In the matter of Tribeca Learning Limited (ABN 16 084 211 423) [2006] FCA 356

REASONS FOR JUDGMENT 1 This is the first court hearing of an application to approve a Scheme of Arrangement. 2 The originating process, filed on 13 March 2006, seeks orders convening a meeting of members to consider a members Scheme of Arrangement. The scheme involved is an acquisition of transfer scheme which utilises Part 5.1 of the Corporations Act 2001 (Cth) ("the Act"). The proposal is that the scheme shareholders shares are transferred in consideration for 40.5 cents cash per share to Kaplan Australia Pty Limited ("Kaplan"). 3 Kaplan is a subsidiary of Kaplan Inc which is in turn a subsidiary of the Washington Post Company which is publicly listed on the New York Stock Exchange. 4 The scheme consideration is approximately $55 million with a maximum consideration of just less than $56.7 million. 5 Mr Oakes SC of counsel has provided me with helpful written submissions in support of his application for an order convening a meeting. It is unnecessary to refer to the submissions in any detail but I will leave the submissions with the court papers. 6 Today's application is supported by a number of affidavits as follows; Mr David Mackay sworn 13 March 2006, Mr Warren Jacobson sworn 23 March 2006, Mr Wayne Lonergan sworn 22 March 2006, Mr D.W. Stammer sworn 17 March 2006, Mr A.B. Davis sworn 23 March 2006 and Mr Hal Jones sworn 22 March 2006. 7 A number of exhibits to those affidavits have also been put in evidence; they are exhibit WJ1 to Mr Jacobson's affidavit, exhibits HJ1, HJ2 and HJ3 to Mr Jones' affidavit and exhibit WRL2 to Mr Lonergan's affidavit. 8 Also in evidence is a letter from ASIC dated 24 March 2006 which sets out ASICs policy in relation to the provision of a letter under s 411(17) of the Act. The policy referred to in the letter is that the "s 411(17) letter" is not provided until the second court hearing. 9 One of the matters raised by Mr Oakes' submission is what I can call the "credit risk issue" which arises from the necessary lead time before the payment of the cash consideration. I am satisfied that the scheme adopts a version of the model which was approved by Gyles J in Re Tempo Services Limited (2005) 53 ACSR 523. I note also that the evidence includes a letter from the Washington Post Company dated 10 March 2006 in which that company unconditionally undertakes to Kaplan to provide Kaplan with the scheme consideration. 10 One other matter which I raised with Mr Oakes is that the scheme provides for a takeover of the scheme company which could have proceeded under the provisions of Chapter 6 of the Act. 11 In Ford's Principles of Corporations Law at [24.060] the authors set out the authorities which have considered this question. The authors conclude that the effect of the cases is to preserve the availability of the Scheme of Arrangement procedure to achieve a friendly takeover offer notwithstanding s 411(17) as long as the scheme includes essential elements which could not be achieved under Chapter 6. 12 In the present case there does not appear to be such essential elements, however, the letter from ASIC which is exhibit B indicates that ASIC does not at present have any intention of opposing the orders which would be sought at the second court hearing, and Mr Oakes has indicated that he anticipates that they will produce to the court on the second court hearing a statement in writing by ASIC in accordance with s 411(17)(b) so that it would appear unlikely that any issue in relation to this section will arise at the second court hearing. 13 I am satisfied that the evidence referred to in the affidavits mentioned above is in accordance with the usual practice taken into account by a court in exercising its discretion to order the convening of a meeting under s 411. I am also satisfied that the draft short minutes of order incorporate the usual practice. The drafting protocols of the applicable orders are usefully summarised in [31] of Mr Oakes' written submissions. 14 Accordingly, I propose to and I will make orders in accordance with [1] to [6] of the short minutes of order which I will sign and date with today's date and place with the papers. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.