Integra Mining Limited, in the matter of Integra Mining Limited [2012] FCA 1414 - FCA 2012 case summary — Zoe

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Integra Mining Limited, in the matter of Integra Mining Limited [2012] FCA 1414

[2012] FCA 1414

Federal Court of Australia|2012-12-12|Before: McKerracher J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2012-12-12

Before

McKerracher J

Catchwords

CORPORATIONS - scheme of arrangement - application pursuant to s 411(1) that a company convene a meeting of members

Source

Original judgment source is linked above.

Catchwords

CORPORATIONS - scheme of arrangement - application pursuant to s 411(1) that a company convene a meeting of members

Judgment (24 paragraphs)

[1]

The Plaintiff convene a meeting of holders of fully paid ordinary shares in the capital of the Plaintiff ("Shareholders") to be held in Perth, Western Australia on 19 December 2012 ("Scheme Meeting") for the purpose of the Shareholders considering and, if thought fit, approving, with or without modifications, the scheme of arrangement proposed pursuant to Part 5.1 of the Corporations Act 2001 (Cth) (the "Act") between the Plaintiff and its Shareholders ("Scheme") which is attached hereto and marked Annexure "A".
The Court approves, for the purposes of section 412(1)(a) of the Act, an explanatory statement constituted by the scheme booklet which forms annexure "CBP-1" to the Affidavit of Chadwick Byron Poletti sworn 14 November 2012 ("Scheme Booklet").
Subject to registration of the Scheme Booklet with the Australian Securities and Investments Commission ("ASIC") pursuant to section 412(6) of the Act, the Plaintiff is to despatch the Scheme Booklet to the Shareholders who appear on the register of members as at 5pm on 15 November 2012 by ordinary pre-paid post (or by airmail to overseas Shareholders) on or before 19 November 2012.
The Court directs, subject to these orders, that the Scheme Meeting is to be: (a) held at the Pan Pacific Perth, 207 Adelaide Terrace, Perth, Western Australia at 10.00am (Perth time) on Wednesday 19 December 2012; (b) convened, held and conducted in accordance with the provisions of Part 2G.2 of the Act that apply to members of a company and the provisions of the Plaintiff's constitution that are not inconsistent therewith and that apply to meetings of members; (c) convened, held and conducted pursuant to section 1319 of the Act, on the basis that Corporations Regulations 5.6.12 and 5.6.14 to 5.6.36A do not apply to the meeting; and (d) convened using the notice of meeting in the form or to the effect of the notice contained in Annexure D of the Scheme Booklet.

[7]

Options and performance rights 5 Integra has issued 15,350,000 unlisted options to acquire Integra shares (Options). Three million, eight hundred and fifty thousand (3,850,000) of the Options are due to expire on 31 December 2012 (which is prior to the proposed date for implementation of the Scheme). Integra and Silver Lake have entered into deeds of transfer with the holders of these Options pursuant to which: the holders can elect to exercise their Options in accordance with their terms but will receive their Integra shares before the Record Date so that those shares will be acquired by Silver Lake under the Scheme; or the Options will be transferred to Silver Lake upon implementation of the Scheme, and the holders will be entitled to receive shares in Silver Lake outside of the Scheme in an amount calculated by reference to the Scheme Consideration and the Black Scholes option valuation methodology. 6 Integra and Silver Lake have entered into deeds of transfer with the holders of the remaining Options pursuant to which the Options will be transferred to Silver Lake upon implementation of the Scheme, and the holders will be entitled to receive shares in Silver Lake outside of the Scheme in an amount calculated by reference to the Scheme Consideration and the Black Scholes option valuation methodology. 7 Integra has also issued 5,579,786 unlisted performance rights to Integra employees (Performance Rights) where each Performance Right constitutes a performance right to receive an Integra Share. 1,448,807 of the Performance Rights have an exercise price of $0.76 and are due to expire on 17 November 2012 (which is also prior to the proposed date for implementation of the Scheme). Integra and Silver Lake have entered into deeds of transfer with the holders of these Performance Rights pursuant to which: (a) the holders can elect to exercise their Performance Rights in accordance with their terms but will receive their Integra shares before the Record Date so that those shares will be acquired by Silver Lake under the Scheme; or (b) the Performance Rights will be transferred to Silver Lake upon implementation of the Scheme, and the holders will be entitled to receive shares in Silver Lake outside of the Scheme in an amount calculated by reference to the Scheme Consideration and the Black Scholes option valuation methodology. 1,000,000 of the Performance Rights have an exercise price of $0.63 and are due to expire on 30 March 2013. Integra and Silver Lake have entered into deeds of transfer with the holders of these Performance Rights pursuant to which the Performance Rights will be transferred to Silver Lake upon implementation of the Scheme, and the holders will be entitled to receive shares in Silver Lake outside of the Scheme in an amount calculated by reference to the Scheme Consideration and the Black Scholes option valuation methodology. The final 3,131,699 Performance Rights have an exercise price of nil and are due to expire on 1 July 2013. The Board of Integra has exercised its discretion to automatically vest these Performance Rights subject to Court approval of the Scheme and the Scheme becoming effective. The Integra shares to be issued on the vesting of these Performance Rights will be issued before the Record Date so that those shares will be acquired by Silver Lake under the Scheme. 8 If the Scheme is implemented Integra will become a wholly owned subsidiary of Silver Lake.

[9]

Nature of Review 11 The nature of review at this stage is to enquire whether the Scheme is not inappropriate and is one that sensible business people might consider is of benefit to its members: Re Sonodyne International Ltd (1994) 15 ACSR 494 (at 499) per Hayne J. If the proposed arrangement is one that seems fit for consideration by a meeting of members and is a commercial proposition likely to gain the Court's approval if passed by the necessary majorities, then leave should be given to convene the meeting: Re ACM Gold Ltd (1992) 34 FCR 530 (at 535) per O'Loughlin J. The Court is not required to be satisfied either at the convening or approval stage that no better scheme could have been devised: Re Foundation Healthcare Ltd (2002) 42 ACSR 252 (at 265) per French J (as his Honour then was). 12 The Court should order the convening of the Scheme Meeting and approve the dispatch of the Scheme Booklet (explanatory statement) if satisfied as to the following five matters: The Scheme is an arrangement in respect of which the Court may order a meeting of the members: s 411(1) CA. That is: the Scheme is an arrangement; Integra is a Pt 5.1 Body; the Scheme participants are members of Integra; and the Scheme Meeting will be convened between members of the same class. the Australian Securities and Investments Commission (ASIC) has had a reasonable opportunity to examine the terms of the Scheme and explanatory statement and make submissions to the Court in relation thereto: s 411(2)(b) CA. The explanatory statement provides adequate disclosure (s 412(1)(a)(i) CA) and contains the prescribed information: s 412(1)(a)(ii) CA, r 5.1.01 and Sch 8 cl 8301- 8310 of the Corporations Regulations 2001 (Cth) (Corporations Regulations). The procedural requirements of the Federal Court (Corporations Rules) 2000 (Cth) have been met. That there is no apparent reason why the Scheme should not, in due course, receive the Court's approval if the necessary majority of member's votes is achieved: Re NRMA Insurance Ltd (No 1) (2000) 156 FLR 349 (at [3], [14]-[41]) per Santow J; Re Ranger Minerals Ltd (2002) 42 ACSR 582 (at [21]-[23], [31]-[36], [40] and [47]) per Parker J; Re Hills Motorway Ltd (2002) 43 ACSR 101 (at [5]) per Barrett J; Re International Goldfields Ltd (2003) 21 ACLC 1199 (at [9]-[32]) per Barker J; Re Orica Ltd [2010] VSC 231 (at [7]) per Davies J; Re MAC Services Group Ltd (2010) 80 ACSR 390 (at [5]) per Barrett J.

[17]

Draft Explanatory Statement 27 The complete Scheme Booklet comprises the body of the text, a summary of the terms of the Implementation Agreement, the deed poll, the scheme of arrangement, the notice of scheme meeting, a list of Integra's ASX announcements from 14 September 2012, a list of Silver Lake's ASX announcements from 31 August 2012, the independent expert's report, which appends the independent technical specialist's report and the investigating accountant's report. 28 The emphasis is on proper disclosure: Re Seven Network Ltd [2010] FCA 220 (at [8]). The explanatory statement must provide proper disclosure as required in s 411(3) CA. It must essentially set out 'all the main facts as will enable shareholders to exercise their judgment on the proposed scheme': Re Dorman Long & Co Ltd, South Durham Steel & Iron Co Ltd [1934] Ch 635 (at 665-666) per Maugham J; applied by Santow J in Re NRMA Ltd (No 1) (at 354) and French J in Re Foundation Healthcare Ltd (at 263). 29 The Scheme Booklet prepared by Integra in relation to the Scheme has been drafted to satisfy the disclosure requirements prescribed in: ASIC Regulatory Guides 60, 111 and 112; and s 411(3) and s 412 CA and Sch 8 of the Corporations Regulations. 30 Regulation 5.1.01 of the Corporations Regulations prescribes the information for the explanatory statement as required by s 411(3)(b) and s 412(1)(a)(ii) CA. In respect of a scheme between a Pt 5.1 body and its members, or a class of its members, reg 5.1.01(1)(b) requires the explanatory statement to state the matters set out and have annexed to it the reports and copies of documents mentioned in Pt 3 of Sch 8 to the Corporations Regulations. 31 Part 3 of Sch 8 to the Corporations Regulations (Pt 3) is entitled 'Prescribed information relating to proposed compromise or arrangement with members or a class of members' and contains ten items, item 8301 to item 8310 inclusive. Each of these items is considered in the checklist attached to Integra's submissions filed on 14 November 2012.

Integra Mining Limited, in the matter of Integra Mining Limited [2012] FCA 1414

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Catchwords

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Catchwords

Judgment (24 paragraphs)

Legislation Cited (2)

Cases Cited (6)