Kidman Resources Limited, in the matter of Kidman Resources Limited (No 2) [2019] FCA 1513

THE COURT ORDERS THAT:

1. Pursuant to subsection 411(4)(b) of the Corporations Act 2001 (Cth) (Act), the Scheme of Arrangement between the Plaintiff and its members agreed to by the said members at the meeting held on 5 September 2019 (the terms of which are as set out in Annexure A to these Orders) (Scheme) be and is hereby approved.
2. Pursuant to subsection 411(12) of the Act, the Plaintiff be exempted from compliance with subsection 411(11) of the Act in relation to the Scheme.
3. Pursuant to rule 39.34 of the Federal Court Rules 2011 (Cth), these Orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ANNEXURE A

O'CALLAGHAN J: 1 On 30 July 2019, I ordered that Kidman Resources Limited (Kidman) convene and hold a meeting (the Scheme Meeting) of the holders of its ordinary shares (Kidman Shareholders) to consider and, if thought fit, to agree to (with or without any alterations or conditions) the scheme of arrangement (the Scheme) proposed to be made between Kidman and Kidman Shareholders. The orders also addressed matters relating to the holding of the Scheme Meeting and the despatch of materials to Kidman Shareholders in connection with it. The orders also provided for the second court hearing (or approval hearing) to take place in Melbourne on 12 September 2019 (yesterday). 2 My reasons for making the 30 July orders are contained in Kidman Resources Limited, in the matter of Kidman Resources Limited [2019] FCA 1226. These reasons should be read in conjunction with those reasons. Accordingly, I will not rehearse an overview of the Scheme. 3 The Scheme Meeting was duly held on 5 September 2019 and the Scheme resolution was passed by the requisite statutory majorities. 4 The Scheme, if implemented, will result in the acquisition for cash consideration of the ordinary shares in Kidman by Wesfarmers Lithium Pty Ltd (Wesfarmers Lithium), a wholly owned subsidiary of Wesfarmers Limited (Wesfarmers) and the subsequent delisting of Kidman. 5 Kidman now seeks orders approving the Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (the Act) and exempting it from compliance with s 411(11) of the Act pursuant to s 411(12). 6 The Scheme Booklet was registered by the Australian Securities and Investments Commission (ASIC) on 1 August 2019. 7 In support of its application for approval of the Scheme, Kidman relied on the affidavits listed in Annexure 1 to these reasons. 8 I have had the benefit of detailed written and oral submissions on behalf of Kidman. Having considered those submissions and read the affidavits in support of the orders, it is apparent that no issue requires particular consideration. The reasons for making the orders approving the Scheme and exempting Kidman from compliance with s 411(11) of the Act may therefore be stated briefly. 9 The Notice of Scheme Meeting contained in the Scheme Booklet included the following statements: (a) "the Scheme (with or without modification) must be approved by an order of the Court"; and (b) "[i]f the Scheme Resolution put to this meeting is passed by the requisite majorities and the other conditions to the Scheme are satisfied, Kidman intends to apply to the Court on 12 September 2019 for approval of the Scheme". 10 Mr Pizzey, the Chairman of Kidman, chaired the Scheme Meeting. He told the meeting that if the Scheme resolution was passed, the second hearing would be held yesterday. 11 Pursuant to Order 11 of the 30 July orders, an advertisement of the proposed approval hearing was published in "The Australian" newspaper on 23 August 2019. 12 At yesterday's hearing, Kidman tendered a letter from ASIC under s 411(17)(b) of the Act, stating that ASIC has no objection to the Scheme. 13 I am satisfied that the affidavit evidence filed by Kidman in support of the approval orders sought demonstrates compliance with the 30 July orders. 14 It is not necessary in a case such as this, where no even arguably contentious issue arises, to describe in any detail the role of the Court at an approval hearing, or to rehearse the many cases about it. 15 It is sufficient to observe that in deciding whether to grant approval of a scheme of arrangement, the Court will ordinarily have regard to the following matters, namely that: (a) the orders of the Court convening a meeting of members were complied with; (b) the meeting of members so convened has approved the scheme with the requisite majority; (c) all other statutory requirements have been satisfied; (d) 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; (e) there has been full and fair disclosure to members and creditors of all information material to the decision whether to vote for or against the applicable scheme; and (f) 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. 16 The requisite majorities for the purposes of s 411(4) were satisfied. 79.19% of the Kidman Shareholders that were present and voting (in person or by proxy) voted in favour of the Scheme resolution and 94.65% of the votes cast (in person or by proxy) were cast in favour of the Scheme resolution. 17 The Scheme was conditional on the satisfaction of the conditions precedent set out in clause 3.1(a) of the Scheme, one of which is that the conditions precedent in clause 3.1 of the Scheme Implementation Deed, other than the court approval condition precedent, had been satisfied or waived by the "Delivery Time" (8.00am yesterday). I am satisfied on the basis of the certificates regarding the satisfaction of the conditions precedent that are in evidence that each of the relevant conditions precedent has been satisfied. 18 Section 411(17) of the Act provides that the Court must not approve a compromise or arrangement under this section unless it is satisfied that the compromise or arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 (the takeover provisions), or there is produced to the Court, as occurred here, a statement in writing by ASIC stating that it has no objection to the compromise or arrangement. 19 This is an appropriate case in which the Court should make an order pursuant to s 411(4)(b) approving the Scheme, having regard to the following: (a) the support of Kidman Shareholders as reflected in the voting results at the Scheme Meeting; (b) the opinion of the independent expert (KPMG) that the Scheme is fair and reasonable and therefore in the best interests of Kidman Shareholders, in the absence of a superior proposal; (c) the position of ASIC that it has no objection to the Scheme; (d) no competing proposal having arisen; (e) the terms and nature of the Scheme; (f) the unanimous recommendation of the board of directors of Kidman (contained in the Scheme Booklet) that Kidman Shareholders vote in favour of the Scheme; (g) the disclosure made in the Scheme Booklet; (h) there being nothing to suggest that the Scheme was proposed other than in good faith; (i) there being nothing to suggest that Kidman Shareholders voted other than in good faith; and (j) there being nothing to suggest that any Kidman Shareholder was oppressed. 20 In light of these matters I am satisfied that the Scheme has been made in good faith and is "at least so far fair and reasonable, as that an intelligent and honest [person], who is a member of that class, and acting alone in respect of [their] interest[s] as such a member, might approve of it" (Re Alabama, New Orleans, Texas and Pacific Junction Railway Company [1891] 1 Ch 213 at 247, per Fry LJ) and that it is accordingly appropriate that the Court exercise its jurisdiction to approve the Scheme. 21 Section 411(11) of the Act provides, subject to s 411(12), that a copy of the Court's order approving the scheme be annexed to every copy of the company's constitution issued after the order is made. Section 411(12) allows the Court to exempt a body from compliance with this provision or to determine the period during which it shall comply. 22 Such exemption orders are invariably made in schemes of arrangement of this type, where there is no alteration to the constitution, and the company acquired is to become a wholly owned subsidiary of the bidder. 23 For those reasons, I made the orders sought, set out above. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice O'Callaghan.

Affidavits relied on (1) Affidavit of Colin Paul Fawns affirmed 11 September 2019 (Senior Client Service Manager - Boardroom Pty Limited, Kidman's share registry) (which addresses the email despatch of the Scheme materials, receipt of proxy forms, shareholder communications, registration of attendees at the Scheme Meeting and acting as the returning officer for the poll at the Scheme Meeting). (2) Second affidavit of George John Pizzey sworn 6 September 2019 (Chairman of Kidman who chaired the Scheme Meeting) (which addresses the holding of the Scheme Meeting and the passing of the Scheme resolution); (3) Affidavit of Danny Perry Hunt affirmed 11 September 2019 (Relationship Manager - Orient Capital Pty Ltd - a wholly owned subsidiary of Link Market Services Pty Ltd) (which addresses the preparation of the Scheme Booklet for despatch to Kidman Shareholders, the physical despatch of the Scheme materials, the shareholder information line, contacting Kidman Shareholders and the micro-site created to contain links to Scheme materials and which set out the timetable and key dates for the Scheme); (4) Fifth affidavit of Ron Smooker sworn 10 September 2019 (which addresses preparation of the Scheme Booklet for despatch to Kidman Shareholders, registration of the Scheme Booklet, ASX announcements made by Kidman including the announcement of the Scheme Meeting results to the ASX, the advertisement of the second court hearing, and that no notice has been received from any person proposing to appear at the second court hearing to object to the approval of the Scheme); (5) Sixth affidavit of Ron Smooker sworn 12 September 2019 (which addresses, among other matters, satisfaction of conditions precedent, ASIC's position in respect of the second court hearing, whether notice has been received from any person proposing to appear at the second court hearing to object to the approval of the Scheme, whether Kidman has received notice of any competing proposal and the position proposed to be adopted regarding foreign resident capital gains tax withholding).