Integra Mining Limited, in the matter of Integra Mining Limited (No 2) [2013] FCA 220

Federal Court of Australia|2013-03-13|Before: McKerracher J

INTRODUCTION 1 These are reasons for orders I made at the second hearing concerning the scheme of arrangement (the Scheme) described in Integra Mining Limited, in the matter of Integra Mining Limited [2012] FCA 1414. The Scheme is annexed to these reasons at Annexure A. At the second hearing I approved the Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (CA) and exempted the Plaintiff (Integra) from compliance with the procedural requirements of s 411(11) CA. 2 On 15 November 2012 I made orders under s 411(1) CA that Integra convene a scheme meeting on 19 December 2012 for the purpose of its members voting on the acquisition of all of the fully paid ordinary shares in Integra by Silver Lake Resources Limited (Silver Lake). Those orders were subsequently amended on 21 November 2012 due to logistical difficulties Integra encountered in dispatching the Scheme booklet to members. Ultimately, however, the Scheme meeting was duly convened and an overwhelming majority of the members voted in favour of the Scheme. 3 No creditor or shareholder appeared at the second hearing to oppose the Scheme. Both Integra and Silver Lake were represented by senior counsel at the second hearing. The former relied on a number of affidavits to show, amongst other matters, that the Australian Securities and Investments Commission (ASIC), pursuant to s 411(17)(b) CA, had issued a 'no objection' letter to the proposed Scheme on 20 December 2012.

THE EVIDENCE 5 In support of its application, Integra read the following affidavits: an affidavit of Mr John Emery sworn on 14 December 2012; an affidavit of Mr Peter Reynold Ironside sworn 20 December 2012; an affidavit of Mr John Hartley sworn 17 December 2012; an affidavit of Ms Wendy McAuley sworn 18 December 2012; a supplementary affidavit of Mr Peter Reynold Ironside sworn 21 December 2012. 6 Integra also relied on the materials it previously filed as well as a comprehensive outline of submissions filed on 20 December 2012, annexed to which was a helpful 'second court hearing checklist'.

Procedural Requirements 7 Integra submitted, and I was satisfied that, that the evidence established that all of the procedural requirements had been met. 8 The Scheme booklet, approved by the Court on 15 November 2012, was registered with ASIC on the same date. The Scheme booklet was subsequently dispatched to members in accordance with orders of 21 November 2012. Notice of the second hearing was advertised in The Australian and The West Australian on 13 December 2012, in accordance with my orders of 15 November 2012 (as amended by my orders of 21 December 2012). 9 The Scheme meeting was duly convened and conducted on 19 December 2012. An overwhelming majority of members (99.57% of votes cast were in favour of the Scheme, representing 98.47% of the members voting) voted in favour of the Scheme - far exceeding the requisite statutory majorities.

No Objection by ASIC 10 Exhibited to the supplementary Ironside affidavit, and pursuant to s 411(17(b) CA, Integra produced a letter from ASIC dated 20 December 2012, stating that it had no objection to the proposed Scheme. That is sufficient to satisfy the requirements of s 411(17) CA as ss 411(17) (a) and (b) are in the alternative. The 'no objection' letter from ASIC, while not binding on the Court, may remove requirement that the Court be satisfied that the arrangement has not been proposed for the purpose of avoiding the operation of Ch 6: Re United Mineral Corporation NL (No 2) [2010] FCA 47 (at [9]).

Good Faith and No Improper Purpose 11 However, production of a 'no objection' letter from ASIC does not bring an end to the Court's discretion: Re Macquarie Private Capital A Ltd [2008] NSWSC 323 (at [29]). At any rate, there was no evidence before me to support the proposition that the Scheme was proposed for an improper purpose or in bad faith.

Fair and Reasonable 12 The test is whether an intelligent, honest person who is a member, properly informed and acting alone, might approve the proposed Scheme: Re Seven Network Ltd (ACN 052 816 789) (No 3) (2010) 267 ALR 583 (at [35]-[40]) per Jacobson J; Re Central Pacific Minerals NL [2002] FCA 239 (at [12]-[14]). As counsel for Integra submitted, generally members are in the best position to determine whether a scheme is fair and reasonable and in their commercial interests. As noted above, an overwhelming majority of fully informed members voted in favour of the Scheme - far exceeding the requisite statutory majorities. The Directors of Integra unanimously recommended the Scheme to members in absence of a superior proposal. 13 The report by the independent expert, Ernst & Young, also concluded that the Scheme was in the best interests of the members. It concluded that under the Scheme, using a market approach, members were receiving a premium in the range of 4.7% and 16.2% for their shares. The Scheme is therefore fair and reasonable because it will yield commercial benefit for the members and is of a kind that is fair and reasonable from the view of an intelligent and honest person. 14 There was no evidence to suggest any minority shareholder oppression in the context of the Scheme, nor was there any evidence that there had not been full or frank disclosure of all material information to the shareholders. All matters relevant to my discretion in approving the Scheme were brought to my attention.

Conditions Precedent 15 The supplementary Ironside affidavit annexed certificates from Integra and Silver Lake certifying that all conditions precedent (other than the conditions precedent in relation Court approval of the Scheme) were satisfied or taken to be waived as at 21 December 2012.

Section 411(11) Exemption 16 Integra also sought, and was granted, an exemption from compliance with s 411(11) CA, which may be granted under s 411(12), requiring it to annexe a copy of every order of the Court made for the purpose of s 411(4)(b) to every copy of Integra's Constitution issued after the order was made. 17 I accepted Integra's submission that from the implementation of the Scheme, Integra was to be a wholly owned subsidiary of Silver Lake and there would be no utility in attaching the order to every copy of Integra's Constititution. I note that exemptions were granted for the same reasons in Re Foundation Healthcare (2002) 43 ACSR 680 and Re Coventry Resources Ltd (No 2) [2012] FCA 1473 (at [23]) per Barker J. The exemption sought was entirely sensible, obvious and uncontentious.

CONCLUSION 18 It was for the above reasons that the Scheme was approved and Integra was exempted from compliance with s 411(11) CA. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Corporations Act 2001(Cth)ss 411(4)(b), 411(11), 411(12)

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