PrimeAg Australia Limited, in the matter of PrimeAg Australia Limited [2013] FCA 1001

IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1741 of 2013

IN THE MATTER OF PRIMEAG AUSTRALIA LIMITED ACN 127 984 123 PRIMEAG AUSTRALIA LIMITED ACN 127 984 123

JUDGE: FARRELL J DATE: 3 october 2013 PLACE: SYDNEY

REASONS FOR JUDGMENT 1 These are my reasons for making orders on 28 August 2013 under s 411(1) of the Corporations Act 2001 (Cth) (Corporations Act) and ancillary directions under s 1319 to convene a meeting of certain members of the plaintiff company, PrimeAg Australia Limited ACN 127 984 123 (PrimeAg), to consider approving a scheme of arrangement as described in these reasons (Scheme) (Scheme Meeting). The Scheme is an "acquisition" scheme and therefore within the concept of an "arrangement" which has often been approved by Australian courts. 2 Unless otherwise indicated, in these reasons references to provisions of a statute are references to provisions of the Corporations Act, terms defined in the Explanatory Memorandum which is Exhibit 1 (Explanatory Memorandum) bear the same meaning and those terms are used in the way they are commonly used in "acquisition" schemes of arrangement.

PrimeAg 3 PrimeAg is a public company whose securities are listed for quotation on the Australian Securities Exchange (ASX). Historically, its main business activity has been investment in agricultural land and water assets in eastern Australia; it currently holds assets in New South Wales and Queensland.

Capital structure 4 PrimeAg has on issue 266,394,444 ordinary shares (PrimeAg Shares). 1,868,722 executive performance rights are also on issue, which are not quoted on any stock exchange. These rights are held by Mr Peter Corish AM, the Chief Executive Officer of PrimeAg. Mr Corish has, by deed, agreed with PrimeAg to surrender these rights for nil consideration if the Scheme becomes Effective.

Privatisation Process 5 Since its initial public offering in 2007, PrimeAg Shares generally traded at a discount to their reported net asset value. 6 On 30 August 2012, the PrimeAg Board announced an extensive public tender process under which it would consider proposals to acquire PrimeAg or some or all of its assets (Privatisation Process). Resulting from the Privatisation Process, on 15 February 2013, PrimeAg announced the sale of approximately 60% of its remaining portfolio to Global Ag Properties Australia Pty Ltd as trustee for Global Ag Properties Australia Trust (TIAA-CREF Transaction). 7 PrimeAg has made the following capital returns to its shareholders: Following the sale of some assets in July 2012, PrimeAg returned to PrimeAg Shareholders $40 million (representing $0.15 per PrimeAg Share) in October 2012. In April 2013, PrimeAg returned $106.6 million to PrimeAg Shareholders (representing $0.40 per PrimeAg Share), which was the proceeds of an entitlement offer it had completed in August 2011 after deduction of an amount estimated to be adequate to meet PrimeAg's working capital needs. Following completion of the TIAA-CREF Transaction, in August 2013, PrimeAg returned $122.5 million to PrimeAg Shareholders (representing $0.46 per PrimeAg Share).

Acquirer 8 Australian Food & Fibre Limited (AFF) is an Australian public company, securities in which were listed for quotation on ASX until November 2007. Its Executive Chairman is Dr David Robinson (Dr Robinson). 9 AFF holds 23,341,176 PrimeAg Shares (approximately 8.8%) and Dr Robinson holds 178,703 PrimeAg Shares (approximately 0.7%).

Proposed transactions 10 On 1 July 2013, PrimeAg announced to ASX that it had entered into agreements for the Emerald Transaction and the Scheme (Proposed Transactions). It is intended that by November 2013, PrimeAg will return a further $105-$113 million to its shareholders if the Emerald Transaction and the Scheme are successfully completed, and the Emerald Distribution and the Final Distribution are made. 11 The Proposed Transactions and related distributions are the final stage of the Privatisation Process. Scheme Shareholders will be asked to vote at the Scheme Meeting to approve the Scheme and PrimeAg Shareholders will vote at an extraordinary general meeting (EGM) in relation to the Emerald Transaction, the Emerald Distribution and the Final Distribution (EGM Resolutions) to implement the Proposed Transactions. The Scheme will only proceed if the EGM Resolutions are also passed.

Emerald Transaction 12 PrimeAg will sell its property at Emerald in Queensland (Emerald Property) to Cowal Agriculture Holdings Pty Limited as trustee for Cowal Agriculture Unit Trust for $30.875 million, which will be distributed to PrimeAg Shareholders (representing $0.1159 per PrimeAg Share) (Emerald Distribution). The $30.875 million consideration for the Emerald Transaction represents a 26.5% reduction to the value of the Emerald Property (based on independent valuations). The Emerald Transaction is subject to shareholder approval, but it is not conditional on the Scheme being approved.

Scheme 13 If the Scheme is approved, AFF will acquire all of the shares in PrimeAg held by Scheme Shareholders, that is, all members of PrimeAg other than AFF and Dr Robinson. The Scheme Consideration is $0.1693 per PrimeAg Share or $45.1 million in aggregate. 14 The Scheme Consideration represents a reduction of 15% to the value of the total net assets remaining in PrimeAg at the completion of the Scheme. The Scheme will be conditional (among other things) on Scheme Shareholder and Court approval, the EGM Resolutions being passed and completion of the Emerald Transaction.

Final Distribution 15 Immediately before the Scheme is implemented, PrimeAg will make a final cash distribution to PrimeAg Shareholders of $29-$37 million in aggregate ($0.11-$0.14 per PrimeAg Share). The Final Distribution is conditional on the Scheme, the Emerald Transaction and the Emerald Distribution being approved and implemented. The amount of the Final Distribution will depend on the outcome of a number of factors including: the final sale of the 2012-2013 summer crop harvest, PrimeAg's operating and sale transaction costs before completion of the Proposed Transactions, and the "True-Up" mechanism set out in schedule 8 of the Scheme Implementation Agreement relevant to the extent to which the non-property assets of PrimeAg as at 31 July 2013 are more or less than $15.4 million (the value which they have been attributed in calculating the Share Consideration). 16 Absent "unforeseen circumstances", it is the PrimeAg Board's intention to update PrimeAg Shareholders on the Final Distribution before the Scheme Meeting.

Total proceeds from the Privatisation Process 17 The Chairman's letter in the Explanatory Memorandum notes: If the Proposed Transactions, the Emerald Distribution and the Final Distribution are approved by PrimeAg Shareholders and completed, the total proceeds that will be received by PrimeAg Shareholders, including the three capital returns in October 2012, April 2013 and August 2013, will be between $374.0-$382.0 million (representing $1.40-$1.43 per PrimeAg Share). The total proceeds to be received by PrimeAg Shareholders since the start of the Privatisation Process represent a substantial premium of between 29.8% and 32.6% relative to the PrimeAg share price before the announcement of the Privatisation Process (3-month VWAP $1.08 per share to 29 August 2012). However, it represents a 9.2%-11% discount to the total net asset value of PrimeAg disclosed in the 30 June 2012 financial accounts of $420.7 million ($1.58 per share). [Footnote: The net asset value of $420.7 million at 30 June 2012 does not include water entitlements to the value of $11.8 million, which was not included in line with the relevant accounting standards.]

Directors and directors' interests 18 The PrimeAg Board recommends that, in the absence of a Superior Proposal, PrimeAg Shareholders vote in favour of the Scheme and the EGM Resolutions. All of the directors have indicated their intention to vote with the PrimeAg shares they control in favour of the same. 19 The Explanatory Memorandum does not indicate that any PrimeAg director has any interest in the outcome of the Proposed Transactions other than as a shareholder of PrimeAg.

Independent Expert and other experts 20 The PrimeAg Board commissioned Deloitte Corporate Finance Pty Ltd as the Independent Expert to provide a report in relation to the Scheme and the Emerald Transaction for the purpose of ASX Listing Rule 10.10.2. Taylor Byrne and CBRE Valuations Pty Ltd were appointed as Independent Valuers to provide updated property valuations for all properties included in the Proposed Transactions. Ernst & Young provided an independent limited assurance report on PrimeAg's historical information and pro forma historical financial information which is set out in Attachment F to the Explanatory Memorandum. KPMG provided a letter of advice concerning the Australian income tax implications of the Scheme which is set out in Section 8 of the Explanatory Memorandum.

Independent Expert's conclusion 21 The Independent Expert provided a report which formed Attachment E to the Explanatory Memorandum. The Independent Expert concluded that:

Emerald Transaction 22 The Emerald Transaction is (in the absence of a Superior Proposal) not fair but the advantages of the Emerald Transaction outweigh the disadvantages and therefore it is reasonable. However, in the absence of the Scheme, the Emerald Transaction may not be reasonable. 23 The Independent Expert considered that the Emerald Transaction is not "fair" because the fair market value of the property at Emerald was assessed at $42 million compared to the Emerald Consideration of $30.9 million; on a "per share" basis this amounted to a fair market value of $0.16 compared to $0.12. This represented a discount of 26.5%. However, the Independent Expert considered it "reasonable" in particular because: While the 26.5% discount to fair market value is significant, it is in line with the historical discount to net assets that PrimeAg and other similar vehicles have traded at. Although there is potential to realise the underlying fair market value of Emerald, there are impediments and uncertainties in respect of realising those values in light of current market conditions; The Emerald Transaction enables the Scheme to proceed and therefore allow shareholders to participate in the advantages of the Scheme and Proposed Transactions as a whole; In light of the Privatisation Process and no Superior Offers having been received, any higher offer appears unlikely. The Board will consider any Superior Offer which might emerge before shareholders vote on the Emerald Transaction; and There are no compelling alternatives available and alternatives available are subject to significant execution risks and uncertainty in respect of timing and quantum of future distributions to shareholders.

Scheme 24 The Scheme (which is conditional on completion of the Emerald Transaction) is, in the absence of any Superior Proposal, not fair but as the advantages of the Scheme outweigh the disadvantages the Scheme, it is reasonable and in the best interests of PrimeAg Shareholders. 25 The Independent Expert considers that the Scheme Consideration is not "fair" because it values PrimeAg Shares at between $0.18 and $0.19 per share and the Scheme Consideration is $0.163; the aggregate value of the Scheme Consideration is $45.1 million compared to the fair market value of those assets which will still be held by PrimeAg at the time the Scheme is implemented of $47.1-$50.1 million. 26 The Independent Expert noted in particular: The Scheme Consideration represents a discount of between 4% and 10% of the fair market value of PrimeAg's underlying assets which is relatively modest in the context of the historical discount in net assets that PrimeAg and other similar vehicles have traded at. While there is the potential to realise the underlying fair market value of the property held by PrimeAg over time, there are uncertainties in respect of realising these values in light of current market conditions. In light of the process undertaken to date, and that no Superior Offers have been received, any higher offer appears to be unlikely. The Board of PrimeAg will consider any Superior Offer to the extent that it emerges before the shareholders vote in respect of the Proposed Transactions. There are no compelling alternatives available to Scheme Shareholders which appear likely to result in a superior outcome and alternatives are subject to significant execution risks and uncertainty in respect of timing and quantum of future distributions to shareholders.

EGM and Scheme Meeting 27 The draft Explanatory Memorandum contained a notice of the EGM at Attachment A (relating to approvals of the Emerald Transaction, the Emerald Distribution and the Final Distribution) and a notice of the Scheme Meeting at Attachment B. This reflected the order in which it was proposed to hold the respective meetings. As a result, PrimeAg Shareholders would be asked to approve the Emerald Transaction, which is not conditional on the Scheme proceeding, before they would know the outcome of the Scheme Meeting. 28 The Court did not consider this to be the appropriate order in which to hold the meetings because: (a) The Independent Expert's opinion was that the Emerald Transaction is not fair and it may not be reasonable in the absence of the Scheme, while it was not fair but reasonable if the Scheme proceeded. Holding the EGM first would therefore require PrimeAg Shareholders to vote without a material piece of information: the outcome of the resolution to approve the Scheme; (b) It was easier to pass the resolution to approve the Emerald Transaction than the resolution to approve the Scheme. The resolution to approve the Emerald Transaction is an ordinary resolution, requiring a simple majority to pass. The resolution to approve the Scheme has the special majority set out in s 411(4)(a)(ii), that is, 75% of the votes cast on the resolution and (unless the Court otherwise orders) a majority in number of those who are present and vote at the meeting (in person or by proxy). This heightened PrimeAg shareholders' exposure to the risk that the resolution to approve the Scheme would not pass but the resolution to approve the Emerald Transaction would pass; (c) As the resolution to approve the Scheme is conditional on the resolution to approve the Emerald Transaction being passed, if the EGM precedes the Scheme Meeting, there is commercial pressure to approve the Emerald Transaction despite the risk that the resolution to approve the Scheme might not pass; (d) Once the ordinary resolution to approve the Emerald Transaction is passed, there is greater commercial compulsion to vote in favour of the Scheme to avoid the risk of being "locked in" to PrimeAg with assets of much smaller scale and diversity; (e) There is no necessity to hold the EGM before the Scheme Meeting, even though the Scheme will not proceed if the EGM Resolutions are not passed. 29 The Explanatory Memorandum was amended so that the Scheme Meeting preceded the EGM. In view of the issues raised in [28], I would not consider it an appropriate use of the power of the Chairman to adjourn the Scheme Meeting if, as a result, the EGM Resolutions are voted on before the Scheme Shareholders have voted on the resolution to approve the Scheme; Shareholders should know the outcome of the vote on the Scheme before they vote on the EGM Resolutions.

Funding 30 The maximum aggregate Scheme Consideration will be $41,118,664. Under the Scheme Implementation Agreement, AFF is also required to pay Miscellaneous Cash Amounts to PrimeAg which will be included in the Final Distribution. AFF will fund payment of the Scheme Consideration and the Miscellaneous Cash Amounts from a combination of cash reserves, existing loan and overdraft facilities and these are summarised in Section 7.5 of the Explanatory Memorandum.

Scheme Implementation Agreement 31 On 28 June 2013, PrimeAg and AFF entered into a Scheme Implementation Agreement which was amended by a deed dated 16 August 2013; it is summarised at Section 10.7 of the Explanatory Memorandum. The parties agreed to use their best endeavours to implement the Scheme subject to satisfaction or waiver of a number of conditions precedent. The Sunset Date is 30 November 2013.

Conditions precedent 32 Many of the conditions precedent are common in acquisition schemes: see Section 10.7(a) of the Explanatory Memorandum. Those relevant to the Proposed Transactions include: Completion of the Emerald Transaction; Completion of the True-up Mechanism described in Section 10.7(b) of the Explanatory Memorandum; The PrimeAg Board approving and announcing the Emerald Distribution and Final Distribution and those Distributions occurring subject to and at the same time as the implementation of the Scheme; and No Material Adverse Effect on PrimeAg, including anything which results or is likely to result in PrimeAg having a negative cash balance, a negative Residual Operating Budget Amount or insufficient other relevant cash balances on the Implementation Date.

Exclusivity arrangements 33 The Scheme Implementation Agreement sets out so called deal protection measures including "no shop", "no talk" and "matching rights" arrangements. These arrangements are subject to a fiduciary carve out (with the exception of the "no shop" arrangements) which would not prevent a Superior Proposal or preparation of a target statement in response to an unsolicited takeover bid. They are disclosed in Section 10.7(d) of the Explanatory Memorandum.

Break fee 34 Section 10.7(e) of the Explanatory Memorandum contains a summary of the circumstance in which a break fee is payable. If the Board recommends or proceeds with a Superior Proposal, PrimeAg must pay AFF a fee of $451,000 (plus GST). $451,000 is equal to 1% of the equity value of PrimeAg implied by the Scheme Consideration. If any PrimeAg director changes his recommendation, withdraws or recommends against (or indicates that he intends to vote against) the Scheme or any of the EGM Resolutions (except where there is a Superior Proposal, a favourable Independent Expert's Report is not issued or the Relevant Cotton Price exceeds $525), PrimeAg must pay AFF's actual legal, financial and advisory costs incurred from 20 May 2013 up to a maximum of $250,000 plus GST. 35 No break fee is payable to AFF if PrimeAg shareholders vote against the Scheme or any of the EGM Resolutions. No statement to this effect was included in the draft Explanatory Memorandum provided at the hearing. It is appropriate that shareholders have, among the many disclosures concerning exclusivity arrangements and break fees (which are appropriately set out in the Explanatory Memorandum), a disclosure that they are free to vote for or against a Scheme without PrimeAg thereby incurring a break fee. Otherwise the weight of disclosure can be misleading and potentially coercive. PrimeAg amended Section 10.7(e) of the Explanatory Memorandum to include that disclosure.

Takeovers Panel Guidance 36 Mr Corish has given evidence that it was a condition of AFF's agreement to enter into the Scheme Implementation Agreement and pursue the Scheme that PrimeAg agreed to the exclusivity and break fee arrangements, and he considered it in the interest of PrimeAg shareholders to do so. 37 It is relevant to note that there has been an extensive Privatisation Process undertaken by PrimeAg; there are interrelated transactions (including the Emerald Transaction) which add levels of execution risk to the proposal and implementation of the Scheme; there is no break fee payable where Scheme Shareholders vote against the Scheme; the break fee is approximately 1% of the equity value of PrimeAg calculated by reference to the Share Consideration and PrimeAg is not precluded from dealing with a Superior Proposal in accordance with the directors' fiduciary duties should one emerge. Accordingly, the exclusivity and break fee arrangements are generally in accordance with Guidance Note 7 issued by the Takeovers Panel.

ASAT 38 The Agreement as to Shares and Alternative Transactions dated 28 June 2013 (which is referred to at Section 10.8 of the Explanatory Memorandum) contains provisions in relation to PrimeAg directors' recommendations for the Emerald Transaction. It also contains break fee and exclusivity arrangements. Although approval of the Emerald Transaction is the subject of the EGM and the Scheme is conditional on the Emerald Transaction being approved by shareholders, the Emerald Transaction is not dependent on the Scheme proceeding. No issues were raised at the hearing in relation to this issue and I do not think they fall for consideration as part of the application under s 411(1).

Relevant law 39 In Associated Advisory Practices Limited, in the matter of Associated Advisory Practices Limited [2013] FCA 761 at [19] to [24], I set out a summary of the relevant law on applications such as that under consideration here. It is convenient to restate that summary here: [19] Section 411(1) of the Corporations Act relevantly provides that, where an arrangement is proposed between a company and its members the Court may, on the application of the company in a summary way, order a meeting of the members of the company to be convened in such manner and to be held at such place as the Court directs. The Court may also approve the explanatory statement required by s 412(1)(a) to accompany the notice of such a meeting. [20] Section 412(1)(a) of the Corporations Act relevantly provides that, where a meeting is convened under s 411(1), the company must, with every notice convening the meeting, send a statement explaining the effect of the arrangement. Such a statement must state any material interests of the directors and the effect of the proposed arrangement on those interests insofar as they may differ from the effect on like interests of other persons. The statement must also set out such information as is prescribed and any other information that is material to a member's decision to agree or not agree to the arrangement. Consideration of the adequacy of disclosure is a central task of the Court at the first Court hearing. Essentially, the question is whether shareholders have been provided sufficient information to make a decision whether to vote for or against the proposed Scheme. [21] The Court must not make an order pursuant to an application under s 411(1) unless 14 days' notice of the hearing of the application has been given to the Australian Securities and Investments Commission (ASIC) and the Court is satisfied that ASIC has had a reasonable opportunity to examine the terms of the proposed arrangement and the draft explanatory statement, and to make submissions to the Court regarding the arrangement and statement. [22] The Court will not ordinarily convene a meeting of members to consider a scheme of arrangement unless the Court is satisfied that the scheme is of such a nature and cast in such terms that, if it receives the statutory majority at the meeting of members, the Court would be likely to approve the scheme on the hearing of an unopposed application: Re Central Pacific Minerals NL [2002] FCA 239 at [8]; Re CSR Ltd (2010) 183 FCR 358 at [12]; Australian Securities Commission v Marlborough Gold Mines Limited (1993) 177 CLR 485 at 504. By granting leave to convene the meeting, the Court does not give its imprimatur to the proposed scheme or foreshadow its approval at the second court hearing for the purposes of s 411(4)(b): Re Foundation Healthcare Ltd (2002) 42 ACSR 252 at [36]; Australian Securities Commission v Marlborough Gold Mines Limited at 504-505. The question for the Court is whether it is reasonable to suppose that sensible business people might consider the arrangement proposed as being beneficial to members: In re Alabama, New Orleans, Texas and Pacific Junction Railway Company [1891] 1 Ch 213 at 243; Re CSR Ltd at [80]. The Court does not need to be satisfied that no better scheme could have been proposed: Re Foundation Healthcare Ltd at [44]. Ultimately, the question is for the members themselves: see FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72. [23] So called deal protection measures have been considered regularly by the Courts, and the Courts will usually not interfere where the measures are generally consistent with the guidance provided by the Takeovers Panel in Guidance Note 7 - Lock-up Devices. In Re APN News & Media Ltd (2007) 62 ACSR 400 at [55], Lindgren J suggested that evidence should be led in relation to these matters. [24] Given the ex parte nature of these applications, it is the duty of counsel to bring to the Court's attention all matters that could be considered relevant to the exercise of its discretion. See: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 at [7].

Affidavit evidence 40 The following affidavits were read and exhibits tendered at the hearing: The affidavit of Mr Roger Corbett AO, the chairman and a non-executive director of PrimeAg, sworn on 22 August 2013 in which Mr Corbett consents to act as Chairman and sets out his interests in 741,312 PrimeAg Shares and that he has no interest in shares in AFF. The affidavit of Mr David Trebeck, a non-executive director of PrimeAg, sworn on 26 August 2013, in which Mr Trebeck consents to act as Chairman of the Scheme Meeting if Mr Corbett is unwilling or unable to act as Chairman, and sets out his interest in 450,004 shares in PrimeAg and that he has no interest in AFF shares. The affidavit of Mr David Robinson, chairman of AFF, affirmed on 26 August 2013 in relation to the accuracy of the information contained in the Explanatory Memorandum relating to AFF and the verification process adopted for that material. The affidavit of Mr Peter Corish AM, the Chief Executive Officer and a director of PrimeAg sworn on 27 August 2013 and Exhibit PJC1 (comprising two volumes). Mr Corish verifies: The number of shares issued by PrimeAg, the number of executive performance rights and the number of PrimeAg Shares held by AFF and Dr Robinson. That he has entered into a Cancellation Deed dated 8 August 2013 under which he agreed to surrender all of his executive performance rights for nil consideration, subject to the Scheme becoming Effective. A range of formal information including PrimeAg's constitution, its certificate of incorporation, its annual report for the year ended 30 June 2012, a current ASIC search, and the fact that PrimeAg intends to publicly release statutory financial statements for the year ended 30 June 2013 on Tuesday, 27 August 2013. Counsel for PrimeAg confirmed that those financial statements had been released. That on 28 June 2013, PrimeAg entered into the Emerald Sale Agreement and the Scheme Implementation Agreement (amended on 16 August 2013); that PrimeAg announced the Proposed Transactions to ASX on 1 July 2013 and its intention to make the Emerald Distribution and the Final Distribution. That PrimeAg intends to lodge any court order made under s 411(4)(b) with ASIC on 21 October 2013 (Effective Date), that the Record Date will be the fifth business day after that and that the Scheme will be implemented on 4 November 2013. A draft of the Explanatory Memorandum and proposed Proxy Form and sets out the steps proposed for despatch of those materials. The facts and circumstances set out in the Letter from the Chairman and the reasons to vote for and against the Proposed Transactions set out in the Explanatory Memorandum. Receipt of consents to be named in the Explanatory Memorandum. The verification process adopted by PrimeAg. The exclusivity provisions and break fee provided for in the Scheme Implementation Agreement and Section 10.7 of the Explanatory Memorandum. The proposed form of newspaper advertisement of the second court hearing. The affidavit of Ms Rachel Foley-Lewis, a chartered accountant and director of Deloitte Corporate Finance Pty Ltd, sworn on 27 August 2013 provides evidence in relation to her professional qualifications, cognisance of Federal Court Practice Note CM 7 and the Independent Expert's Report. The affidavit of Mr William Koeck, a partner at Ashurst Australia, solicitors to PrimeAg, sworn on 27 August 2013 provides evidence in relation to the provision of the draft Explanatory Memorandum to ASIC and ASX and correspondence with ASIC and ASX. Annexed to the affidavit is a copy of a letter dated 20 August 2013 from ASX confirming that ASX has no objection. Counsel provided the Court at the hearing a copy of ASIC's "usual" letter confirming that it had been provided with a copy of the draft Explanatory Memorandum and indicating that it did not intend to appear at the first court hearing.

Part 5.1 body 41 I am satisfied that PrimeAg is a "Part 5.1" body.

ASIC 42 I am satisfied for the purposes of s 411(2) that ASIC received 14 days' notice of the hearing and that it has had adequate opportunity to consider the Explanatory Memorandum and make submissions to the Court.

Chairman of Scheme Meeting 43 I am satisfied that Mr Corbett or failing him Mr Trebeck have consented to act as Chairman of the Scheme Meeting and I am satisfied that in all of the circumstances they are appropriate to do so and that they should have the power to adjourn the meeting.

Classes 44 AFF and Dr Robinson will not vote at the Scheme Meeting, appropriately, as they are not Scheme Shareholders. There has been no suggestion of any basis on which the Scheme Shareholders should be divided into classes.

Verification 45 The verification process described by Mr Corish in his affidavit appears in all relevant respects to be a usual process for verification of schemes and other disclosure documents.

Warranty 46 Clauses 6.7(b) and 6.8 of the Scheme (set out in Attachment C of the Explanatory Memorandum) contain the deemed warranty by PrimeAg Shareholders and obligation to transfer PrimeAg Shares free of encumbrances (to the extent permitted by law) which have become usual following the decisions of Lindgren J in Re APN News & Media Ltd (2007) 62 ACSR 400 at [57]-[63]; Re WebCentral Group Ltd (No 2) (2006) 58 ACSR 742 at [14]-[22] and Re Investa Properties Ltd [2007] FCA 1104 at [29]-[30].

Performance Risk 47 I am satisfied that issues of performance risk have been addressed in the manner which has become usual in schemes of arrangement approved by the Courts. The Deed Poll set out in Attachment D of the Explanatory Memorandum in favour of the Scheme Shareholders dated 21 August 2013 is in usual form. Clause 3.1 of the Scheme requires the Scheme Consideration to have been paid into a trust account established by PrimeAg. Under clause 3.2, this payment must have occurred before Scheme Shares and rights attaching to them are transferred to AFF on the Implementation Date.

Conditions 48 Clause 2.1 of the Scheme provides that the Scheme is conditional on the Scheme Implementation Agreement and the Deed Poll not having been terminated and the conditions set out in clauses 4.1, 4.2, 4.3 and schedules 1, 2 and 3 of the Scheme Implementation Agreement having been satisfied, waived or released, in each case before 8 am on the day of the second court hearing; the Scheme being approved by the requisite majority under s 411(4)(a); the Court approving the Scheme subject to conditions or alterations acceptable to AFF and PrimeAg and the orders coming into effect under s 411(10).

Orders 49 Based on the material provided to the Court and the matters referred to in these reasons, there is no evidence at this stage to suggest that the Scheme is not bona fide or proposed for an improper purpose. The formal requirements of s 411 for the Court to order the convening of a meeting of members to consider the Scheme and to approve the Explanatory Memorandum for circulation to PrimeAg Shareholders appear to have been met. The orders sought by PrimeAg should therefore be made. I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.