a full interim hearing. In the result, orders were made, pending a further hearing, restraining MEPA from
l sending to any member of Ampolex a copy of either of the original Part A statements or of any offers pursuant to those Part A statements; or
l acquiring the convertible notes from persons who hold ordinary and preference shares in Ampolex, at a price based on a conversion ratio in excess of one to one plus accrued interest.
The Revised Offer and Part A Statement
As I have already noted, the parties agreed that the further hearing, scheduled for 25 March 1996, should finally determine all issues in the proceedings. On 21 March 1996, four days before the hearing, MEPA served an affidavit sworn by Mr Entsminger, MEPA's Chairman and Managing Director. Mr Entsminger's affidavit annexed what was described as a "revised" offer and Part A statement for the ordinary shares. I shall refer to them in the same way.
The revised offer and Part A statement incorporated a number of amendments approved on 8 March 1996 by the ASC pursuant to s.728 of the Law (which empowers the ASC to exempt a person from compliance with any provision within Chapter 6). These amendments are not relevant to the present proceedings. However, the revised offer and Part A statement also included a number of other changes (to use a neutral word), that had not been approved by the ASC. In view of the relief sought in MEPA's cross-claim it is necessary to describe in some detail the changes not approved by the ASC.
(i) Clause 7(b) of the original offer, which specified certain conditions subsequent to which the offer was subject, was altered. The following extract shows the changes to the original cl.7(b). The blocking indicates the new material and the blocking shows the deleted material.
"(b)(1) no material adverse change occurring, being announced or otherwise becoming public in the business, financial or trading position or profitability of Ampolex or a subsidiary of Ampolex between and including 14 February 1996 and the end of the Offer Period, including, but without limiting the generality of the foregoing; and
(2) no one or more of the following changes occurring, being announced or otherwise becoming public between and including 14 February 1996 and the end of the Offer Period which would have the effect (whether as a result of a single transaction or otherwise) that assets with an aggregate unencumbered value in excess of $100 million are, or at some future time will be, disposed of or acquired (as the case may be):
(i) any disposal of (i)Ampolex or a subsidiary of Ampolex disposing of shares in a subsidiary of Ampolex;
(ii)Ampolex or a subsidiary of Ampolex entering into any agreement (including, without limitation, an option agreement) in relation to the disposal, or acquisition, by Ampolex or a subsidiary of Ampolex of any assets the aggregate unencumbered value of which exceeds the sum of $50 million; or
(iii)any person having, as a result of MEPA acquiring Ampolex Shares, the right (whether actual or contingent) to:
(A) acquire any asset of Ampolex or a subsidiary of Ampolex under any joint venture or other agreement (Agreement); or
(B) require Ampolex or a subsidiary of Ampolex to dispose, or to offer to dispose, of any asset under
an Agreement.
where the aggregate unencumbered value of any such assets exceeds the sum of $50 million."
The revised Part A statement referred to cl.7(1)(b)(1) of the revised offer, but did not set out the changes in the drafting of cl.7(1)(b)(1) and (2).
(ii) The condition subsequent, previously contained in cl.7(f) of the offer (relating to approval of the Treasurer to the proposed acquisition under FATA), was deleted and reintroduced as a condition precedent (new cl.7(3)). The revised offer provided that no contract to sell Ampolex shares could arise from acceptance of the offer until the condition in cl.7(3) was satisfied, or the offer was declared to be free from the condition.
(iii) The revised Part A statement modified MEPA's intentions with respect to its on-market offer to acquire the convertible notes. The changes made it clear that MEPA would make an on-market offer, on an unconditional basis, to purchase the notes for $7.00 per note. However, MEPA reserved the right to vary the consideration offered either upwards or downwards (the original Part A statement had stated that the price would only be revised upwards) and to withdraw
the offer at any time (the original Part A statement had at least implied that the offer would remain on foot while the take-over offer continued in force). The relevant changes appear in the following passage:
"MEPA will, during the Offer Period, offer on an unconditional basis (the Unconditional On-Market Offer) to acquire Ampolex Convertible Notes on the Australian Stock Exchange Limited (the Australian Stock Exchange) while the Offers remain open for acceptance. The consideration to be offered under the Unconditional On-Market Offer will be $7.00 for each Ampolex Convertible Note. MEPA reserves the right to increase may vary this price at any time while during the Offers remain open for acceptance Offer Period. MEPA may also withdraw the Unconditional On-Market Offer at any time by giving notice to the Australian Stock Exchange."
(iv) The revised Part A statement specifically addressed the significance of Ampolex's half-yearly report, released on 26 February 1996. MEPA expressly stated that it would not seek to treat the interim result as a "material adverse change" for the purposes of cl.7(1)(b)(1) of the offer.
(v) Under the general heading "Other Information Concerning Ampolex", part 13 of the revised Part A statement included an additional section (4) concerning the convertible note litigation. Among other things, it was stated that a holding by the Court in favour of GPG's conversion ratio, of 6.6 shares for one note, would not be regarded as a "material adverse change". This section is as follows:
(4) The following matters in relation to the Convertible Note Litigation may also be relevant to holders of Ampolex Shares:
(a) As set out in section 8(2) of this Statement, during the Offer Period MEPA will make an Unconditional On-Market Offer. Pursuant to this offer, MEPA will offer to acquire Ampolex Convertible Notes on the Australian Stock Exchange at a price of $7.00 per Convertible Note. MEPA may vary this price at any time. The Unconditional On-Market Offer may be withdrawn at any time by MEPA giving notice to the Australian Stock Exchange.
MEPA considers that it is unlikely that the Convertible Note Litigation will be resolved prior to the end of the Offer Period. If the Convertible Note Litigation is resolved before the end of the Offer Period and a declaration is made by the Court that Ampolex Convertible Notes are convertible on the basis of one ordinary share per Convertible Note, this would not cause MEPA to vary the price at which it would offer to acquire Ampolex Shares or Ampolex Preference Shares. However, MEPA might withdraw the Unconditional On-Market Offer or reduce the price of that offer.
If the Convertible Note Litigation is resolved before the end of the Offer Period and a declaration is made by the Court that Ampolex Convertible Notes are convertible on the basis of 6.6 ordinary shares per Convertible Note, MEPA might withdraw the Unconditional On-Market Offer.
(b) Clause 7(1)(b)(1) of the Offers provides that the Offers are conditional on there not being any material adverse change in the business, financial or trading position or profitability of Ampolex or a subsidiary of Ampolex between and including 14 February 1996 and the end of the Offer Period.
While MEPA considers it unlikely that the Convertible Note Litigation will be resolved prior to the end of the Offer Period, if it is held by the Court during the Offer Period that Ampolex Convertible Notes are convertible on the basis of 6.6 ordinary shares per Convertible note. MEPA would not regard this as constituting a material adverse change within the meaning of Clause 7(1)(b)(1) of the Offers, and therefore would not rescind the contracts resulting from acceptance of the Offers on this basis."
(vi) Under the heading "MEPA's Intentions About Business, Assets and Employees of Ampolex", the revised Part A removed the following sentence (which I have blocked for consistency):
"If the Takeover Scheme is successful, MEPA proposes to discuss with the senior executives and management of Ampolex the best way to utilize the assets and the experience and expertise of employees of Ampolex for the benefit of MEPA and other members of the Mobil Group."
The revised Part A added the following information concerning MEPA's intentions:
"Typically, oil and gas resources and assets of the Mobil Group are developed, managed and operated by the Mobil E&P affiliate which is incorporated in the jurisdiction, or which has a branch office in the region, in which the resources and assets are located. Ampolex has assets located in, amongst other places, Australia, Papua New Guinea, Venezuela, Peru, Colombia, Argentina and the United States. Mobil has E&P affiliates or branch offices operating, or responsible for Mobil Group assets and businesses, in most of these countries. In the longer term, consideration will be given as to whether it is appropriate that assets of Ampolex located outside of Australia be sold or otherwise transferred to Mobil E&P affiliates that currently operate or have a presence in the region in which the relevant assets are located. It is not possible for MEPA to decide as to a particular course of action in this regard because it has not yet had access to the information necessary to review the operational, commercial, taxation and financial considerations relevant to making any such decision.
Following the acquisition of Ampolex, MEPA would expect that Ampolex would invest more than $1.7 billion over the next ten years in the Australian upstream oil and gas projects already within Ampolex's portfolio. Approximately 75% of this expenditure is expected to be spent on the development of the Gorgon liquefied natural gas project, with the remainder being spent on fields such as Wandoo, East Spar, Harriet and Macedon/Pyrenes. In addition, an ongoing exploration programme will be pursued offshore North West Australia. Any exploration success or the identification of additional projects within the current portfolio may result in a further increase in further investment.
MEPA uses the worldwide human and technical resources of the Mobil Group. These services include technical services such as geological modelling and reservoir characterisation, drilling technology and management, reserves estimation and management and well production engineering. Services provided to MEPA by companies within the Mobil Group are provided on commercial arm's length terms. MEPA intends that these resources of the Mobil Group will be available to Ampolex on the same commercial arm's length terms as those on which they are available to MEPA so as enable Ampolex to successfully develop its existing resource base. In addition, after detailed review of the Ampolex operations, employees of MEPA or another Mobil affiliate may, if required, be employed within Ampolex on a temporary or permanent basis to complement existing expertises within Ampolex."
The Part A statement added the further comment that any rationalisation intended to produce savings associated with the avoidance of duplication of functions would not alter MEPA's intention to offer continuing employment to all Ampolex employees.
(vii) Finally, the revised Part A statement clarified MEPA's intentions should it not succeed in acquiring all of the securities in Ampolex:
"MEPA would seek to implement its intentions in respect of Ampolex as set out above even if MEPA has not acquired all of the securities in Ampolex pursuant to its various offers, although MEPA recognises that its ability to do so will be dependent upon the level of its shareholding in Ampolex and the circumstances at the time."
The Cross-Claim
The purpose of MEPA preparing a revised offer and Part A statement was to allow it to seek relief, if necessary, under ss.739 and 743 of the Law. This relief is sought in the cross-claim, in the form of the following paragraphs:
"1. If the Part A Statements dated 26 February 1996 and offers relating thereto lodged by [MEPA] are found not to comply with any provision of Chapter 6 of the Corporations Law, a declaration pursuant to section 743 of the Corporations Law that on condition that such Part A Statements dated 26 February 1996 are amended in the manner set out in the [revised offer and Part A statement] (or in such further manner as the Court shall direct) such Part A statements and offers shall be valid.
2. If the Court shall find that any past or proposed conduct of [MEPA] in connection with the registration, service and distribution of the said Part A Statements or conduct referred to in such Part A Statements has contravened or shall contravene any provision of Chapter 6 of the Corporations Law:
(a) an order pursuant to section 743 of the Corporations Law that the said Part A Statements and offers relating thereto are not invalid because of any such contravention; and/or
(b) an order pursuant to section 739 of the Corporations Law that the said Part A Statements and offers only be distributed in a form which includes amendments of the type set out in the [revised offer and Part A statement] or with such further amendments or information as the Court shall direct.
3. That, upon the Cross-Claimant undertaking to the Court not to distribute either [the original Part A statements] nor the [revised Part A Statement], nor any Part A Statements in similar terms relating to the preference shares in [Ampolex], unless and until it has obtained an exemption under section 728 of the Corporations Law from the Australian Securities Commission permitting it to distribute:
(a) a Part A Statement and offer either with amendments in the form indicated in the [revised offer and Part A Statement] or such amendment as the ASC or the Court considers necessary; and
(b) a Part A Statement and offer relating to the offer to acquire preference shares in Ampolex Limited containing the same amendments mutatis mutandis,
the Court refrain from making any order sought by the Applicant."
The Parties' Positions
At the hearing, MEPA was represented by Mr Campbell QC, who appeared with Mr Bannon. It is, I think, fair to say that Mr Campbell directed the bulk of his argument to supporting the terms of the revised offer and Part A statement. He contended
that these documents were in conformity with the Law, even if the original Part A statement was held to be defective. Mr Bennett QC, who appeared with Mr Rares SC for Ampolex (each argued different aspects of the case), construed the amendments to MEPA's original offer and Part A statement as admissions by MEPA that the original Part A statement was deeply flawed. Mr Campbell, although perhaps not strenuously defending the original Part A statement, did not concede that it contravened the Law.
MEPA's principal submission, as I followed Mr Campbell's argument, was that, insofar as the original Part A statement contravened the Law, the discretionary relief available under ss.739 and 743 of the Law ought to be afforded to MEPA. This was because the revised documents complied with the Law and it was in the interests of shareholders and noteholders that the original Part A statement be permitted to proceed, subject to the inclusion of the additional material incorporated within the revised documents. Accordingly, Mr Campbell argued, the relief sought in the cross-claim should be granted. (As to the need for a substantive application for relief see Gantry v Parker & Parsley, at 563-564, per Sheppard J., at 470, per Burchett J.) Mr Campbell supported the revised Part A statement as a whole. He did not suggest that the Court should pick and choose among the various changes, although he expressed the view that, if the Court was minded to include additional material, this could be accommodated in a consolidated document to be sent to shareholders.
Ampolex's position on certain issues varied somewhat during the hearing. This was perhaps not surprising, given that MEPA's focus of attention was the revised Part A statement, which was made available only shortly before the trial. At the outset, Mr Rares said that no point would be taken about the amendment in the revised offer and Part A statement, converting the requirement for approval of the Treasurer under FATA from a condition subsequent to a condition precedent. Mr Rares also said that no point would be taken about the third issue raised in the letter from Ampolex's solicitors of 11 March 1996. The complaint under this heading was that the original Part A statement did not specify whether, if GPG succeeded in the convertible note litigation, this would be regarded as a material adverse change for the purposes of MEPA's offer. A similar complaint was also made in relation to Ampolex's interim results. Since both of these issues were expressly addressed in the revised Part A statement, Mr Rares accepted that the issues had been resolved.
Relatively late in the argument, Mr Rares submitted that the Court had no power under ss.739 or 743 of the Law to sanction an amendment to an offer which is to be forwarded to shareholders. It was pointed out that this submission appeared to be inconsistent with the concessions previously made, since the conversion of a condition subsequent to a condition precedent was effected through a change to the proposed offer. Mr Rares then resiled from the concessions he had made earlier. However, as I understood his position, he did so only for the purpose of raising the jurisdictional argument and an argument as to the scope of s.739. He contended, in particular, that the commitment in the revised Part A statement not to regard success by GPG in the litigation as a material adverse change, was significant in considering whether MEPA could claim relief under s.739. However, Mr Rares made it clear that Ampolex would raise no objection if MEPA sought clearance from the ASC to alter the proposed offer, in order to convert the condition subsequent relating to the Treasurer's approval into a condition precedent.
Apart from the jurisdictional question, Ampolex's principal contentions were that both the original Part A statement and the revised Part A statement contravened the Law. The grounds relied on generally, but not entirely, corresponded to those raised in the letter of 11 March 1996:
(i) neither Part A statement adequately set out MEPA's considered views as to the likely outcome of the convertible note litigation, nor MEPA's intentions with respect to offers to be made to convertible noteholders (s.750, Part A, cll.17, 20; s.995(2));
(ii) neither Part A statement (but especially the original statement) adequately stated MEPA's intentions with respect to the business and assets of Ampolex, to the point where the Part A statements not only omitted material information, but constituted conduct that was misleading and deceptive (s.750, Part A, cll. 17,20; s.995(2));
(iii) both Part A statements and offers breached s.698(2) of the Law, since MEPA's proposed offers gave a noteholder who also held shares a benefit not provided for under the takeover offers;
(iv) the revised offer contravened s.746(4) of the Law because the provisions relating to changes which would constitute conditions subsequent (cl.7(1)(b)(2) of the revised offer) were different from and therefore not "in accordance with" MEPA's public announcement on 14 February 1996; and
(v) neither Part A statement set out the terms or proposed terms of offers or invitations made or to be made in relation to the convertible notes (s.750, Part A, cl.8);
Ampolex also submitted that, independently of the jurisdictional point, no order should be made in favour of MEPA under ss.739 and 743 of the Law. Ampolex contended that s.739 did not permit the amendment of a Part A statement, as distinct from mere clarification or amplification of its terms. What was proposed here by MEPA amounted to an amendment, since matters of substance were involved. In any event, so it was submitted, the Court should not exercise its discretion in favour of MEPA. Among other things, Mr Rares relied on the absence of any explanation proffered on behalf of MEPA as to why the original Part A statement had failed to include information of importance to shareholders (this segment of the argument assuming that the original Part A statement contravened Chapter 6 of the Law).
The Evidence
Mr Rares read two affidavits sworn by Mr King, Ampolex's general counsel. These affidavits, for the most part, simply annexed documentation. Mr King was briefly cross-examined.
Mr Campbell read an affidavit sworn by Mr Entsminger, MEPA's Chairman and Managing Director, annexing the revised offer and Part A statement. Mr Entsminger was cross-examined at some length by Mr Rares. Since Ampolex's submissions suggested that I should not accept Mr Entsminger's evidence on certain issues, I should say something about his evidence.
Mr Entsminger from time to time presented as a quite hesitant witness, whose responses did not always suggest that he was in complete command of all the information relevant to the offers and Part A statements with which he said he was familiar. Nonetheless, I think that Mr Entsminger was endeavouring to be a truthful witness. Subject to one matter, I generally accept his evidence. In particular, I accept his account of the respective roles played by MEPA and Mobil in the decision-making process leading up to the preparation and service of the Part A statements. The substance of that account was that the initiative for the takeover came from MEPA and that it put forward recommendations to Mobil for the concurrence of the parent company. According to Mr Entsminger, despite the appearance in Australia at the time of the takeover announcement of Mobil representatives, MEPA itself managed the strategy for the takeover, although Mobil was to provide the funds to finance the bid.
The qualification to which I have referred is that I formed the impression that Mr Entsminger was reluctant to concede the significance of certain contemporary documents. These, generally speaking, suggested that MEPA had formed particular intentions or was considering particular proposals in relation to Ampolex's assets and business, should the take-over ultimately succeed. I do not think that Mr Entsminger was trying to mislead the Court. But I think that, understandably enough, he was conscious of the requirements of the Law and, from time to time, was anxious not to accept an interpretation that might suggest that MEPA had contravened any of those requirements. On some of the matters on which I have made findings, I have relied on, or drawn inferences from, contemporary documentation. In doing so, I have not always fully accepted Mr Entsminger's interpretation of the events or proposals recorded or referred to in the documents.