FARRELL J:
1 These are reasons for orders made on 1 October 2020 pursuant to s 1319 of the Corporations Act 2001 (Cth) in relation to the adjournment of a scheme meeting and approval of the dispatch of a supplementary scheme booklet and consequential matters.
2 On 4 September 2020, Markovic J made orders under s 411(1) and s 1319 of the Corporations Act for convening a meeting of the holders of fully paid ordinary shares in OneVue Holdings Limited (OneVue) to be held on 9 October 2020 for the purpose of considering whether to approve (with or without modifications) a scheme of arrangement and approving a scheme booklet in the form of Exhibit 1: see OneVue Holdings Limited, in the matter of OneVue Holdings Limited [2020] FCA 1321.
3 Under the proposed scheme of arrangement, Iress Limited (Iress) would acquire all of the issued shares in OneVue for a consideration of AUD$0.40 per OneVue share.
4 On 28 September 2020, Iress and OneVue made announcements to the Australian Securities Exchange (ASX) to the effect that Iress had decided to increase the scheme consideration to AUD$0.43 per OneVue share. In its announcement, Iress relevantly said:
OneVue and Iress have entered into an amendment to the Scheme Implementation Agreement (SIA) between them to give effect to the increase in consideration. A copy of the amending agreement is attached to this announcement as Annexure A.
Iress chief executive Andrew Walsh said: "The original offer price of 40 cents per share was unanimously recommended by the OneVue Board. It was towards the upper end of the independent expert's valuation range and represented a 67% premium to OneVue's closing share price on 28 May 2020, the last trading day prior to the announcement of the Scheme.
"While overall feedback from OneVue shareholders has been very positive regarding the Scheme, Iress has considered all shareholder feedback and decided to increase consideration to 43 cents per share to give the Scheme the greatest chance of success. This revised price is at the top of the independent expert's valuation range of 36 cents to 43 cents per OneVue share and represents a 79% premium to the 28 May 2020 closing share price.
"If OneVue shareholders view the offer as attractive, we encourage them to vote in favour. If the Scheme is unsuccessful, the independent expert has indicated there is a risk that the OneVue share price will fall below our original offer. On 28 May 2020, OneVue was trading at 24 cents per share."
The revised consideration of 43 cents per share represents Iress' best and final offer, in the absence of a competing proposal and subject to all of Iress' rights under clause 11.6 of the SIA, which gives Iress the right to make a matching offer in the event of a competing proposal.
5 Attached to each announcement was a copy of a letter dated 27 September 2020 from the Chief Executive Officer of Iress to the directors of OneVue. It was executed on behalf of both parties to take effect as an amendment to the Scheme Implementation Agreement dated 1 June 2020 as varied on 17 July 2020 (SIA) which relevantly provided as follows:
3. Pursuant to clause 22.1 of the SIA, the parties have agreed that clause 1.1 of the SIA is amended so that the definition of "Scheme Consideration" is deleted and replaced with:
Scheme Consideration means an amount to be paid pursuant to the Scheme for each Target Share held by a Scheme Participant calculated as the amount per Target Share of $0.43.
4. The parties otherwise confirm that the terms of the SIA remain unaltered. Iress also irrevocably confirms and undertakes to OneVue and Scheme Shareholders that if the Scheme Consideration becomes payable under the Scheme, the Deed Poll in favour of Scheme Shareholders (which was executed by Iress on 27 August 2020) will continue to bind Iress to satisfy its obligations under the Deed Poll, including payment of the Scheme Consideration (as amended by paragraph 3 of this letter).
5. Without limiting the obligations of the parties under the SIA, each party must do anything necessary (including executing agreements and documents) to give full effect to this letter and the transactions contemplated by it, including:
5.1. if required, agreeing to any consequential amendments in relation to the Scheme and the Deed Poll;
5.2. making submissions to the Court to exercise its discretion under section 411(6) of the Corporations Act to make orders approving the Scheme (with such modifications to the Scheme Consideration as provided by this letter); and
5.3. providing reasonable assistance to OneVue in its application to the Court for orders approving the Scheme (with such modifications to the Scheme Consideration as provided by this letter).
6 In the late afternoon of 29 September 2020, OneVue's solicitors approached the Court to seek orders adjourning the scheme meeting and authorising dispatch of a supplementary scheme booklet. As Markovic J was not available, it fell to me as Commercial and Corporations duty judge to consider whether the orders should be made.
7 In support of the orders sought, OneVue relied on the following affidavits.
8 First, an affidavit of Naomi Gabriella Omundson sworn on 30 September 2020. Ms Omundson is a solicitor employed by McCullough Robertson Lawyers, solicitors for OneVue. Annexed to Ms Omundson's affidavit is correspondence with the Australian Securities and Investments Commission in relation to a draft supplementary scheme booklet. By letter dated 30 September 2020 to the directors of OneVue, ASIC confirmed that it had received a draft supplementary explanatory statement and a revised version of it on that day and that ASIC did not propose to appear to make submissions or to intervene at the Court hearing to approve the dispatch of the draft supplementary explanatory statement.
9 Second, an affidavit of Ashley Mark Fenton affirmed on 30 September 2020. Mr Fenton is the chief financial officer and company secretary of OneVue. Annexed to Mr Fenton's affidavit are a copy of the announcements made by Iress and OneVue to the ASX on 28 September 2020, a draft supplementary scheme booklet and circular resolution of OneVue's directors dated 29 September 2020. Mr Fenton also:
(a) Noted that section 9.7 of the scheme booklet provided as follows:
9.7 Supplementary information
OneVue will issue a supplementary document to this Scheme Booklet if it becomes aware of any of the following between the date of lodgment of the Scheme Booklet for registration by ASIC and the Scheme Meeting:
(a) a material statement in this Scheme Booklet is false or misleading;
(b) a material omission from this Scheme Booklet;
(c) a significant change affecting a matter included in this Scheme Booklet; or
(d) a significant new matter has arisen that would have been required to be included in this Scheme Booklet if it had arisen before the date of lodgment of this Scheme Booklet for registration by ASIC.
Depending on the nature and timing of the changed circumstances and subject to obtaining any relevant approvals, OneVue may circulate and publish any supplementary document by:
(a) approaching the Court for a direction as to what is appropriate in the circumstances;
(b) placing an advertisement in a prominently published newspaper which is circulated generally throughout Australia;
(c) posting the supplementary document on OneVue's website; or
(d) making an announcement to ASX.
(b) Advised that, subject to the Court's direction, OneVue proposes to dispatch a supplementary scheme booklet by releasing it on the ASX, emailing it to shareholders and mailing it to shareholders in the same manner as provided in Order 1 made by Markovic J on 4 September 2020.
(c) Provided evidence of the verification process undertaken by OneVue in relation to the statements in the draft supplementary scheme booklet on the basis of which he had formed the view that all of the statements of fact in it as they relate to OneVue are true and correct, there is no material information omitted from it and there has been no material change to the information set out in the scheme booklet.
(d) Noted that OneVue's Board approved the dispatch of the draft supplementary scheme booklet subject to approval by ASIC and the Court, receipt of consents to be named by Grant Thornton Corporate Finance Pty Ltd (the independent expert) and verification. A board subcommittee was established to take any action required having regard to any changes to the draft supplementary scheme booklet be required by ASIC or the Court.
10 Third, the affidavit of Robert James Kelly affirmed on 30 September 2020. Mr Kelly is a partner in King & Wood Mallesons, the solicitors for Iress. Attached to the affidavit is a copy of Iress' announcement made on 28 September 2020. Mr Kelly gives evidence that, after being shown a copy of the draft supplementary scheme booklet, he is satisfied that all of the statements in it which pertain to Iress (and its related parties, officers and nominees) are correct in all material respects and there is no omission of material information or misleading or deceptive statements.
11 Fourth, the affidavit of Siobhan Elizabeth Moloney affirmed on 1 October 2020. Ms Moloney is a solicitor employed by McCullough Robertson Lawyers. She gave evidence concerning communications by OneVue with its shareholders to date and its proposed communications by email, mail and a telephone campaign. Revised scripts relevant to telephone communications have been marked as Exhibit 3.
12 The supplementary scheme booklet in the form of Exhibit 2:
(a) Refers to the ASX announcements made by Iress and OneVue on 28 September 2020 in relation to the increase of the scheme consideration from $0.40 to $0.43 per OneVue share held at the record date for the scheme (increased scheme consideration).
(b) Notes that Iress had confirmed that the increased scheme consideration was its best and final offer in the absence of a superior proposal and subject to its rights under clause 11.6 of the SIA which allows it to make matching offers in the event of a competing proposal.
(c) Sets out the premium that the increased scheme consideration represents on various measures compared to the closing price of a OneVue share on 28 May 2020.
(d) States that OneVue directors continue to recommend that OneVue shareholders vote in favour of the scheme in the absence of a superior offer and the independent expert continuing to conclude that the scheme is in the best interest of OneVue shareholders.
(e) States that the independent expert has confirmed to the OneVue directors that its opinion has not changed and notes that the increased scheme consideration is at the top of the independent expert's value range of $0.36 to $0.43 per share. Shareholders are referred to the report included as Attachment A to the scheme booklet.
(f) States that the Court had ordered that the scheme meeting be adjourned to 10.30 am on Wednesday, 21 October 2020. All shareholders registered at 7 pm on 19 October 2020 would be eligible to vote at the adjourned meeting. Shareholders are referred to the relevant page of the scheme booklet and the notice of adjourned scheme meeting set out in Annexure B of the supplementary scheme booklet for details of how to vote. It is noted that valid proxy forms that have been lodged will remain valid unless revoked and gives details of how any desire to change that vote may be effected.
(g) States that other terms of the scheme remain unchanged.
(h) Sets out the key dates for the scheme. The Court notes that as a result of the adjournment of the scheme meeting, the date of the second court hearing will also change and that matter is noted in the key dates for the scheme.
(i) At Annexure A, sets out the amendment to the SIA referred to previously in these reasons.
(j) At Annexure B, sets out a notice of the adjourned scheme meeting. The resolution proposed is in the same form as that set out in the notice of scheme meeting contained in the scheme booklet.
13 There is one issue on which senior counsel for OneVue asked the Court to comment in its reasons, and that is how the issue of the changed (improved) consideration might appropriately be addressed in light of the terms of the definition of "scheme consideration" in clause 1.1 of the scheme of arrangement set out in Annexure C to the scheme booklet. That definition is as follows:
Scheme Consideration means an amount to be paid pursuant to the Scheme for each Target Share held by a Scheme Participant, being an amount per Target Share of $0.40.
14 Section 1.5 of the draft supplementary scheme booklet provides as follows:
1.5 Amended Scheme
The Scheme to be voted on is the Scheme set out as an Annexure to the Scheme Booklet. When the matter comes before the Court for approval, OneVue will apply for an amendment to the Scheme to increase the Scheme Consideration from $0.40 per OneVue Share to $0.43 per OneVue Share. Iress has agreed to this amendment: see the Amendment to the Scheme Implementation Agreement which is Annexure A of this Supplementary Scheme Booklet. The Court has power to order such an amendment under section 411(6) of the Corporations Act.,
Valid proxy forms for the Scheme Meeting that have been lodged by any OneVue Shareholder are valid unless revoked.
15 I accept that the Court has power under s 411(6) of the Corporations Act to modify the definition of "scheme consideration" from $0.40 to $0.43 at the second court hearing and that the statement in section 1.5 of the draft supplementary scheme booklet is not misleading.
16 In Billabong International Limited, in the matter of Billabong International Limited (No 2) 2018] FCA 496, Yates J made orders at a second court hearing approving a scheme of arrangement in the form of the relevant annexure to a scheme booklet under ss 411(4)(b) and 411(6) with the modification of the definition of "Scheme Consideration" from $1.00 per share to $1.05 per share. Those orders were made on the basis of his Honour's reasoning set out at [13] to [26]. I note that his Honour's reasoning relied on comments made in Re Boart Longyear Ltd (No 2) [2017] NSWSC 1105; (2017) 122 ACSR 437 at [92] (Black J) concerning the nature of the discretion conferred by s 411(6) which were approved by the New South Wales Court of Appeal in Snowside Pty Ltd as trustee for the Snowside Trust v Boart Longyear Ltd [2017] NSWCA 215; (2017) 122 ACSR 291 at [22] and the approach approved by Barrett J in Re Citect Corporation Ltd [2006] NSWSC 143; (2006) 56 ACSR 663 at [13] and [16]. I respectfully adopt that approach as properly applicable in this case. Having regard to the fact that the change is an increase in cash consideration, there is no reason to think that a similar order would not be made at the second court hearing in this matter if shareholders of OneVue approve the scheme by requisite majorities and it is otherwise appropriate to make orders under s 411(4)(b) of the Corporations Act.
17 There is a second issue which it might be appropriate to address at the second court hearing. It is raised by the terms of the amendments to the SIA effected on 28 September 2020 at [5.1], and that is whether or not there is a need to amend the deed poll having regard to the change in share consideration to provide the usual shareholder protection in relation to the payment of scheme consideration by a party (Iress) which is not bound by the scheme.
18 As noted by senior counsel for OneVue in brief submissions filed on 30 September 2020, the Court's power to make orders that a scheme meeting be adjourned and authorising the dispatch of supplementary material under s 1319 is well settled: see PR Finance Group Limited, in the matter of PR Finance Group Limited (No 3) [2013] FCA 704 at [15] and [16] and the cases there cited. In all of the circumstances described above, the Court considered it appropriate to make the orders sought.
I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Farrell.