In the matter of Infomedia Limited [2025] NSWSC 1230 | Case summary

In the matter of Infomedia Limited [2025] NSWSC 1230 | Case summary | Zoe

It is well-established that the Court’s role at a first Court hearing in respect of a scheme is primarily to determine, in the exercise of its discretion, whether to convene a scheme meeting and approve the explanatory statement if it is satisfied of several matters, namely that the plaintiff is a “Part 5.1 body”; the proposed scheme is an “arrangement” within the meaning of s 411 of the Act; there has been proper disclosure to members (or creditors if a creditors’ scheme); the scheme is bona fide and properly proposed; ASIC has had reasonable opportunity to examine the proposed scheme and explanatory statement, to make submissions and has had 14 days’ notice of the proposed hearing date of the first Court hearing; the procedural requirements of the Supreme Court (Corporations) Rules 1999 (NSW) (“Rules”) have been met; and there is no apparent reason why the scheme should not, in due course, receive the Court’s approval if the necessary majority of votes is achieved: Re Ellerston Global Investments Ltd [2020] NSWSC 879 at [25]–[26]; Re Vocus Group Ltd [2021] NSWSC 630 at [12]; Re Invocare Ltd [2023] NSWSC 1180 at [16] (“Invocare”); Re Pacific Smiles Group Ltd [2024] NSWSC 812 at [9]; Re APM Human Services International Ltd [2024] NSWSC 1095 at [11] (“APM”).
Each of the preconditions to the exercise of s 411(1) of the Act is met here. Infomedia is registered under the Act and is a Part 5.1 body and the proposed scheme is an “arrangement” between Infomedia and its shareholders. The draft scheme booklet has been the subject of a verification process. The procedural requirements under the Rules have been met, on the basis that I will dispense with r 3.4 of the Rules where Infomedia proposes to give notice of the second Court hearing by way of ASX announcement in accordance with common practice.
Where the preconditions to the exercise of power under s 411(1) of the Act are satisfied, then it is necessary for the Court to consider whether the Court should, in its discretion, exercise its power under s 411(1) of the Act. As Mr Willaims points out, the principles relevant to the exercise of that discretion are well established and were summarised in Re Origin Energy [2023] NSWSC 1246 at [21]–[23]. The Court will consider whether the proposed scheme is fit for consideration at the proposed scheme meeting, in the sense that it is of such a nature and cast in such terms that, if it achieves the statutory majority at the meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed and that members (or creditors) are to be properly informed as to the nature of the scheme before the scheme meeting.
Here, Infomedia’s directors recommend that its shareholders vote in favour of the scheme at the scheme meeting, in the absence of a superior proposal and subject to the independent expert continuing to conclude that the scheme is in the best interests of Infomedia’s shareholders. Infomedia appointed Grant Thornton as an independent expert to assess the merits of the scheme and prepare a report as to whether the scheme is fair and/or reasonable and/or in the best interests of Infomedia shareholders, in the absence of a superior proposal. Grant Thornton assesses the value of an Infomedia share to be in the range of $1.57 to $1.79 and the scheme consideration of $1.72 per Infomedia share is at the upper end of that valuation range. On that BASIS, Grant Thornton has expressed the view that that the scheme is “fair” and “reasonable” and in the best interest of the Infomedia’s shareholders, in the absence of a superior proposal. No apparent difficulty otherwise arises with the disclosure in the scheme booklet and the verification process adopted in respect of the scheme booklet.
Subject to the particular matters addressed below, I am satisfied that there is nothing in the terms of the scheme or in its effect on scheme shareholders that would otherwise warrant the Court declining to approve the scheme at the second Court hearing, if it receives the statutory majorities required by s 411(4)(a)(ii) of the Act at the scheme meeting.

Mr Williams draws several particular aspects of the scheme to the Court’s attention. First, he points out that, as noted above, the scheme consideration of $1.72 is reduced by the cash amount of the Permitted Dividends. He submits, and I accept, that this matter does not involve financial assistance for the purpose of s 260A of the Act: Invocare at [18]; Re Citadel Group Ltd (2020) 148 ACSR 598; [2020] FCA 1580 at [47]–[53]; Re RXP Services Ltd [2021] FCA 38 at [49]–[57]; Re Uniti Group Ltd (2022) 160 ACSR 602; [2022] FCA 671; Re Oz Minerals Ltd [2023] FCA 197 at [7] and [18] (“Oz Minerals”).
Second, Mr Williams noted that Infomedia and BidCo have entered into a loan agreement, under which Infomedia has agreed to lend an amount to BidCo equal to the excess cash held by Infomedia to fund part of the scheme consideration, conditional on shareholder approval and the scheme becoming effective (“Bidder Loan”). If made, that loan is expected to be in the range of $33 million to $41 million And will be interest free and repayable on 31 March 2026 or earlier. Approval of the Bidder Loan is a condition precedent to the scheme, although the evidence indicates that BidCo has sufficient debt and equity funding to meet its obligations under the scheme without the Bidder Loan. BidCo rightly recognises that the Bidder Loan involves the provision of financial assistance by Infomedia for the acquisition of Infomedia shares by BidCo, and Infomedia shareholders will therefore be asked to vote on resolutions under ss 260A(1)(b) and 260B of the Act approving the giving of that financial assistance and under s 208(1)(a) of the Act approving the giving of a related party benefit to BidCo, as the potential holding company of Infomedia. Those resolutions are to be put to Infomedia shareholders at a general meeting to take place immediately following the conclusion of the scheme meeting. BidCo and its related parties and associates will not be permitted to vote on those resolutions.
Mr Williams submits, and I accept, that the use of the Bidder Loan has no impact on the proceeds received by Infomedia shareholders. He also submits, and I also accept, that the financial assistance to be provided by Infomedia for the acquisition of its shares under the scheme would not prevent the convening of the scheme meeting, in circumstances where the giving of that assistance is to be separately approved by special resolution of Infomedia shareholders: Re Clough Ltd [2013] FCA 1149 at [4]; Re ThinkSmart Ltd [2022] FCA 1314 at [42]–[43]; Re Thorn Group Ltd [2023] NSWSC 1299 at [17]. Here, shareholders who support the scheme and wish to see it implemented will likely also support the resolutions necessary to permit that financial assistance to be given, and any shareholder who does not have that view will have the opportunity to vote against the resolution to approve the scheme and the resolutions to approve the giving of financial assistance.
Third, Mr Williams addresses the question of the funding of the scheme consideration and performance risk. He points out that, If the scheme becomes effective, the total aggregate scheme consideration that will be payable by BidCo (after allowing for the Permitted Dividends) is approximately $632 million. BidCo is a special purpose vehicle and the evidence addresses the issue noted in paragraph 28(b) of Practice Note SC Eq 4, which recognises that:

Mr Story’s evidence is that BidCo intends to fund the scheme consideration through a combination of debt funding and equity funding, as disclosed in section 8.5 of the Shareholder Booklet. Broadly, subjected to limited conditions, BidCo has received a legally binding equity commitment letter from the TPG Emerging Companies Asia Fund (“TECA Fund”), which has committed to providing Bidco with an aggregate amount of up to $385,881,866.80 million (“Equity Commitment”) to assist the BidCo in meeting its obligations to fund the scheme consideration or pay the reverse break fee; and, if the scheme consideration or the reverse break fee become due and payable by the BidCo, the TECA Fund is obliged to provide the equity funding for that purpose. BidCo has also entered into a binding amended and restated debt commitment letter with several lenders to provide, among other syndicated facilities, a senior secured term loan facility and senior secured revolving facility to the Bidder in an aggregate amount of $309.5 million, subject to customary conditions precedent as disclosed in section 8.5(c) of the Shareholder Booklet. These arrangements are expected to be sufficient for BidCo to fund the scheme consideration, although BidCo has also entered into the Bidder Loan with Infomedia to which I referred above. I am satisfied that the evidence sufficiently establishes BidCo’s capacity to fund the proceedings and this matter provides no reason not to convene the scheme meeting.
There is also evidence that BidCo has executed a deed poll in favour of Infomedia shareholders, by which it undertakes to each scheme shareholder to perform its obligations in respect of the scheme, including the obligation to provide or procure the provision of the scheme consideration to the Infomedia shareholders in accordance with the terms of the scheme. Mr Williams submits, and I accept, that the deed poll together with the provision of the scheme consideration to a trust account maintained by the scheme company are well-established means of managing performance risk: Re ELMO Software Pty Ltd [2023] NSWSC 12 at [27]–[28].
Fourth, Mr Williams notes that the scheme is subject to several conditions precedent, pursuant to cl 3.2 of the Scheme Implementation Agreement, including the shareholder approvals noted above and BidCo obtaining FIRB approval and German regulatory approval, as summarised in sections 6.4 and 11.4(b) of the shareholder booklet and this matter also provides no reason not to convene the scheme meeting.
Fifth, Mr Williams addresses Infomedia employee incentives. He notes that Infomedia's remuneration framework for employees includes at-risk short-term cash and deferred equity incentives and at-risk long-term equity incentives (“Equity Incentives”). The manner in which those employee incentives will be treated is described in the scheme booklet. Mr Williams submits, and I accept, that holders of performance rights or similar rights to receive Infomedia shares who are also Infomedia shareholders are not in a separate class of members by reason only that they also hold such rights: Re Cashcard Australia Ltd (2004) 48 ACSR 738; [2004] FCA 223; Re Foster’s Group Ltd (No 2) [2011] VSC 547 at [38]–[43]. One director of Infomedia, Mr Monsees (the Chief Executive Officer and Managing Director) has a relevant interest in Equity Incentives issued by Infomedia, as described in section 11.1(b) of the scheme booklet, and all of his Equity Incentives will be accelerated on the basis described in section 7.11(f) of the Shareholder Booklet. Mr Williams righty recognises that, where a director will receive a substantial benefit in relation to a scheme which other shareholders will not receive, that benefit should be disclosed as a matter for shareholders to take into account when considering that director's recommendation, and that such a director may generally make a recommendation to shareholders if his interest is sufficiently disclosed: Re Kidman Resources Ltd (2019) 139 ACSR 122; [2019] FCA 1226 at [115]; Re DWS Ltd (2020) 148 ACSR 616; [2020] FCA 1590 at [41]–[49]; Re Intega Group Ltd [2021] NSWSC 1434 at [22]; Oz Minerals Ltd at [10], [18]; APM at [27]. I accept that Mr Monsees’ interest is sufficiently disclosed at footnote 1 in the Chairman’s letter and in section 11.1(b) of the scheme booklet. These matters also give rise to no reason not to convene the scheme meeting.
Sixth, Mr Williams addresses exclusivity provisions in relation to the scheme. Pursuant to clauses 8 and 9 of the Scheme Implementation Agreement, during the Exclusivity Period (as defined), Infomedia is restricted in relation to negotiations with third parties such as “no shop”, “no talk”, and “no due diligence” restrictions. It also has “notification” and “matching right” obligations. The “no talk” and “no due diligence” restrictions are subject to a customary fiduciary exception under cl 8.3 of the Scheme Implementation Agreement. The Exclusivity Period commenced on the execution of the agreement (6 August 2025) and ends on the earlier of the termination of the Scheme Implementation Agreement in accordance with its terms; the Implementation Date (3 December 2025); and the End Date (being 6 February 2026). Mr Williams rightly points out that, in assessing exclusivity terms, the Court is concerned to ensure that any exclusivity period should be for no more than a reasonable period capable of precise ascertainment; an exclusivity clause directed at dealing with an unsolicited alternative merger proposal should be subject to a fiduciary carve out; and the provision must be clearly disclosed in the explanatory statement sent to shareholders: Re Arthur Yates & Co Ltd (2001) 36 ACSR 758 at [9]; [2001] NSWSC 40. I accept that an exclusivity period of 6 months adopted here is not an unreasonable period in a substantial transaction of this kind and the exclusivity provisions are in common form and are sufficiently disclosed in the scheme booklet: Re Coca-Cola Amatil Ltd [2021] NSWSC 270 at [22]; Re Ansarada Group Ltd [2024] NSWSC 411 at [23] (“Ansarada”); Re Donaco International Ltd [2025] NSWSC 662 at [15].
Seventh, Mr Williams deals with the question of break fees. The break fee of $6,500,000 payable by Infomedia to BidCo (in the circumstances set out in clause 10.2 of the Scheme Implementation Agreement) and the reverse break fee of the same amount payable by BidCo to Infomedia (in the circumstances set out in clause 10.3 of the Scheme Implementation Agreement) each represent approximately 1% of the implied equity value of the scheme. This is consistent with the Takeovers Panel’s guidance and the circumstances in which the break fee or the reverse break fee are payable do not include the failure of Infomedia shareholders to approve the scheme or the Court’s declining to approve the scheme. I accept that break fees are common in schemes of arrangements and will generally be permitted unless the amount of the break fee is such that it could influence voting at the meeting to be convened or if there are some other unusual circumstances: Re Adelaide Bank Ltd [2007] FCA 1582 at [31]; Re Bolnisi Gold NL (No 2) (2007) 65 ACSR 510 at 513; [2007] FCA 2078; Re Afterpay Ltd [2021] NSWSC 1435 at [33]; Ansarada at [24]; Re Bigtincan Holdings Ltd [2025] NSWSC 140 at [54]. The amount of the reimbursement fee and the reverse reimbursement fee are here not so large that they could realistically influence voting at the scheme meeting. These matters also provide no reason not to convene the scheme meeting.
Eighth, Mr Williams notes that the scheme provides for a deemed warranty by Infomedia shareholders that, among other things, their shares will be free from encumbrances. That deemed warranty is disclosed in section 6.14 of the scheme booklet and also provides no reason not to convene the scheme meeting: Re APN News and Media Ltd (2007) 62 ACSR 400 at [57]–[63]; Re Ardent Leisure Ltd [2018] NSWSC 1665 at [26].
Ninth, Mr Williams addresses the manner of despatch of scheme materials and reminder communications which are in conventional form. He also refers to the engagement of a third party to operate an in-bound shareholder information line for Infomedia shareholders; to conduct “outbound” calls to each shareholder with over 10,000 Infomedia shares; and to assist with proxy adviser engagement. Infomedia draws these proposed communications with Infomedia Shareholders to the Court’s attention but, consistent with now common practice, does not seek orders approving them. I have reviewed these communications and did not consider that any issues arose from them which I needed to draw to Infomedia’s attention. These matters, separately and together, provide no reason not to make the orders sought by Infomedia.

In the matter of Infomedia Limited

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