Sundance Resources Limited, in the matter of Sundance Resources Limited (No 2) [2013] FCA 481

INTRODUCTION 1 On 16 April 2013, on an application by the plaintiff (Sundance) which was supported by an affidavit sworn by its Company Secretary on 16 April 2013, I made final orders on the papers, amongst other things: vacating orders made pursuant to s 411(1) of the Corporations Act 2001 (Cth) (CA) that Sundance convene a meeting of ordinary shareholders for the purpose of considering and approving a proposed scheme of arrangement, whereby all shares would be acquired by Hanlong (Africa) Mining Investment Ltd (Hanlong); and dismissing the proceeding. 2 These are brief reasons for doing so.

PROCEDURAL HISTORY OF THE SCHEME 3 The details of the proposed scheme are contained in Sundance Resources Limited, in the matter of Sundance Resources Limited [2012] FCA 1290. As will be seen below, the proposed scheme of arrangement did not proceed smoothly. Somewhat frustratingly, the commercial expectations did not eventuate. 4 On 9 November 2012 I made orders (the November orders) pursuant to s 411(1) CA that: Sundance convene a meeting of its ordinary shareholders on 14 December 2012; the explanatory statement in the scheme booklet for distribution to shareholders be approved; and the second hearing of the application to approve the scheme be adjourned to 18 December 2012. 5 On 14 December 2012, the chairperson adjourned the scheme meeting following approval by Sundance's shareholders. 6 On 18 December 2012 (the December orders), following an application by Sundance, I varied the November orders so as to adjourn the scheme meeting to 1 February 2013. Sundance's application was supported by an affidavit sworn by its Company Secretary on 14 December 2012. The affidavit revealed that Hanlong needed more time to meet the conditions precedent of the scheme implementation agreement dated 24 August 2012. 7 On 5 December 2012, Sundance and Hanlong agreed to a new scheme timetable and entered into an agreement that Hanlong would, if required by Sundance, provide Sundance with working capital funding of up to $15 million by way of convertible notes. 8 On 8 February 2013, following a further application by Sundance, I made orders vacating the balance of the December orders and adjourned the proceeding to a directions date in April. In support of a second adjournment, Sundance relied on an affidavit sworn by its solicitor on 7 February 2013. The solicitor deposed that on 1 February 2013, the chairman of the scheme meeting adjourned the meeting to a time and date to be fixed. This was announced to the Australian Securities Exchange (ASX) on the same day by the Company Secretary of Sundance. 9 The solicitor's affidavit further deposed to the fact that Hanlong was unable to satisfy a condition precedent by 13 December 2012, namely, the provision of a credit approved term sheet from its financier to Sundance. 10 Sundance and Hanlong agreed to a further extension of the scheme timetable which provided amongst other things that Hanlong would provide the term sheet by 31 January 2013. 11 Hanlong subsequently requested and obtained a further extension to the scheme timetable to enable sufficient time to obtain regulatory approvals in China. The Chinese regulator required that Hanlong enter into an agreement with a large Chinese partner with sufficient capabilities to undertake the planned iron ore project in central Africa which was the subject of the proposed scheme with Sundance. The ASX announcement dated 7 February 2013 made clear that Hanlong's negotiations with the large Chinese partner would need to be sufficiently advanced for its financier to issue the term sheet as required by the scheme implementation agreement. Under the further amended scheme timetable, the credit approved terms sheet was due by 26 March 2013. 12 On 28 March I made orders that the directions hearing listed for 3 April 2013 be vacated. This was on the basis that the condition precedent of the scheme implementation agreement was still outstanding. 13 On 8 April 2013 Sundance wrote to the Court, attaching its announcement to the ASX that it had terminated its scheme implementation agreement with Hanlong and stating its intention seek orders dismissing the scheme. 14 A little over a week later Sundance filed a minute of proposed orders and a third affidavit sworn by its Company Secretary which exhibited a copy of the termination agreement between Sundance and the Hanlong Group, which became effective at midnight (WST) on the evening of 8 April 2013.