Zenyth Therapeutics Ltd v Smith - [2014] FCA 694 - FCA 2014 case summary — Zoe

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Zenyth Therapeutics Ltd v Smith

[2014] FCA 694

Federal Court of Australia|2014-07-02|Before: Gilmour J

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At a glance

Source facts

Court

Federal Court of Australia

Decision date

2014-07-02

Before

Gilmour J

Catchwords

CORPORATIONS - scheme of arrangement - approval of scheme of arrangement

Source

Original judgment source is linked above.

Catchwords

CORPORATIONS - scheme of arrangement - approval of scheme of arrangement

Judgment (81 paragraphs)

[1]

Pursuant to section 1322(4)(a) of the Corporations Act 2001 (Cth) (Act), to the extent that annexure MCN-04 of the affidavit of Michael Choon Ming Ng sworn on 20 May 2014, as published on 20 May 2014, does not comply with the requirement to be published at least 5 days before the date fixed for the date of the hearing of the application and thereby contravenes rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth), the period for the time for the publication of the notice is abridged and any such act of the Plaintiff is not invalid by reason of such contravention.
Pursuant to section 411(4)(b) of the Act, the scheme of arrangement between the Plaintiff and its members, a copy of which is annexed and marked 'A', is approved.
Pursuant to section 411(4)(b) of the Act, the scheme of arrangement between the Plaintiff and its optionholders, a copy of which is annexed and marked 'B', is approved.
Pursuant to section 411(12) of the Act, the plaintiff be exempted from compliance with section 411(11) of the Act, in relation to the schemes of arrangement referred to in Orders 2 and 3 of these orders.
These orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. 'A' Share Scheme of Arrangement This scheme of arrangement is made this 20th day of May 2014. This scheme of arrangement is made under section 411 of the Corporations Act 2001 (Cth) Parties Sierra Mining Limited ACN 118 060 441 of Level 9, BGC Centre, 28 The Esplanade, Perth, Western Australia (Sierra) and The holders of fully paid ordinary shares in Sierra (other than Excluded Shareholders) recorded in the Sierra Share Register as at the Record Date (Scheme Shareholders).

[2]

1.1 Definitions The meanings of the terms used in this Share Scheme are set out below. ASIC means the Australian Securities and Investments Commission. ASX means ASX Limited (ABN 98 008 624 691). Business Day means a day in Perth that is not a Saturday, Sunday or public holiday and on which banks, ASX and TSX are open for trading. CDI means CHESS Depositary Interest, being a unit of beneficial ownership in one New RTG Share or one New RTG Option (as the context requires) registered in the name of CDN. CDN means CHESS Depositary Nominees Pty Limited ACN 071 346 506. CHESS means the clearing house electronic sub-register system of share transfers operated by ASX Settlement Pty Ltd. Corporations Act means the Corporations Act 2001 (Cth). Court means the Federal Court of Australia, Perth Registry or such other court of competent jurisdiction under the Corporations Act agreed to in writing by RTG and Sierra. DRS means the Direct Registration System. Effective means: (a) when used in relation to the Share Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to the Share Scheme; and (b) when used in relation to the Option Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to the Option Scheme. Effective Date means, when used in relation to the Share Scheme or Option Scheme, the date on which the Share Scheme or Option Scheme becomes Effective (as the context requires). Election Date means 5.00pm on the fifth Business Day after the Effective Date. End date means 31 July 2014. Excluded Shareholder means any Sierra Shareholder who is a member of the RTG Group or any Sierra Shareholder who holds any Sierra Shares on behalf of, or for the benefit of, any member of the RTG Group. Government Agency means any foreign or Australian government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity, or any minister of the Crown in right of the Commonwealth of Australia or any other federal, state, provincial, local or other government (foreign or Australian). Implementation Date means the fifth Business Day after the Record Date, or such other day as the parties agree. Ineligible Foreign Optionholder means a Scheme Optionholder whose address shown in the Sierra Option Register is a place outside Australia and its external territories, New Zealand or Canada unless RTG determines that it is lawful and not unduly onerous or impracticable to issue that Scheme Optionholder with New RTG Shares or New RTG Options in the form of CDIs when the Option Scheme becomes Effective. Ineligible Foreign Shareholder means a Scheme Shareholder whose address shown in the Sierra Share Register is a place outside Australia and its external territories, New Zealand or Canada unless RTG determines that it is lawful and not unduly onerous or impracticable to issue that Scheme Shareholder with New RTG Shares and New RTG Options in the form of CDIs when the Share Scheme becomes Effective. New RTG Option means a right to acquire one unissued RTG Share, with an exercise price of C$0.15 and an expiry date 3 years after the date of issue, adjusted for the RTG Share Consolidation in accordance with clause 0, on the terms and conditions set out in section 6.3(a) of the Scheme Booklet and to be issued to Scheme Shareholders under the Share Scheme. New RTG Share means a share in the capital of RTG to be issued to Scheme Shareholders under the Share Scheme. Option Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Sierra and the Scheme Optionholders under which the Scheme Optionholders will receive the Option Scheme Consideration, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by RTG and Sierra. Option Scheme Consideration means two New RTG Shares in the form of CDIs for every one Scheme Option held and two New RTG Options in the form of CDIs for every nine Sierra Options held on the Record Date, adjusted for the RTG Share Consolidation in accordance with clause 4.9 of the Option Scheme and subject to the terms of the Option Scheme. Record Date means 5.00pm on the third Business Day after the Effective Date. Registered Address has the meaning given in clause (a)(e). RTG means RTG Mining Inc. of Level 2, 338 Barker Road, Subiaco, Western Australia. RTG Group means RTG and each of its subsidiaries and a reference to a 'RTG Group Member' or a 'member of the RTG Group' is to RTG or any of its subsidiaries. RTG Register means the register of shareholders or optionholders (as applicable) maintained by RTG or its agent. RTG Registry means Computershare Investor Services Pty Ltd ACN 078 279 277 or Computershare Trust Company of Canada (as applicable) who assist RTG maintain the RTG Register. RTG Share means a share in the capital of RTG. RTG Share Consolidation means the consolidation of every ten RTG shares on issue into one consolidated RTG share, conditional on the Share Scheme becoming Effective. Sale Agent means RTG or a person or persons appointed by RTG to sell the New RTG Shares and New RTG Options that are attributable to: (a) Ineligible Foreign Shareholders; (b) Ineligible Foreign Optionholders; and (c) Small Shareholders or Small Optionholders who do not elect to withdraw from participating in the Sale Facility under the terms of the Share Scheme or Option Scheme. Sale Facility means the sale facility provided for in clause 4.7. Sale Facility Election Form means an election form for the purposes of a Small Shareholder making an election under clause (ii). Sale Facility Participant means: (a) each Small Shareholder who has not made an election to withdraw from participating in the Sale Facility under clause (ii) of the Share Scheme; (b) each Small Optionholder who has not made an election to withdraw from participating in the Sale Facility under clause 4.3(b)(ii) of the Option Scheme; (c) each Ineligible Foreign Shareholder; and (d) each Ineligible Foreign Optionholder, in respect of whom New RTG Shares and New RTG Options are issued to the Sale Agent as nominee in trust in the circumstances referred to in clause (a). Sale Facility Securities has the meaning given in clause (a). Scheme Booklet as defined in the Scheme Implementation Deed. Scheme Implementation Deed means the implementation deed dated 24 February 2014 between Sierra and RTG relating to the implementation of the Share Scheme and Option Scheme. Scheme Optionholder means the holders of Sierra Options recorded on the Sierra Option Register as at the Record Date. Scheme Share means a Sierra Share held by a Scheme Shareholder at 5.00pm on the Record Date. Scheme Shareholder means a holder of fully paid ordinary shares in Sierra (other than Excluded Shareholders) recorded in the Sierra Share Register as at the Record Date. Second Court Date means the first day on which an application made to the Court for an order under section 411(4)(b) of the Corporations Act approving the Share Scheme is heard. Share Election Form means an election form for the purposes of a Scheme Shareholder making an election under clause (i). Share Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Sierra and the Scheme Shareholders under which Scheme Shareholders will receive the Share Scheme Consideration, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by RTG and Sierra. Share Scheme Consideration means three New RTG Shares in the form of CDIs for every one Scheme Share held and one New RTG Option in the form of CDIs for every three Scheme Shares held, adjusted for the RTG Share Consolidation in accordance with clause 0 and subject to the terms of this Share Scheme. Share Scheme Deed Poll means the deed poll under which RTG covenants in favour of the Scheme Shareholders to perform its obligations under the Share Scheme. Sierra Option means an ASX listed option to acquire one unissued Sierra Share. Sierra Option Register means the register of Sierra Optionholders maintained in accordance with the Corporations Act. Sierra Registry means Computershare Investor Services Pty Ltd ACN 078 279 277 who assist Sierra maintain the Sierra Share Register and Sierra Option Register. Sierra Share means a fully paid ordinary share in Sierra. Sierra Share Register means the register of members of Sierra maintained in accordance with the Corporations Act. Sierra Shareholder means a person who is registered as the holder of a Sierra Share. Small Optionholder means a Scheme Optionholder who is entitled to receive an aggregate of 9,000 or less New RTG Shares under the Option Scheme and the Share Scheme (if applicable). Small Shareholder means a Scheme Shareholder who is entitled to receive an aggregate of 9,000 or less New RTG Shares under this Share Scheme and the Option Scheme (if applicable). Trading Day means a day on which the ASX or TSX is open for trading. TSX means the Toronto Stock Exchange.

[3]

1.2 Interpretation In this Share Scheme: (a) Headings and bold type are for convenience only and do not affect the interpretation of this Share Scheme. (b) The singular includes the plural and the plural includes the singular. (c) Words of any gender include all genders. (d) Other parts of speech and grammatical forms of a word or phrase defined in this Share Scheme have a corresponding meaning. (e) An expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and any Government Agency as well as an individual. (f) A reference to a clause, party, schedule, attachment or exhibit is a reference to a clause of, and a party, schedule, attachment or exhibit to, this agreement and a reference to this agreement includes any schedule, attachment and exhibit. (g) A reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them. (h) A reference to a document (including this Share Scheme) includes all amendments or supplements to, or replacements or novations of, that document. (i) A reference to '$', 'A$' or 'dollar' is to Australian currency. (j) A reference to 'C$' is to the lawful currency of Canada. (k) A reference to any time is a reference to that time in Perth. (l) A term defined in or for the purposes of the Corporations Act has the same meaning when used in this Share Scheme. (m) A reference to a party to a document includes that party's successors and permitted assignees. (n) No provision of this Share Scheme will be construed adversely to a party because that party was responsible for the preparation of this Share Scheme or that provision. (o) A reference to a body, other than a party to this Share Scheme (including an institute, association or authority), whether statutory or not: (i) which ceases to exist; or (ii) whose powers or functions are transferred to another body, is a reference to the body which replaces it or which substantially succeeds to its powers or functions.

[10]

4.3 Election Procedure (a) Subject to clauses (a), 0, 0 and 0, a Scheme Shareholder will receive the Share Scheme Consideration. A Scheme Shareholder who wishes to receive New RTG Shares and New RTG Options in the form of CDIs listed on ASX does not need to make an election under clause (a). (b) Subject to the remaining provisions of this clause 0 and clauses 0 and 0: (i) each Scheme Shareholder will be entitled to elect to receive New RTG Shares and New RTG Options listed on TSX rather than New RTG Shares and New RTG Options in the form of CDIs listed on ASX, by completing the Share Election Form and returning it to the address specified in the Share Election Form so that it is received by the Election Date; and (ii) each Small Shareholder who does not wish to participate in the Sale Facility and wishes to receive the Share Scheme Consideration, must make an election to withdraw from participating in the Sale Facility by completing the Sale Facility Election Form, indicating whether they wish to receive New RTG Shares and New RTG Options in the form of CDIs listed on ASX or New RTG Shares and New RTG Options listed on TSX, and returning it to the address specified in the Sale Facility Election Form so that it is received by the Election Date. (c) A Small Shareholder who does not make an election under clause (ii), will have their Share Scheme Consideration dealt with in accordance with clauses 0, 4.7 and 0. (d) An Ineligible Foreign Shareholder is not entitled to make any election pursuant to clause (a) and any election purportedly made by it will be invalid. Ineligible Foreign Shareholders will have their Share Scheme Consideration dealt with in accordance with clauses 0, 4.7 and 0. (e) An election under clause (a) must be made in accordance with the terms and conditions on the Share Election Form or Sale Facility Election Form, as the case may be. (f) A Scheme Shareholder (who is not a Sale Facility Participant) who does not make a valid election pursuant to clause (i) will be deemed to have elected to receive New RTG Shares and New RTG Options in the form of CDIs listed on ASX. (g) Subject to clause (g), a valid election made or deemed to be made by a Scheme Shareholder under this clause 0 will be deemed to apply in respect of the Scheme Shareholder's entire holding of Scheme Shares, regardless of whether the Scheme Shareholder's holding of Scheme Shares is greater or less than the Scheme Shareholder's holding at the time it made its election. (h) A Scheme Shareholder (other than an Ineligible Foreign Shareholder and a Small Shareholder) who is noted on the Sierra Share Register as holding one or more parcels of Sierra Shares as trustee or nominee for, or otherwise on account of, another person may not make separate elections under clauses (i) or (ii) in relation to each of those parcels of Sierra Shares. (i) A Scheme Shareholder may vary or withdraw any election made by it under this clause 0 by the Election Date. To vary such an election, a Scheme Shareholder must lodge a replacement Share Election Form or Sale Facility Election Form, as the case may be, by the Election Date. To withdraw such an election, a Scheme Shareholder must follow the procedure set out in the Scheme Booklet, Share Election Form or Sale Facility Election Form. (j) Subject to clause (j), an election which is not made or deemed to have been made in accordance with this clause 0 will not be a valid election for the purpose of this Share Scheme and will not be recognised by Sierra or RTG for any purpose. (k) Sierra may, with the agreement of RTG, settle as it thinks fit any difficulty, matter of interpretation or dispute which may arise in connection with determining the validity of any election, and any such decision will be conclusive and binding on Sierra, RTG and the relevant Scheme Shareholder.

[11]

4.4 Provision of Share Scheme Consideration Subject to clauses (d), 0, 0, 0 and 0, the obligation of RTG to provide the Share Scheme Consideration to Scheme Shareholders will be satisfied by RTG: (a) in the case of Share Scheme Consideration that is required to be provided to Scheme Shareholders in the form of New RTG Shares and New RTG Options listed on TSX, by RTG procuring that: (i) the name and address of each such Scheme Shareholder is entered into the RTG Register on the Implementation Date in respect of the New RTG Shares and New RTG Options to which it is entitled under this clause 4; and (ii) a DRS advice is sent to the Registered Address of each such Scheme Shareholder representing the number of New RTG Shares and New RTG Options issued to the Scheme Shareholder pursuant to this Share Scheme; (b) in the case of Share Scheme Consideration that is required to be provided to Scheme Shareholders as New RTG Shares and New RTG Options in the form of CDIs listed on ASX, by RTG: (i) issuing to CDN to be held on trust that number of New RTG Shares and New RTG Options that will enable CDN to issue CDIs as envisaged by clause (b)(iii) on the Implementation Date; (ii) procuring that the name and address of CDN is entered into the RTG Register in respect of those New RTG Shares and New RTG Options on the Implementation Date and that a DRS advice in the name of CDN representing those New RTG Shares and New RTG Options is sent to CDN; (iii) procuring that on the Implementation Date, CDN issues to each such Scheme Shareholder the number of CDIs to which it is entitled under this clause 4; (iv) procuring that on the Implementation Date, the name of each such Scheme Shareholder is entered in the records maintained by CDN as the holder of the CDIs issued to that Scheme Shareholder on the Implementation Date; (v) in the case of each such Scheme Shareholder who held Scheme Shares on the CHESS subregister - procuring that the CDIs are held on the CHESS subregister on the Implementation Date and sending or procuring the sending of a CDI holding statement to each such Scheme Shareholder which sets out the number of CDIs held on the CHESS subregister by that Scheme Shareholder; and (vi) in the case of each such Scheme Shareholder who held Scheme Shares on the issuer sponsored subregister - procuring that the CDIs are held on the issuer sponsored subregister on the Implementation Date and sending or procuring the sending of a CDI holding statement to each such Scheme Shareholder which sets out the number of CDIs held on the issuer sponsored subregister by that Scheme Shareholder; (c) in the case of Share Scheme Consideration that is required to be dealt with as a result of the operation of clauses 0 and 0, by RTG procuring that: (i) the name and registered address of the Sale Agent, as nominee in trust for the Sale Facility Participants, is entered into the RTG Register on the Implementation Date in respect of the New RTG Shares and New RTG Options required to be issued to it under this clause 4; (ii) a holding statement or DRS advice (or equivalent document) in the name of the Sale Agent, as nominee in trust for the Sale Facility Participants, is sent to the Sale Agent representing the number of New RTG Shares and New RTG Options so issued to it; (iii) the Sale Agent, as nominee in trust for the Sale Facility Participants, sells those New RTG Shares and New RTG Options on behalf of the Sale Facility Participants, and pays the net proceeds to the RTG Registry, in trust for the Sale Facility Participants, in accordance with clause 4.7; and (iv) the RTG Registry pays the net proceeds on to the Sale Facility Participants in accordance with clause 4.7; and (d) in the case of joint holders of Scheme Shares: (i) the New RTG Shares, New RTG Options or CDIs to be issued under this Share Scheme will be issued to and registered in the names of the joint holders; (ii) any cheque required to be sent under this Share Scheme will be made payable to the joint holders and sent to the holder whose name appears first in the Sierra Share Register; and (iii) any other document required to be sent under this Share Scheme, will be forwarded to the holder whose name appears first in the Sierra Share Register as at the Record Date.

[14]

4.7 Sale Facility (a) New RTG Shares and New RTG Options that: (i) but for an election by a Small Shareholder under clause (ii), are required to be dealt with under this clause by virtue of clause 0 (rounded to the nearest whole number in accordance with clause 0); or (ii) are required to be dealt with under this clause by virtue of clause 0 (rounded to the nearest whole number in accordance with clause 0), must be issued by RTG to the Sale Agent, as nominee in trust for the Sale Facility Participants, on the Implementation Date (rounded, if necessary to the nearest whole number in accordance with clause 0) (together with the New RTG Shares and New RTG Options to be issued by RTG to the Sale Agent, as nominee in trust for the Sale Facility Participants, on the Implementation Date under clause 4.7(a) of the Option Scheme, the Sale Facility Securities) and subsequently sold in accordance with the remaining provisions of this clause 4.7. (b) The Sale Facility will only be available in respect of New RTG Shares and New RTG Options issued to the Sale Agent, as nominee in trust for the Sale Facility Participants, in the circumstances referred to in clause (a). Any purported election by a Scheme Shareholder to participate in the Sale Facility in any other circumstances will be invalid and not recognised for any purpose. (c) RTG must procure that the Sale Agent: (i) within 8 weeks after the date of the Implementation Date, sells the Sale Facility Securities on the ASX and/or TSX in the ordinary course of trade and otherwise in such manner, including selling the Sale Facility Securities in one or more lots, at such price or prices and on such other terms as the Sale Agent determines in good faith; (ii) deducts from the C$ or A$ gross proceeds of such sale of all Sale Facility Securities any taxes and costs (including brokerage of up to 1%) applicable to those Sale Facility Securities; (iii) within 5 Trading Days after the last sale of the Sale Facility Securities is completed under (i) above, arranges for the conversion of the net proceeds of all such sales in C$ referred to in (ii) above from C$ to A$; and (iv) within one Trading Day after conversion of those net proceeds to A$ under (iii) above, pays that A$ amount (after having deducted any applicable currency conversion costs) to the RTG Registry, in trust for the Sale Facility Participants, by telegraphic transfer of clear funds to an A$ account nominated by the RTG Registry. (d) Within 7 Business Days after the date on which the Sale Agent remits the A$ amount referred to in clause (a)(c)(iv) to the RTG Registry, RTG will cause the RTG Registry to pay to each Sale Facility Participant their pro-rata share of the A$ amount referred to in clause (a)(c)(iv), being the proportion which the number of Sale Facility Securities attributable to them bears the total number of Sale Facility Securities. The amount payable to each Sale Facility Participant under this clause will, if necessary, be rounded down to the nearest whole cent, and any part of the A$ amount referred to in clause (a)(c)(iv) remaining after such rounding will be paid by the RTG Registry to a charity nominated by RTG. (e) Sale Facility Participants agree that the amount referred to in clause (a)(d) may be paid by the Sale Agent doing any of the following at the Sale Agent's election: (i) sending a cheque or money order for that amount (after having deducted any applicable taxes) by pre-paid post (or pre-paid airmail if the address is outside Australia) to the Sale Facility Participant's address as shown in the Sierra Share Register as at the Record Date (the Registered Address); (ii) depositing that amount into an account with any bank notified to Sierra (or any agent of Sierra) by an appropriate written authority from the Sale Facility Participant, whether in A$ or after having arranged for the conversion of that amount into a currency other than A$ in accordance with the written authority from the Sale Facility Participant, and after having deducted any applicable taxes or currency conversion costs; or (iii) in the event that a Sale Facility Participant does not have a Registered Address or the RTG Registry believes a Sale Facility Participant is not known at its Registered Address, and no account has been notified in accordance with clause (a)(e)(i) or a deposit into such an account is rejected or refunded, the RTG Registry must hold the amount on trust until the Sale Facility Participant claims the amount (in which case the RTG Registry may pay that amount in accordance with (i) or (ii) above) or the amount is dealt with in accordance with unclaimed money legislation. Any benefit accruing from the amount while it is held on trust will be to the benefit of Sierra. An amount credited to the account is to be treated as having been paid to the Sale Facility Participant. Sierra must procure that records are maintained of the amounts paid, the people who are entitled to the amounts and any transfers of the amounts. (f) Payment by the RTG Registry to a Sale Facility Participant in accordance with this clause 4.7 satisfies in full the Sale Facility Participant's right to Share Scheme Consideration. (g) None of Sierra, RTG, the Sale Agent or the RTG Registry gives any assurance as to the price that will be achieved for the sale of the Sale Facility Securities by the Sale Agent. The sale of the Sale Facility Securities under this clause 4.7 will be at the risk of the Sale Facility Participant.

[18]

Dealings in Sierra Shares (a) To establish the identity of the Scheme Shareholders, dealings in Sierra Shares will only be recognised if: (i) in the case of dealings of the type to be effected using CHESS, the transferee is registered in the Sierra Share Register as the holder of the relevant Sierra Shares by the Record Date; and (ii) in all other cases, registrable transmission applications or transfers in respect of those dealings are received on or before the Record Date at the place where the Sierra Share Register is kept. (b) Sierra must register registrable transmission applications or transfers of the kind referred to in clause (a)(ii) by the Record Date (provided that, for the avoidance of doubt, nothing in this clause (b) requires Sierra to register a transfer that would result in a Sierra Shareholder holding a parcel of Sierra Shares that is less than a 'marketable parcel' (as defined in the Market Rules of ASX)). (c) If the Share Scheme becomes Effective, a holder of Scheme Shares (and any person claiming through that holder) must not dispose of or purport or agree to dispose of any Scheme Shares or any interest in them after the Record Date. (d) Sierra will not accept for registration or recognise for any purpose any transmission application or transfer in respect of Sierra Shares received after the Record Date. (e) For the purpose of determining entitlements to the Share Scheme Consideration, Sierra must maintain the Sierra Share Register in accordance with the provisions of this clause (c) until the Share Scheme Consideration has been paid to the Scheme Shareholders. The Sierra Share Register in this form will solely determine entitlements to the Share Scheme Consideration. (f) All statements of holding for Sierra Shares will cease to have effect from the Record Date as documents of title in respect of those shares and, as from that date, each entry current at that date on the Sierra Share Register will cease to have effect except as evidence of entitlement to the Share Scheme Consideration in respect of the Sierra Shares relating to that entry. (g) As soon as possible on or after the Record Date, and in any event within one Business Day after the Record Date, Sierra will ensure that details of the names, Registered Addresses and holdings of Sierra Shares for each Scheme Shareholder and details of all Share Election Forms and Sale Facility Election Forms validly submitted and not revoked are available to RTG in the form RTG reasonably requires.

[34]

1.1 Definitions The meanings of the terms used in this Option Scheme are set out below. ASIC means the Australian Securities and Investments Commission. ASX means ASX Limited (ABN 98 008 624 691). Business Day means a day in Perth that is not a Saturday, Sunday or public holiday and on which banks, ASX and TSX are open for trading. CDI means CHESS Depositary Interest, being a unit of beneficial ownership in one New RTG Share or one New RTG Option (as the context requires) registered in the name of CDN. CDN means CHESS Depositary Nominees Pty Limited ACN 071 346 506. CHESS means the clearing house electronic sub-register system of share transfers operated by ASX Settlement Pty Ltd. Corporations Act means the Corporations Act 2001 (Cth). Court means the Federal Court of Australia, Perth Registry or such other court of competent jurisdiction under the Corporations Act agreed to in writing by RTG and Sierra. DRS means the Director Registration System. Effective means: (a) when used in relation to the Share Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to the Share Scheme; and (b) when used in relation to the Option Scheme, the coming into effect, under section 411(10) of the Corporations Act, of the order of the Court made under section 411(4)(b) of the Corporations Act in relation to the Option Scheme. Effective Date means, when used in relation to the Share Scheme or Option Scheme, the date on which the Share Scheme or Option Scheme becomes Effective (as the context requires). Election Date means 5.00pm on the fifth Business Day after the Effective Date. End date means 31 July 2014. Government Agency means any foreign or Australian government or governmental, semi-governmental, administrative, fiscal or judicial body, department, commission, authority, tribunal, agency or entity, or any minister of the Crown in right of the Commonwealth of Australia or any other federal, state, provincial, local or other government (foreign or Australian). Implementation Date means the fifth Business Day after the Record Date, or such other day as the parties agree. Ineligible Foreign Optionholder means a Scheme Optionholder whose address shown in the Sierra Option Register is a place outside Australia and its external territories, New Zealand or Canada unless RTG determines that it is lawful and not unduly onerous or impracticable to issue that Scheme Optionholder with New RTG Shares or New RTG Options in the form of CDIs when the Option Scheme becomes Effective Ineligible Foreign Shareholder means a Scheme Shareholder whose address shown in the Sierra Share Register is a place outside Australia and its external territories, New Zealand or Canada unless RTG determines that it is lawful and not unduly onerous or impracticable to issue that Scheme Shareholder with New RTG Shares and New RTG Options in the form of CDIs when the Share Scheme becomes Effective. New RTG Option means a right to acquire one unissued RTG Share with an exercise price of C$0.15 and an expiry date 3 years after the date of issue, adjusted for the RTG Share Consolidation in accordance with clause 4.9, on the terms and conditions set out in section 6.3(a) of the Scheme Booklet and to be issued to Scheme Optionholders under the Option Scheme. New RTG Share means a share in the capital of RTG to be issued to Scheme Optionholders under the Option Scheme. Option Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Sierra and the Scheme Optionholders under which the Scheme Optionholders will receive the Option Scheme Consideration, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by RTG and Sierra. Option Scheme Consideration means two New RTG Shares in the form of CDIs for every one Scheme Option held and two New RTG Options in the form of CDIs for every nine Scheme Options held on the Record Date, adjusted for the RTG Share Consolidation in accordance with clause 4.9 and subject to the terms of this Option Scheme. Option Scheme Deed Poll means the deed poll under which RTG covenants in favour of the Scheme Optionholders to perform its obligations under the Option Scheme. Option Scheme Meeting means the meeting of Sierra Optionholders ordered by the Court to be convened under section 411(1) of the Corporations Act. Record Date means 5.00pm on the third Business Day after the Effective Date. Registered Address has the meaning given in clause 4.7(e)(i). RTG means RTG Mining Inc. of Level 2, 338 Barker Road, Subiaco, Western Australia. RTG Group means RTG and each of its subsidiaries and a reference to a 'RTG Group Member' or a 'member of the RTG Group' is to RTG or any of its subsidiaries. RTG Register means the register of shareholders or optionholders (as applicable) maintained by RTG or its agent. RTG Registry means Computershare Investor Services Pty Ltd ACN 078 279 277 or Computershare Trust Company of Canada (as applicable) who assist RTG maintain the RTG Register. RTG Share means a share in the capital of RTG. RTG Share Consolidation means the consolidation of every ten RTG shares on issue into one consolidated RTG share, conditional on the Share Scheme becoming effective. Sale Agent means RTG or a person or persons appointed by RTG to sell the New RTG Shares and New RTG Options that are attributable to: (a) Ineligible Foreign Shareholders; (b) Ineligible Foreign Optionholders; and (c) Small Shareholders or Small Optionholders who do not elect to withdraw from participating in the Sale Facility under the terms of the Share Scheme or Option Scheme. Sale Facility means the sale facility provided for in clause 4.7. Sale Facility Election Form means an election form for the purposes of a Small Optionholder making an election under clause 4.3(b)(ii). Sale Facility Participant means: (a) each Small Shareholder who has not made an election to withdraw form participating in the Sale Facility under clause 4.3(b)(ii) of the Share Scheme; (b) each Small Optionholder who has not made an election to withdraw from participating in the Sale Facility under clause 4.3(b)(ii) of the Option Scheme; (c) each Ineligible Foreign Shareholder; and (d) each Ineligible Foreign Optionholder, in respect of whom New RTG Shares and New RTG Options are issued to the Sale Agent as nominee in trust in the circumstances referred to in clause 4.7(a). Sale Facility Securities has the meaning given in clause 4.7(a). Scheme Booklet as defined in the Scheme Implementation Deed. Scheme Implementation Deed means the implementation deed dated 24 February 2014 between Sierra and RTG relating to the implementation of the Share Scheme and Option Scheme. Scheme Option means a Sierra Option held by a Scheme Optionholder at 5.00pm on the Record Date. Scheme Optionholder means the holders of Sierra Options recorded on the Sierra Option Register as at the Record Date. Scheme Shareholder means a holder of fully paid ordinary shares in Sierra (other than any member of the RTG Group or any person who holds any Sierra Shares on behalf of, or for the benefit of, any member of the RTG Group) recorded in the Sierra Share Register as at the Record Date. Second Court Date means the first day on which an application made to the Court for an order under section 411(4)(b) of the Corporations Act approving the Option Scheme is heard. Share Election Form means an election form for the purposes of a Scheme Optionholder making an election under clause 4.3(b)(i). Share Scheme means the scheme of arrangement under Part 5.1 of the Corporations Act between Sierra and the Scheme Shareholders under which Scheme Shareholders will receive the Share Scheme Consideration, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and agreed to by RTG and Sierra. Share Scheme Consideration means three New RTG Shares in the form of CDIs for every one Scheme Share held and one New RTG Option in the form of CDIs for every three Scheme Shares held, adjusted for the RTG Share Consolidation in accordance with clause 4.9 of the Share Scheme and subject to the terms of the Share Scheme. Sierra Option means an ASX listed option to acquire one unissued Sierra Share. Sierra Optionholder means a holder of a Sierra Option. Sierra Option Register means the register of Sierra Optionholders maintained in accordance with the Corporations Act. Sierra Registry means Computershare Investor Services Pty Ltd ACN 078 279 277 who assist Sierra maintain the Sierra Share Register and Sierra Option Register. Sierra Share means a fully paid ordinary share in Sierra. Sierra Share Register means the register of members of Sierra maintained in accordance with the Corporations Act. Small Optionholder means a Scheme Optionholder who is entitled to receive an aggregate of 9,000 or less New RTG Shares under this Option Scheme and the Share Scheme (if applicable). Small Shareholder means a Scheme Shareholder who is entitled to receive an aggregate of 9,000 or less New RTG Shares under the Share Scheme and Option Scheme (if applicable). Trading Day means a day on which the ASX or TSX is open for trading. TSX means the Toronto Stock Exchange.

[35]

1.2 Interpretation In this Option Scheme: (a) Headings and bold type are for convenience only and do not affect the interpretation of this Option Scheme. (b) The singular includes the plural and the plural includes the singular. (c) Words of any gender include all genders. (d) Other parts of speech and grammatical forms of a word or phrase defined in this Option Scheme have a corresponding meaning. (e) An expression importing a person includes any company, partnership, joint venture, association, corporation or other body corporate and any Government Agency as well as an individual. (f) A reference to a clause, party, schedule, attachment or exhibit is a reference to a clause of, and a party, schedule, attachment or exhibit to, this agreement and a reference to this agreement includes any schedule, attachment and exhibit. (g) A reference to any legislation includes all delegated legislation made under it and amendments, consolidations, replacements or re-enactments of any of them. (h) A reference to a document (including this Option Scheme) includes all amendments or supplements to, or replacements or novations of, that document. (i) A reference to '$', 'A$' or 'dollar' is to Australian currency. (j) A reference to 'C$' is to the lawful currency of Canada. (k) A reference to any time is a reference to that time in Perth. (l) A term defined in or for the purposes of the Corporations Act has the same meaning when used in this Option Scheme. (m) A reference to a party to a document includes that party's successors and permitted assignees. (n) No provision of this Option Scheme will be construed adversely to a party because that party was responsible for the preparation of this Option Scheme or that provision. (o) A reference to a body, other than a party to this Option Scheme (including an institute, association or authority), whether statutory or not: (i) which ceases to exist; or (ii) whose powers or functions are transferred to another body, is a reference to the body which replaces it or which substantially succeeds to its powers or functions.

[42]

4.3 Election Procedure (a) Subject to clauses 4.3(b), 4.5, 4.6 and 4.8, a Scheme Optionholder will receive the Option Scheme Consideration. A Scheme Optionholder who wishes to receive New RTG Shares and New RTG Options in the form of CDIs listed on ASX does not need to make an election under clause 4.3(b). (b) Subject to the remaining provisions of this clause 4.3 and clauses 4.5 and 4.6: (i) each Scheme Optionholder will be entitled to elect to receive New RTG Shares and New RTG Options listed on TSX rather than New RTG Shares and New RTG Options in the form of CDIs listed on ASX, by completing the Share Election Form and returning it to the address specified in the Share Election Form so that it is received by the Election Date; and (ii) each Small Optionholder who does not wish to participate in the Sale Facility and wishes to receive the Share Scheme Consideration, must make an election to withdraw from participating in the Sale Facility by completing the Sale Facility Election Form, indicating whether they wish to receive New RTG Shares and New RTG Options in the form of CDIs listed on ASX or New RTG Shares and New RTG Options listed on TSX, and returning it to the address specific in the Sale Facility Election Form so that it is received by the Election Date. (c) A Small Optionholder who does not make an election under clause 4.3(b)(ii), will have their Option Scheme Consideration dealt with in accordance with clauses 4.6, 4.7 and 4.8. (d) An Ineligible Foreign Optionholder is not entitled to make any election pursuant to clause 4.3(b) and any election purportedly made by it will be invalid. Ineligible Foreign Optionholders will have their Option Scheme Consideration dealt with in accordance with clauses 4.5, 4.7 and 4.8. (e) An election under clause 4.3(b) must be made in accordance with the terms and conditions on the Share Election Form or Sale Facility Election Form, as the case may be. (f) A Scheme Optionholder (who is not a Sale Facility Participant) who does not make a valid election pursuant to clause 4.3(b)(i) will be deemed to have elected to receive New RTG Shares and New RTG Options in the form of CDIs listed on ASX. (g) Subject to clause 4.3(h), a valid election made or deemed to be made by a Scheme Optionholder under this clause 4.3 will be deemed to apply in respect of the Scheme Optionholder's entire holding of Scheme Options, regardless of whether the Scheme Optionholder's holding of Scheme Options is greater or less than the Scheme Optionholder's holding at the time it made its election. (h) A Scheme Optionholder (other than an Ineligible Foreign Optionholder and a Small Optionholder) who is noted on the Sierra Option Register as holding one or more parcels of Sierra Options as trustee or nominee for, or otherwise on account of, another person may not make separate elections under clauses 4.3(b)(i) or 4.3(b)(ii) in relation to each of those parcels of Sierra Shares. (i) A Scheme Optionholder may vary or withdraw any election made by it under this clause 4.3 by the Election Date. To vary such an election, a Scheme Optionholder must lodge a replacement Share Election Form or Sale Facility Election Form, as the case may be, by the Election Date. To withdraw such an election, a Scheme Optionholder must follow the procedure set out in the Scheme Booklet, Share Election Form or Sale Facility Election Form. (j) Subject to clause 4.3(k), an election which is not made or deemed to have been made in accordance with this clause 4.3 will not be a valid election for the purpose of this Option Scheme and will not be recognised by Sierra or RTG for any purpose. (k) Sierra may, with the agreement of RTG, settle as it thinks fit any difficulty, matter of interpretation or dispute which may arise in connection with determining the validity of any election, and any such decision will be conclusive and binding on Sierra, RTG and the relevant Scheme Optionholder.

[43]

4.4 Provision of Option Scheme Consideration Subject to clauses 4.4(d), 4.5, 4.6, 4.8 and 4.9, the obligation of RTG to provide the Option Scheme Consideration to Scheme Optionholders will be satisfied by RTG: (a) in the case of Option Scheme Consideration that is required to be provided to Scheme Optionholders in the form of New RTG Shares and New RTG Options listed on TSX, by RTG procuring that: (i) the name and address of each such Scheme Optionholder is entered into the RTG Register on the Implementation Date in respect of the New RTG Shares and New RTG Options to which it is entitled under this clause 4; and (ii) a DRS advice is sent to the Registered Address of each such Scheme Optionholder representing the number of New RTG Shares issued to the Scheme Optionholder pursuant to this Option Scheme; (b) in the case of Option Scheme Consideration that is required to be provided to Scheme Optionholders as New RTG Shares and New RTG Options in the form of CDIs listed on ASX, by RTG: (i) issuing to CDN to be held on trust that number of New RTG Shares that will enable CDN to issue CDIs as envisaged by clause 4.4(b)(iii) on the Implementation Date; (ii) procuring that the name and address of CDN is entered into the RTG Register in respect of those New RTG Shares and New RTG Options on the Implementation Date and that a DRS advice in the name of CDN representing those New RTG Shares and New RTG Options is sent to CDN; (iii) procuring that on the Implementation Date, CDN issues to each such Scheme Optionholder the number of CDIs to which it is entitled under this clause 4; (iv) procuring that on the Implementation Date, the name of each such Scheme Optionholder is entered in the records maintained by CDN as the holder of the CDIs issued to that Scheme Optionholder on the Implementation Date; (v) in the case of each such Scheme Optionholder who held Scheme Options on the CHESS subregister - procuring that the CDIs are held on the CHESS subregister on the Implementation Date and sending or procuring the sending of a CDI holding statement to each such Scheme Optionholder which sets out the number of CDIs held on the CHESS subregister by that Scheme Optionholder; and (vi) in the case of each such Scheme Optionholder who held Scheme Options on the issuer sponsored subregister - procuring that the CDIs are held on the issuer sponsored subregister on the Implementation Date and sending or procuring the sending of a CDI holding statement to each such Scheme Optionholder which sets out the number of CDIs held on the issuer sponsored subregister by that Scheme Optionholder; (c) in the case of Option Scheme Consideration that is required to be dealt with as a result of the operation of clauses 4.5 and 4.6, by RTG procuring that: (i) the name and registered address of the Sale Agent, as nominee in trust for the Sale Facility Participants, is entered into the RTG Register on the Implementation Date in respect of the New RTG Shares and New RTG Options required to be issued to it under this clause 4; (ii) a holding statement or DRS advice (or equivalent document) in the name of the Sale Agent, as nominee in trust for the Sale Facility Participants, is sent to the Sale Agent representing the number of New RTG Shares and New RTG Options so issued to it; (iii) the Sale Agent, as nominee in trust for the Sale Facility Participants, sells those New RTG Shares and New RTG Options on behalf of the Sale Facility Participants, and pays the net proceeds to the RTG Registry, in trust for the Sale Facility Participants, in accordance with clause 4.7; and (iv) the RTG Registry pays the net proceeds on to the Sale Facility Participants in accordance with clause 4.7; and (d) in the case of joint holders of Scheme Options: (i) the New RTG Shares, New RTG Options or CDIs to be issued under this Option Scheme will be issued to and registered in the names of the joint holders; (ii) any cheque required to be sent under this Option Scheme will be made payable to the joint holders and sent to the holder whose name appears first in the Sierra Option Register; and (iii) any other document required to be sent under this Option Scheme, will be forwarded to the holder whose name appears first in the Sierra Option Register as at the Record Date.

[46]

4.7 Sale Facility (a) New RTG Shares and New RTG Options that: (i) but for an election by a Small Optionholder under clause 4.3(b)(ii), are required to be dealt with under this clause by virtue of clause 4.6 (rounded to the nearest whole number in accordance with clause 4.8); or (ii) are required to be dealt with under this clause by virtue of clause 4.5 (rounded to the nearest whole number in accordance with clause 4.8), must be issued by RTG to the Sale Agent, as nominee in trust for the Sale Facility Participants, on the Implementation Date (rounded, if necessary, to the nearest whole number in accordance with clause 4.8) (together with the New RTG Shares and New RTG Options to be issued by RTG to the Sale Agent, as nominee in trust for the Sale Facility Participants, on the Implementation Date under clause 4.7(a) of the Share Scheme, the Sale Facility Securities) and subsequently sold in accordance with the remaining provisions of this clause 4.7. The Sale Facility will only be available in respect of New RTG Shares and New RTG Options issued to the Sale Agent, as nominee in trust for the Sale Facility Participants, in the circumstances referred to in clause 4.7(a). Any purported election by a Scheme Optionholder to participate in the Sale Facility in any other circumstances will be invalid and not recognised for any purpose. (b) RTG must procure that the Sale Agent: (i) within 8 weeks after the date of the Implementation Date, sells the Sale Facility Securities on the ASX and/or TSX in the ordinary course of trade and otherwise in such manner, including selling the Sale Facility Securities in one or more lots, at such price or prices and on such other terms as the Sale Agent determines in good faith; (ii) deducts from the C$ or A$ gross proceeds of such sale of all Sale Facility Securities any taxes and costs (including brokerage of up to 1%) applicable to those Sale Facility Securities; (iii) within 5 Trading Days after the last sale of the Sale Facility Securities is completed under (i) above, arranges for the conversion of the net proceeds of all such sales in C$ referred to in (ii) above from C$ to A$; and (iv) within one Trading Day after conversion of those net proceeds to A$ under (iii) above, pays that A$ amount (after having deducted any applicable currency conversion costs) to the RTG Registry, in trust for the Sale Facility Participants, by telegraphic transfer of clear funds to an A$ account nominated by the RTG Registry. (c) Within 7 Business Days after the date on which the Sale Agent remits the A$ amount referred to in clause 4.7(c)(iv) to the RTG Registry, RTG will cause the RTG Registry to pay to each Sale Facility Participant their pro-rata share of the A$ amount referred to in clause 4.7(c)(iv), being the proportion which the number of Sale Facility Securities attributable to them bears the total number of Sale Facility Securities. The amount payable to each Sale Facility Participant under this clause will, if necessary, be rounded down to the nearest whole cent, and any part of the A$ amount referred to in clause 4.7(c)(iv) remaining after such rounding will be paid by the RTG Registry to a charity nominated by RTG. (d) Sale Facility Participants agree that the amount referred to in clause 4.7(d) may be paid by the Sale Agent doing any of the following at the Sale Agent's election: (i) sending a cheque or money order for that amount (after having deducted any applicable taxes) by pre-paid post (or pre-paid airmail if the address is outside Australia) to the Sale Facility Participant's address as shown in the Sierra Option Register as at the Record Date (the Registered Address); (ii) depositing that amount into an account with any bank notified to Sierra (or any agent of Sierra) by an appropriate written authority from the Sale Facility Participant, whether in A$ or after having arranged for the conversion of that amount into a currency other than A$ in accordance with the written authority from the Sale Facility Participant, and after having deducted any applicable taxes or currency conversion costs; or (iii) in the event that a Sale Facility Participant does not have a Registered Address or the RTG Registry believes a Sale Facility Participant is not known at its Registered Address, and no account has been notified in accordance with clause 4.7(e)(ii) or a deposit into such an account is rejected or refunded, the RTG Registry must hold the amount on trust until the Sale Facility Participant claims the amount (in which case the RTG Registry may pay that amount in accordance with (i) or (ii) above) or the amount is dealt with in accordance with unclaimed money legislation. Any benefit accruing from the amount while it is held on trust will be to the benefit of Sierra. An amount credited to the account is to be treated as having been paid to the Sale Facility Participant. Sierra must procure that records are maintained of the amounts paid, the people who are entitled to the amounts and any transfers of the amounts. (e) Payment by the RTG Registry to a Sale Facility Participant in accordance with this clause 4.7 satisfies in full the Sale Facility Participant's right to Option Scheme Consideration. (f) None of Sierra, RTG, the Sale Agent or the RTG Registry gives any assurance as to the price that will be achieved for the sale of the Sale Facility Securities by the Sale Agent. The sale of the Sale Facility Securities under this clause 4.7 will be at the risk of the Sale Facility Participant.

[68]

REASONS FOR JUDGMENT 1 I made orders in this matter on 22 May 2014, at which time I indicated that I would deliver written reasons in due course. These are my reasons. 2 The Court on 9 April 2014 (the first court hearing) granted approval to Sierra Mining Limited (ACN 118 060 441) (Sierra) for the convening of: (a) a members scheme meeting (Shareholders Meeting) to consider a proposed members scheme of arrangement (Shareholders Scheme); and (b) an optionholders scheme meeting (Optionholders Meeting) to consider a proposed creditors scheme of arrangement (Optionholders Scheme), (collectively, the Schemes). 3 The Schemes, if implemented, will result in Sierra becoming a wholly owned subsidiary of RTG Mining Inc (RTG). RTG is a company incorporated under the laws of the British Virgin Islands. 4 The meetings have occurred and Sierra, pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth), now applies for orders approving the Schemes. 5 The application is supported by the following affidavits: Affidavits that were before the Court at the first court hearing on 9 April 2014 (a) the affidavit of Matthew Gordon Syme sworn 19 March 2014 (the First Syme Affidavit); (b) the affidavit of Justine Alexandria Magee sworn 21 March 2014; (c) the affidavit of Michael Phillip Bowen sworn 19 March 2014; (d) the affidavit of Scott Douglas Gibson sworn 8 April 2014; and (e) the affidavit of Scott Douglas Gibson sworn 8 April 2014. Affidavits filed since the first court hearing on 9 April 2014 (a) the affidavit of Michael Choon Ming Ng sworn 20 May 2014; (b) the affidavit of Michael Phillip Bowen sworn 20 May; (c) the affidavit of Vanessa McAuley sworn 20 May; (d) the affidavit of Jonathan Sek Han Foo sworn 20 May 2014; (e) the affidavit of Marvi Adolfina Douglas sworn 21 May 2014; (f) the affidavit of Michael Choon Ming Ng sworn 22 May 2014; and (g) the affidavit of Matthew Gordon Syme sworn 22 May 2014. 6 Sierra applies for orders: (a) approving the members scheme of arrangement between Sierra and each registered holder (Shareholders) of ordinary shares in Sierra (Sierra Shares) pursuant to s 411(4)(b) of the Corporations Act; (b) approving the creditors scheme of arrangement between Sierra and holders of listed options (Optionholders) in Sierra (Sierra Options) pursuant to s 411(4)(b) of the Corporations Act; and (c) exempting the plaintiff, pursuant to s 411(12) of the Corporations Act, from compliance with s 411(11) of the Corporations Act. 7 Sierra also seeks orders pursuant to s 1322(4)(a) of the Corporations Act that to the extent that the publication of the notice of hearing to approve the scheme of arrangement between Sierra and its Optionholders in The Australian newspaper on 20 May 2014 does not comply with the requirement to be published at least 5 days before the second hearing of Sierra's application, the period of time for the publication of the notice is abridged and any act of the plaintiff is not invalid by reason of such contravention.

[78]

Application to this matter 34 The formal requirements of Part 5.1 have been satisfied. 35 The Schemes have been overwhelmingly approved by Shareholders and Optionholders. 36 No Shareholder or Optionholder has provided any indication to Sierra that it proposes to oppose the orders sought. 37 ASIC has been kept fully and thoroughly informed at all stages of the process. 38 There is no basis for the Court to exercise its residual power to withhold approval of the Schemes. 39 The evidence discloses that Shareholders and Optionholders will receive substantial benefits from the Schemes. 40 The independent expert has concluded that the Schemes are in the best interests of Shareholders and Optionholders. 41 Although the independent expert concluded that the consideration for the Schemes was not fair but reasonable, the basis of this conclusion was expressed clearly and openly in the Independent Expert's Report. 42 The independent expert's opinion was (broadly) that the: (a) Shareholders Scheme (being the offer of 3 RTG shares for every 1 Sierra Share together with 1 RTG option for every 3 Sierra Shares) is "in the best interests of [Sierra] Shareholders", and "not fair but reasonable"; and (b) Optionholders Scheme (being the offer of 2 RTG shares for every 1 Sierra Option together with 2 RTG options for every 9 Sierra Options) is "in the best interests of [Sierra] Optionholders", and "not fair but reasonable". 43 The Court at the first court hearing was referred to the decision of Dodds-Streeton J in Zenyth Therapeutics Ltd v Smith (2006) 60 ACSR 548, in particular, at [109]-[114]: [109] In Re Rancoo Ltd [(1995) 17 ACSR 206] Hayne J referred to ASIC Policy Statement 75 and expressed reservations about the attribution of different meanings to the concepts "fair" and "reasonable". He acknowledged the difficulty in accepting that an offer which was not fair could still be reasonable. [110] Hayne J stated: Policy Statement 75 expresses the views of the commission about the expression "fair and reasonable". It does so in a way that seeks to attribute different meanings to the words "fair and reasonable". The policy statement does not treat the expression "fair and reasonable" as a single portmanteau statement conveying a meaning to the listener but, rather, seeks to take each element of the expression and attribute a different meaning to it. Thus, the policy statement expressly contemplates the circumstance that an expert might conclude that a particular offer is not fair but nevertheless is reasonable. I must say that, for myself, I find the proposition that an offer may be "not fair" and yet still "reasonable" one which presents some difficulty. Perhaps that view stems from the impression I have that the expression "fair and reasonable" is but a single expression intended to convey a single overall meaning which is not to be identified by reference to particular constituent elements. [111] Hayne J observed that "the net effect of the two transactions is thus, an effect which leads to the overall benefit of the remaining shareholders of Rancoo by a considerable sum, and it is on that basis that the expert concluded that the selective capital reduction is reasonable". [112] Despite his reservations, Hayne J confirmed the reduction of capital, which was unopposed. He stated that "Thus the reduction that has been proposed is a step that is to be taken, as a part of that overall transaction". [113] There is great force in Hayne J's reservations about an offer which, although not fair, is nevertheless reasonable. Although Re Rancoo Ltd constitutes an example of a reduction of capital which was recognised to be such, persuasive applications of the distinction are likely to be rare. [114] Courts should adopt a cautious approach to the approval of any scheme which the independent expert considers "not fair", particularly when it may involve expropriation at an undervalue. In my opinion, a scheme involving an offer of an undervalue, which is not fair, should generally not be considered reasonable unless it is accompanied by some positive compensatory feature. The fact that the security holders are unable to exact fair, or better, consideration through any avenue alternative to the scheme would not necessarily render an unfair scheme reasonable in the relevant sense. (Footnotes omitted). 44 The independent expert expressed more precisely the basis of the opinion that the Schemes though not fair were reasonable and therefore in the best interests of Shareholders and Optionholders. 45 It was disclosed at the first court hearing that ASIC was content with the Independent Expert's Report and the form of the Scheme Booklet. 46 On this basis, and having regard to the vote at the Shareholders Meeting and Optionholders Meeting, there is no suggestion that the Schemes are not being proposed in good faith or that they are commercially immoral in any respect. The reasons underlying the Schemes have been clearly stated and put to all Shareholders and Optionholders. 47 All conditions to the Schemes will, on the making of the orders sought in the minute of proposed orders, either have been satisfied or waived, or, in the case of "negative conditions", will not have occurred.

Zenyth Therapeutics Ltd v Smith

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