[2002] NSWSC 1177
- Re Seven Network (No 3) (2010) 267 ALR 583
Source
Original judgment source is linked above.
Catchwords
[2002] NSWSC 1177
- Re Seven Network (No 3) (2010) 267 ALR 583
Judgment (7 paragraphs)
[1]
Solicitors:
Corrs Chambers Westgarth (Plaintiff)
Herbert Smith Freehills (Bidder)
File Number(s): 2024/106764
[2]
Judgment
By Originating Process filed on 20 March 2024, the Plaintiff, Silver Lake Resources Ltd ("SLR"), applied for orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) ("Act") that it convene a meeting of its members in respect of a proposed scheme of arrangement and ancillary orders. SLR is an Australian public company limited by shares; is admitted to the official list of the securities exchange conducted by Australian Securities Exchange Limited ("ASX"); and is a gold producer with operations in the eastern goldfields and mid-west regions of Western Australia. The proposed scheme provides for Red 5 Limited ("Red 5"), which is a mid-tier Australian gold producer, or its wholly owned nominee to acquire all of the issued shares in SLR (other than those held by "Excluded Shareholders" being Red 5 and its controlled entities) in consideration of the issue of 3.434 fully paid ordinary shares in the capital of Red 5 for each SLR share, subject to the treatment of Ineligible Shareholders (as defined) as set out in the scheme booklet. There are currently no Excluded Shareholders.
I made orders that SLR convene a meeting of its members to consider the proposed scheme and associated orders at the first Court hearing on 24 April 2024, for the reasons set out in my judgment in Re Silver Lake Resources Ltd [2024] NSWSC 631. The scheme was approved by the requisite statutory majorities at the scheme meeting.
At this second Court hearing, SLR now seeks orders approving the scheme. I made those orders at the conclusion of the second Court hearing on 6 June 2024. These are my reasons for making those orders, and I have drawn on the helpful submissions of Mr Izzo, who appears for SLR, in this judgment.
[3]
Affidavit evidence
SLR reads an affidavit dated 4 June 2024 of Ms Katrina Sleiman, who is a partner in the firm of solicitors acting for SLR and gives evidence in relation to dealings with the Australian Securities & Investments Commission ("ASIC"), announcements made by SLR on the ASX and the publication of the notice in respect of the second Court hearing. SLR also reads an affidavit dated 4 June 2024 of Ms Danielle Petch, who is employed by Computershare Investor Services Pty Limited ("Computershare") and gives evidence as to the despatch of documents to shareholders in respect of the scheme. By his affidavit dated 4 June 2024, Mr Rodney Somes, who is employed by Computershare, gives evidence in relation to the conduct of the scheme meeting. By two further affidavits dated 6 June 2024, Ms Sleiman addressed the satisfaction or waiver of the conditions precedent to the scheme.
[4]
Applicable principles, submissions and determination
Mr Izzo submits and I accept that the Court must be satisfied of several matters in order to approve a scheme of arrangement at a second Court hearing, namely that the plaintiff has complied with the orders of the Court convening the meeting of members; the meeting of members so convened has approved the scheme with the requisite majorities; all other statutory requirements have been satisfied; the scheme is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it; the plaintiff has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion; and there was full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]-[10]; Re Central Pacific Minerals NL [2002] FCA 239 at [8]-[14]; Re Seven Network (No 3) (2010) 267 ALR 583; [2010] FCA 400 at [35]-[39]; Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049 at [18]-[24]; Re Signature Capital Investments Ltd (No 2) [2016] FCA 385 at [4].
I also summarised the applicable principles in Re InvoCare Ltd (No 2) [2023] NSWSC 1350 at [8]-[9] as follows:
"The matters of which the Court must be satisfied in approving the scheme at the second Court hearing are whether there was compliance with the orders of the Court convening the scheme meeting or meetings; whether the resolution to approve the scheme was passed by the requisite majority and whether other statutory requirements have been satisfied; and whether all conditions to which the scheme is subject (other than Court approval and lodgement of the Court's orders with ASIC) have been met or waived: Re ELMO Software Ltd (No 2) [2023] NSWSC 81 ("ELMO") at [7].
The Court also has, in exercising its power of approval, a residual discretion whether to approve a scheme and is not bound to approve it merely because it has made orders for the convening of meetings or because the statutory majorities have been achieved: Re Seven Network Ltd (No 3) (2010) 267 ALR 583 ("Seven Network") at [31]; Re Staging Connections Group Ltd (No 2) [2015] FCA 1102 at [12]. In exercising that residual discretion, the (non-exhaustive) matters the Court will take into account include whether the scheme is fair and reasonable so that an intelligent and honest member of the relevant class, properly informed and acting alone, might approve it; whether there was full and fair disclosure to members of all information material to the decision whether to vote for or against the scheme; and whether the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 at [8]; Seven Network at [35]-[40]; Re Pendal Group Ltd (No 3) [2023] NSWSC 14 at [10]; ELMO at [8]."
The evidence establishes that SLR has complied with the Court's orders in respect of the distribution of material in relation to the scheme to SLR shareholders. The scheme meeting was held in accordance with the Court's orders and SLR shareholders there voted in favour of the scheme by the requisite majorities. At that meeting, 96.84% of the votes cast were in favour of the proposed scheme (excluding shareholders who abstained) and 79.22% of shareholders who cast votes were in favour of the proposed scheme. Some 57.91% of available votes were cast at the scheme meeting, although only 6.95% of shareholders by number cast their votes. That attendance is comparable (as to number of shares voted) and higher (as to number of shareholders voting) to the attendance at SLR's AGMs in November 2022 and 2023, where the numbers of participating shareholders were 3.28% and 2.84%, respectively, and the numbers of votes cast were 61.05% and 54.34% respectively, based on resolution two at each AGM. Each of the conditions precedent to the scheme have been satisfied or waived and ASIC has confirmed that it has no objection to the scheme for the purposes of s 411(17)(b) of the Act. I am satisfied that the procedural requirements for approval of the scheme are satisfied.
I now turn to the exercise of the Court's discretion in respect of the scheme. As I noted in my earlier judgment, the scheme was recommended by SLR's directors, and the independent expert whose report was included in the scheme booklet has expressed the view that the scheme was fair and reasonable and in the best interests of SLR shareholders (in the absence of a superior proposal, on the basis of a valuation range for SLR shares of between $1.050 and $1.250 with a preferred value of $1.150, and for 3.434 shares in the merged group of between $1.099 and $1.271 with a preferred value of $1.185). SLR's shareholders have voted in favour of the scheme by the requisite majorities. There is also no reason to doubt that SLR has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion and that there was full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme. No SLR shareholder or other person indicated an intention to appear at the second Court hearing on 6 June 2024 to oppose the scheme and there was no such appearance. There is no reason to doubt that the scheme is fair and reasonable so that an intelligent and honest SLR shareholder, properly informed and acting alone, might approve it. I am satisfied that there is no reason to doubt that SLR has brought to the Court's attention all matters that could be considered relevant to the exercise of the Court's discretion and that there was full and fair disclosure to SLR shareholders of all information material to the decision whether to vote for or against the applicable scheme. I am therefore satisfied that the scheme is appropriate for the Court's approval.
SLR seeks an exemption under s 411(12) of the Act from compliance with s 411(11) so that a copy of the Court's order approving the scheme does not need to be annexed to any copy of SLR's constitution that may be issued in the future. I am satisfied that such an order should be made where, as here, the rights of shareholders are not modified by the scheme: Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 at 240; [2003] WASC 19; Re GBST Holdings Ltd [2019] NSWSC 1503 at [15].
[5]
US Securities Act
SLR and RED 5 intend to rely on s 3(a)(10) of the Securities Act 1933 (US), which provides an exemption from the registration requirements of that statute and this Court's approval of the scheme, among other things, to qualify for that exemption, in relation to shareholders with registered addresses in the United States of America. I should therefore record that the Court has had to consider the fairness of the scheme at this hearing and that the Court was advised before this hearing.
[6]
Orders
For these reasons, I made the orders sought by SLR at the conclusion of the second Court hearing on 6 June 2024.
[7]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 June 2024