MMA Offshore Limited, in the matter of MMA Offshore Limited [2024] FCA 731

ORDERS WAD 90 of 2024 IN THE MATTER OF MMA OFFSHORE LIMITED (ACN 083 185 693) MMA OFFSHORE LIMITED (ACN 083 185 693) Plaintiff

CYAN MMA HOLDINGS PTY LIMITED Interested Party

order made by: COLVIN J DATE OF ORDER: 21 june 2024

1. Pursuant to ss 411(1) and 1319 of Corporations Act 2001 (Cth) (Act): (a) order 1(b) of the orders dated 24 May 2024 be varied, such that the Scheme Meeting be adjourned to 8 July 2024 at 9.00am AWST at the ANZAC Club WA, 28 St Georges Terrace, Perth WA 6000, Australia; and (b) order 4(a) of the orders dated 24 May 2024 be varied, such that Michael Bowen, or failing him, Ian Macliver, be chairperson of the Scheme Meeting.
2. Pursuant to ss 411(1) and 1319 of the Act, the plaintiff is authorised to dispatch, on or before 25 June 2024, a supplementary disclosure document (Supplementary Scheme Booklet), substantially in the form set out in Annexure 'TJCM-17' to the affidavit of Timothy James Cowling Muirhead dated 20 June 2024 (Second Muirhead Affidavit) to the shareholders of the plaintiff whose names appeared on the register of members of the plaintiff as at 5.00 pm AWST on 24 May 2024 (Registered Shareholders).
3. The Supplementary Scheme Booklet be despatched to Registered Shareholders: (a) in the case of Shareholders who have elected to receive notices of meetings and other shareholder communications from the plaintiff electronically (Email Shareholders), an email substantially in the form of Annexure 'TJCM-18' of the Second Muirhead Affidavit which includes access by an embedded link to an online portal or website where Email Shareholders may access an electronic copy of the Supplementary Scheme Booklet; (b) in the case of Shareholders who have elected to receive hard copy communications (Electing Postal Shareholders) and whose registered address is in Australia, the following documents by pre-paid post addressed to the relevant addresses recorded in the plaintiff's register: (i) a letter substantially in the form of Annexure 'TJCM-19' of the Muirhead Affidavit, which contains the address of a website which enables Shareholders to access a copy of the Scheme Booklet (Shareholder Letter); and (ii) a printed copy of the Supplementary Scheme Booklet. (c) in the case of Shareholders who have not nominated an electronic address for the purposes of receiving notices of meetings and other electronic communications from the plaintiff or elected to receive hard copy communications from the plaintiff (Non-Electing Postal Shareholders) and whose registered address is in Australia, the following documents by pre-paid post addressed to the relevant addresses recorded in the plaintiff's register: (i) a Shareholder Letter. (d) in the case of Electing Postal Shareholders and Non-Electing Postal Shareholders whose registered address is outside Australia, the following documents by pre-paid airmail post addressed to the relevant addresses recorded in the plaintiff's register: (i) a Shareholder Letter; and (ii) for Electing Postal Shareholders, a printed copy of the Scheme Booklet.
4. Valid proxy forms for the meeting of members of the plaintiff convened by the Court on 24 May 2024 (Scheme Meeting) that have been lodged by Shareholders remain valid for the purposes of the Scheme Meeting, in accordance with their terms, but any appointment pursuant to those proxy forms may be varied or revoked by the appointing Shareholder at any time up to 9.00 am AWST on 6 July 2024.
5. The plaintiff publish a copy of the Supplementary Scheme Booklet on the plaintiff's ASX Market Announcements Platform and on its website.
6. The plaintiff must lodge an office copy of these orders with ASIC as soon as practicable after they are made.
7. The hearing listed for 2.15 pm AWST on 3 July 2024 be vacated.
8. The proceedings be adjourned to 2.15 pm AWST on 10 July 2024 before Justice Colvin for the hearing of any application to approve the Scheme. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

COLVIN J: 1 MMA Offshore Limited is a public company incorporated in Western Australia and listed on the ASX. It is a global provider of marine and subsea services. Its headquarters are in Perth, Western Australia. It has offices in Singapore, Taiwan, Malaysia and the United Kingdom. Cyan MMA Holdings Pty Ltd is a special purpose company incorporated in Australia. It is a wholly owned subsidiary of a holding company which is in turn a wholly owned subsidiary of Cyan Renewables Pte. Ltd. Cyan Renewables is a portfolio company of Seraya Partners Fund I L.P. which is a fund managed by Seraya Management Private Limited, a Singapore-based infrastructure fund manager. 2 A scheme of arrangement is proposed to effect the acquisition of 100% of the issued share capital of MMA by Cyan (Scheme). Under the Scheme, each shareholder of MMA will receive a cash payment for each share. There is to be no other consideration. Cyan says that it 'intends to support the continued growth of the MMA business across the Asia Pacific, with a focus on diversifying the business into sustainable and low carbon end sectors such as offshore wind and government services. With the support of Cyan Renewables' expertise in specialist offshore wind vessels, MMA is well placed to support the delivery of offshore wind farms in Australia in the future'. 3 MMA applied for orders convening a scheme meeting and approving the despatch of the relevant scheme booklet and for directions to facilitate those matters and a further hearing by the Court to consider whether to approve the Scheme in the event that the meeting of shareholders results in the requisite majority support for shareholders of MMA. I made orders on 24 May 2024 and indicated that I would publish written reasons for doing so. These are those reasons.

The role of the Court 4 The Court has a discretion conferred by s 411 of the Corporations Act 2001 (Cth) to order that a meeting be convened to consider a scheme. I summarised the Court's role when considering the exercise of the discretion in OreCorp Limited, in the matter of OreCorp Limited [2023] FCA 1359 at [10]-[13]. See also the recent summary of the legislative provisions by Banks-Smith J in Allkem Limited, in the matter of Allkem Limited [2023] FCA 1397 at [20]-[27]. As her Honour said at [27]: In summary, the standard of review is whether the proposed scheme is not inappropriate and is one that sensible business people might consider is of benefit to its members. It is not necessary for the Court to descend into the commercial merits of the proposed scheme. 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 majority, then leave should be given to convene the meeting. 5 As was the case for the scheme considered in OreCorp, the Scheme takes a form and has characteristics which place it in a category of scheme in respect of which the Court in many such cases has favourably exercised its discretion to order that a meeting be convened to consider the scheme: as to which, see DDH1 Limited, in the matter of DDH1 Limited [2023] FCA 982 at [25]. In such circumstances, short form reasons are appropriate.

Evidence relied upon in support of the application 6 In addition to affidavits filed by MMA and Cyan, the Court received as an exhibit certain email communications between the Australian Securities and Investments Commission (ASIC) and the lawyers acting for MMA as to the contents of the scheme booklet. The email communications from ASIC included a statement noting that a third party would provide 'shareholder engagement services' and a request by ASIC for an opportunity to review the scripts to be used for those communications 'ahead of their use'.

Conclusions as to preconditions 7 Having reviewed the affidavits, particularly the draft scheme booklet, and written submissions in support of the application I was satisfied that: (1) MMA is a Part 5.1 body; (2) the Scheme is proposed between MMA and its shareholders; (3) the required company search had been undertaken; (4) the Scheme can be properly described as an arrangement; (5) the Scheme is bona fide and properly proposed; (6) the 14 day notice period to ASIC under s 411(2)(a) of the Corporations Act of the court hearing was satisfied; (7) having regard to the matters I described in DDH1 at [17]-[22], the scheme booklet provides adequate disclosure and contains the prescribed information and, on the evidence, appropriate steps appear to have been taken to ensure that the information has been properly verified; (8) no issues arise which require votes to be taken on the basis of separate classes of shareholders; (9) ASIC has had a reasonable opportunity to examine the terms of the Scheme and the scheme booklet, and to make any submissions to the Court; (10) ASIC does not oppose the Scheme; (11) the required matters have been proven in respect of the proposed chair and alternative chair for the shareholder meeting to consider the Scheme; (12) as explained below, issues in relation to performance risk were addressed by mechanisms that are usual and appropriate; and (13) the Scheme was of a kind that was fit for consideration in the sense that if it received the requisite majorities the Court was likely to approve the scheme at a further hearing.

Particular matters for consideration in the present case 8 In deciding whether to exercise the discretion to approve the Scheme, I considered the following particular matters.

Performance risk 9 Appropriate and usual arrangements were in place as to performance risk. Cyan is to use a combination of equity and debt financing to fund the proposed acquisition. Evidence of those commitments was before the Court. In any event, under the terms of the proposed scheme, Cyan is required to provide funds into escrow before shares are transferred.

Proposed communications with shareholders outside scheme booklet 10 As has been noted, it is proposed that there be steps taken in relation to shareholder engagement. A third party has been engaged to provide services. Scripts in relation to communications with shareholders as part of that process are to be provided to ASIC for review. There was no evident reason why those scripts might be received in advance of the second hearing to be conducted if the shareholders approve the Scheme. It will be necessary to consider any issues arising from those communications at the second hearing: as to which, see DDH1 at [50]-[51].

Participation in directors' recommendation by MMA's managing director 11 Mr Ross, the managing director of MMA will receive substantial consideration if the scheme proceeds. It is also proposed that senior management including Mr Ross will be retained if the scheme proceeds. These matters are prominently disclosed in the scheme booklet. 12 Mr Ross has provided a recommendation in support of the proposed scheme. There is a clear disclosure of the extent of his personal interest at the point where that recommendation is included in the scheme booklet. There has been some difference in views as to whether a recommendation should be provided by a director in such circumstances. As explained by Anderson J in Security Matters Limited, in the matter of Security Matters Limited [2023] FCA 19 at [83]: 'the courts' consistent approach is that ordinarily it will be appropriate for a director who is to receive a financial benefit to make a recommendation, provided the benefit is disclosed in the scheme booklet'. I did not consider there to be any matters that might lead to the conclusion that there should be a departure from the ordinary approach.

Performance rights 13 There are existing performance rights, some of which have vested. The manner in which those rights are to be treated as part of the scheme is clearly disclosed. The treatment is consistent with the terms upon which the rights were issued.

Break fee and exclusivity arrangements 14 There is a break fee which is in a form that is consistent with accepted practice. The fee is not payable merely because shareholders do not approve the scheme. There is a reverse break fee which is also within the limits of guidance from the Takeovers Panel. 15 There is also an agreement for limited exclusivity within acceptable parameters and with a carve out that allows for a more favourable rival bid.

ASIC's position 16 I have previously expressed my agreement with the analysis of Jackman J in Vita Group Ltd, in the matter of Vita Group Ltd [2023] FCA 400 at [18] concerning communications with ASIC: DDH1 at [13], see also Mithril Resources Ltd, in the matter of Mithril Resources Ltd [2023] FCA 1177 at [4] (Derrington J). It is not necessary for all of those communications to be before the Court. 17 I have also expressed the view that it may be appropriate for a particular issue to be exposed even though it may have been resolved in a manner acceptable to ASIC: DDH1 at [14]. No matters of significance were identified by senior counsel as having arisen from communications with ASIC. 18 A letter from ASIC in usual terms was provided.

Dispensing orders 19 I was satisfied that it was appropriate to make a number of dispensing orders of a kind that are usual. I was satisfied that it was appropriate to do so having regard to the nature of the proposed scheme and the practicalities associated with convening the meeting and giving notice to shareholders having regard to modern practice.

Conclusion as to approval of the scheme 20 For the above reasons, I made orders substantially in the terms sought.

Further orders for supplementary scheme booklet 21 After the despatch of the scheme booklet, MMA released an ASX announcement with a trading update for the second half of financial year 2024. It also made an announcement that Cyan would be increasing the scheme consideration from $2.60 to $2.70 cash per share. 22 The independent expert who had provided a report for inclusion in the scheme booklet considered that it was necessary to revise the report to take account of the trading update and the increased scheme consideration. 23 The board of MMA formed the view that approval should be obtained to send a supplementary scheme booklet. It sought orders to that effect. Cyan supported the making of the orders. 24 It is well established that the Court has power to give ancillary or consequential directions as to the convening of scheme meetings and the information to be provided to shareholders. 25 No modification was proposed to the scheme other than the increase in scheme consideration. 26 The Court's approach in considering information to be provided by way of supplementary disclosure is the same as the approach when considering the scheme booklet. There must be a fair picture with nothing misleading in any material respect. I was satisfied that the proposed supplementary information met that standard. 27 There was evidence that Cyan had executed a new deed poll as to the performance of its obligations. 28 To allow sufficient time for the despatch of the supplementary information and its consideration by shareholders I was satisfied that it was appropriate to make orders adjourning the scheme meeting. I was also persuaded that it was appropriate to treat valid proxy forms already received as valid subject to amendments that would allow them to be revoked. 29 In those circumstances I made further orders substantially in the terms proposed. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Colvin.