Legrand Australia Pty Ltd v H.P.M. Industries Pty Ltd; in the matter of Legrand Australia Pty Ltd

Judgment (7 paragraphs)

[1]

Pursuant to section 411(1) of the Corporations Act 2001 (the Act), there be convened by the first plaintiff, a meeting of Legrand France SA, as the sole member of the first plaintiff, to be held on 7 October 2009 commencing at 10.00am at Unit 99, 79-99 St Hilliers Road, Auburn, New South Wales for the purpose of considering, and if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being in the form of the scheme of arrangement set out in Exhibit 1) between the first plaintiff and its member (the LA Scheme).
Pursuant to section 411(1) of the Act, there be convened by the second plaintiff, a meeting of H.P.M. Industries Pty Ltd, as the sole member of the second plaintiff , to be held on 7 October 2009 commencing at 10.00am (or as soon after the conclusion of the meeting in Order 1 above as may be practicable) at Unit 99, 79-99 St Hilliers Road, Auburn, New South Wales for the purpose of considering, and if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (being in the form of the scheme of arrangement set out in Exhibit 1) between the second plaintiff and its member (the Nelson Scheme).
In the case of each meeting, one member present by proxy, corporate representative appointed under section 250D of the Act, or attorney under a power, shall constitute a quorum.
Notwithstanding Orders 1 and 2 above, and without limiting the operation of section 249S of the Act, each scheme meeting may with the consent of the chairperson and sole member be conducted by telephone without either being present at the address stipulated in those orders.
The explanatory statement, a copy of which forms part of Exhibit 1 (the Explanatory Statement), be approved for distribution to the member of each of the plaintiffs.
Each scheme meeting shall be convened by a notice of meeting, a copy of which forms part of Exhibit 1, accompanied by a copy of the Explanatory Statement.
Service of each notice of meeting and accompanying Explanatory Statement may be effected by electronic means, or by hand delivery to a person who is a proxy, corporate representative appointed under section 250D of the Act, or attorney under a power, of the first plaintiff and second plaintiff respectively, at any time before the relevant meeting commences.

REASONS FOR JUDGMENT (first court hearing) 1 On 2 October 2009 I made the orders that appear at the front of these reasons. I did so for the following reasons. 2 The first plaintiff, Legrand Australia Pty Ltd (LA), and the second plaintiff, Nelson Industries Pty Ltd (Nelson), applied for orders under s 411(1) of the Corporations Act 2001 (Cth) (Act)for the convening of meetings of their respective members for the purpose of their considering, and if thought fit, agreeing (with or without modification) to, schemes of arrangement relevant to them respectively (the LA Scheme and the Nelson Scheme). 3 The defendant, H.P.M. Industries Pty Ltd (HPM), is a company to which it is proposed that the business (undertakings, assets and liabilities) of LA and the business (undertakings, assets and liabilities) of Nelson, be transferred. In the case of LA, however, certain assets and liabilities are excluded from the transfer. 4 HPM has been joined as a transferee in the light of s 413(1)(a) of the Act in accordance with the approach that was taken in Royal Victorian Institute for the Blind Ltd v RBS. RVIB. VAF Ltd (2004) 206 ALR 581 at [17]. 5 The three parties are all, directly or indirectly, subsidiaries of Legrand France SA. The meetings and transfers will all be intra-group in the sense that they will involve companies within the group headed by Legrand France SA. 6 LA is a wholly owned subsidiary of Legrand France SA and HPM is a wholly owned subsidiary of LA. Nelson is trustee of a trust called the Nelson Lamps Unit Trust (NLUT). Some, but not all, of Nelson's assets are subject to the NLUT. Outside of the Nelson Scheme, the NLUT will be terminated so that Nelson will own all of its assets beneficially. After the transfer to HPM, Nelson will be left owning nothing. 7 Nelson will be deregistered without winding-up. 8 The result of the LA Scheme and the Nelson Scheme will be that LA will be left as the non-operating holding company of the Australian subsidiaries of Legrand France SA, including HPM. 9 Mr M B Oakes SC provided detailed written submissions to the Court and I have taken the course of directing that a copy be placed on the Court file. I adopted his submissions. Those submissions, therefore, embody the reasons why I made an order under s 411(1) on 2 October 2009. 10 The structure of the Schemes bears some similarity to that of the scheme that I considered in In the matter of Stork ICM Australia Pty Ltd; Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849; (2007) 25 ACLC 208 referred to in Mr Oakes's submissions. 11 The Australian Securities and Investments Commission provided a letter to the effect that, in accordance with its usual practice, it did not wish to appear to make submissions on the first court hearing. 12 Paragraph 5 of the Explanatory Statement under s 411(3) was as follows: If the Scheme is approved and implemented, creditors of LA and Nelson will become creditors of HPM (with the exception of creditors to whom the LA Excluded Liabilities are owed, who will remain creditors of LA). The directors of LA and Nelson believe that the creditors of LA and Nelson, respectively, will not be adversely affected by this outcome of the Scheme. The reasons for this opinion are as follows: (a) Each company (LA, HPM and Nelson) is solvent and in a positive net assets position. The combination of the undertakings, Assets and Liabilities of each company will result in the transferee company (HPM) having sufficient assets, cash flows and access to credit facilities to remain solvent and be able to discharge the Liabilities of LA and Nelson which are transferred to HPM as a result of the Schemes (as well as HPM's own liabilities existing immediately before the Effective Time). The following table contains selected recent historical financial information relating to LA, Nelson and HPM and comparative historical and pro forma information relating to HPM before and after the Schemes are implemented. The information is extracted from: (i) each company's unaudited balance sheet as at 30 June 2009 and cash flow statement for the 6 months ending on 30 June 2009 (set out in Schedules 2 and 3 of this explanatory statement); (ii) HPM's pro forma balance sheet set out in Schedule 2 of this explanatory statement, which shows the effect of the Schemes on HPM's financial position (based on the unaudited management accounts) if the Schemes had been implemented on 30 June 2009; and (iii) HPM's pro forma cash flow statement set out in Schedule 3 of this explanatory statement, which shows the effect of the Schemes on HPM's cash flows for the 6 months ending on 30 June 2009 (based on the unaudited management accounts), as if the Schemes had been implemented on 1 January 2009. Financial measure LA (before Schemes) Nelson (before Schemes) HPM (before Schemes) HPM (after Schemes) Net assets at $53,541,000 $9,351,000 $33,906,000 $40,942,000 30 June 2009 Cash and cash equivalents at $769,000 $1,617,000 $2,638,000 $5,025,000 30 June 2009

Note: The estimated Schemes implementation expenses are taken into account in the 'HPM (after Schemes)' column above. (b) Since 30 June 2009, there has not been any material adverse change to the financial position or performance of LA, HPM or Nelson. 13 There was affidavit evidence verifying para 5 of the Explanatory Statement. 14 Paragraph 6 of the Explanatory Statement was as follows: If the Schemes are approved and implemented, employees of LA and Nelson will become employees of HPM, a wholly-owned subsidiary of LA, on and from 1 November 2009. HPM will be renamed 'Legrand Australia Pty Ltd'. HPM will provide employment to the employees of LA and Nelson on the same terms and conditions as they are employed on by LA and Nelson, respectively, prior to the transfer of their employment. All of the LA and Nelson employees' accrued entitlements will be transferred to their employment with HPM, including annual leave and long service leave. Each LA and Nelson employee's length of service will be recognised by HPM and taken into account for the provision of long service leave and other entitlements. HPM will take over the payment of superannuation entitlements currently paid by LA and Nelson to the chosen superannuation fund of each LA and Nelson employee. LA and Nelson employees will retain the ability to nominate to have their superannuation entitlements transferred into a complying fund of their choice. 15 There was affidavit evidence verifying para 6 of the Explanatory Statement. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

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