1300 Smiles Limited, in the matter of 1300 Smiles Limited

In the matter of 1300 Smiles Limited (ACN 094 508 166) (ONT), the court was asked to grant orders convening a meeting of ONT members to consider approving a proposed scheme of arrangement between ONT and its shareholders. The scheme involved the possibility of a special dividend being declared and paid by ONT directors before the scheme implementation date, separate meetings for two classes of shareholders, and conditions for the scheme including the founder shareholders making an election to retain a portion of their shares. The holding company of the bidder was also given the option to acquire the retained portion of target shares within a specified time period in consideration for shares in the holding company.

The legal issues before the court were whether the proposed scheme of arrangement was in the best interests of ONT and its shareholders and whether the orders sought by ONT for convening the scheme meetings were appropriate. The court found that the scheme provided differential consideration to founder and non-founder shareholders, with the former receiving a higher cash offer. The scheme was also conditional on the founder shareholders making an election to retain a portion of their shares, which the holding company of the bidder could acquire within a specified time period. The court was satisfied that the scheme was in the best interests of ONT and its shareholders and that the orders sought by ONT were appropriate.

The court granted the orders sought by ONT, including convening separate meetings for the two classes of shareholders and approving the scheme booklet and proxy forms for distribution to shareholders. The court also exempted ONT from the requirement to publish a notice of the hearing of the application pursuant to rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth). The proceeding was stood over to 10.15 am on Wednesday, 17 November 2021 for the hearing of any application to approve the scheme. The court also granted liberty to apply for further orders.