Australian Energy Limited v AGL Southern Hydro (NSW) Pty Limited
[2011] FCA 738
•22 June 2011
FEDERAL COURT OF AUSTRALIA
Australian Energy Limited v AGL Southern Hydro (NSW) Pty Limited [2011] FCA 738
Citation: Australian Energy Limited v AGL Southern Hydro (NSW) Pty Limited [2011] FCA 738 Parties: AUSTRALIAN ENERGY LIMITED ACN 083 183 028 and PARTIES IN ATTACHED SCHEDULE A v AGL SOUTHERN HYDRO (NSW) PTY LIMITED ACN 056 452 601 File number(s): NSD 802 of 2011 Judge: EMMETT J Date of judgment: 22 June 2011 Legislation: Corporations Act 2001 (Cth) ss 411, 413 Date of hearing: 22 June 2011 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 9 Counsel for the plaintiffs: F Gleeson SC Solicitor for the plaintiffs: Gilbert + Tobin Counsel for the defendant: The defendant did not appear
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 802 of 2011
BETWEEN: AUSTRALIAN ENERGY LIMITED ACN 083 183 028
First PlaintiffPARTIES IN ATTACHED SCHEDULE A
Second to Twelfth PlaintiffsAND: AGL SOUTHERN HYDRO (NSW) PTY LIMITED ACN 056 452 601
Defendant
JUDGE:
EMMETT J
DATE OF ORDER:
22 JUNE 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (the Act):
a)the First Plaintiff convene a meeting of its member, AGL HP1 Pty Limited, to be held on 27 June 2011, commencing at 9am at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the First Plaintiff and its member (First Scheme Meeting);
b)the Second Plaintiff convene a meeting of its member, AGL Southern Hydro Investments Pty Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Second Plaintiff and its member;
c)the Third Plaintiff convene a meeting of its member, AGL (SHL) Pty Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Third Plaintiff and its member;
d)the Fourth Plaintiff convene a meeting of its member, AGL Southern Hydro Investments Pty Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Fourth Plaintiff and its member;
e)the Fifth Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Fifth Plaintiff and its member;
f)the Sixth Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Sixth Plaintiff and its member;
g)the Seventh Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Seventh Plaintiff and its member;
h)the Eighth Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Eighth Plaintiff and its member;
i)the Ninth Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Ninth Plaintiff and its member;
j)the Tenth Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Tenth Plaintiff and its member;
k)the Eleventh Plaintiff convene a meeting of its member, AGL Energy Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Eleventh Plaintiff and its member;
l)the Twelfth Plaintiff convene a meeting of its member, AGL (SG) Pty Limited, to be held on 27 June 2011, commencing at 9am (or as soon after the conclusion of the First Scheme Meeting as may be practicable), at Level 22, 101 Miller Street, North Sydney, New South Wales, for the purpose of considering and, if thought fit, agreeing (with or without modification) to the proposed scheme of arrangement (in a form substantially equivalent to the form of the applicable scheme of arrangement that appears at Attachment A of Exhibit “DC-3”), between the Twelfth Plaintiff and its member; and
m)The explanatory statement for the schemes of arrangement, in the form of Exhibit “DC-3”, be approved for distribution to the members of each of the Plaintiffs, accompanied by the notices convening the Scheme Meetings.
2. Pursuant to s 1319 of the Act:
a)Service of the explanatory statement and notice of the Scheme Meetings may be effected by electronic means, or by hand delivery to a person who is a director, company secretary, proxy, corporate representative appointed under s 250D of the Act (Corporate Representative), or attorney under power, of the members of the Plaintiffs, at any time before the meetings referred to in Order 1 commence;
b)The Scheme Meetings be chaired by Mr Michael Paul McWilliams, or failing him, Mr Michael Patrick Moraza (for any or all of the meetings for the members of the Sixth Plaintiff, Seventh Plaintiff, Tenth Plaintiff, Eleventh Plaintiff or Twelfth Plaintiff) or Mr Stephen John Mikkelsen (for any or all of the meetings for the members of the First to Tenth Plaintiffs);
c) In respect of each meeting referred to in Order 1:
i)The relevant Sole Member, being a body corporate, may appoint an individual as its representative to exercise the powers it may exercise at the Scheme Meeting;
ii)A proxy, appointment of a Corporate Representative, or power of attorney to act on behalf of the relevant Sole Member may be delivered to the Chairman of the Scheme Meeting at any time before the time of the Scheme Meeting;
iii)A resolution put to the vote at the Scheme Meeting to approve the relevant Scheme, or any modification to the Scheme, may be decided by the relevant Sole Member or its representative signing a record of the resolution; and
iv)Regulations 5.6.11 to 5.6.36A of the Corporations Regulations 2001 not apply to the Scheme Meeting.
3.The Plaintiff place an advertisement in The Australian newspaper, in a form substantially equivalent to the form of Annexure A to these orders (as shown to the Court), no later than Thursday, 23 June 2011.
4.The proceeding be stood over to 9:30am on 28 June 2011 for the hearing of any application to approve the Schemes.
5. There be liberty to apply.
6. These Orders be entered forthwith.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 802 of 2011
BETWEEN: AUSTRALIAN ENERGY LIMITED ACN 083 183 028
First PlaintiffPARTIES IN ATTACHED SCHEDULE A
Second to Twelfth PlaintiffsAND: AGL SOUTHERN HYDRO (NSW) PTY LIMITED ACN 056 452 601
Defendant
JUDGE:
EMMETT J
DATE:
22 JUNE 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The 12 plaintiffs are all indirectly wholly owned subsidiaries of AGL Energy Limited (AGL). AGL HP1 Pty Limited (HP1) is also a wholly owned subsidiary of AGL. The defendant, AGL Southern Hydro (NSW) Pty Limited (the Transferee), is a directly wholly owned subsidiary of HP1.
The plaintiffs, HP1 and the defendant are participants in a restructure of the AGL group of companies (the AGL Group). The restructure involves the transfer of some or all of the assets, liabilities and undertaking of various members of the AGL Group to other members of the AGL Group, followed by the deregistration of some or all of the transferor companies. The principal purpose of the proposed restructure is to simplify the legal entity structure of the AGL Group, and to enable business assets that are used by a particular business segment to be held, where possible, in the relevant subsidiary of AGL that most appropriately represents that business segment.
One of the steps in the proposed restructure is that all of the assets, liabilities and undertaking of the 12 plaintiffs be transferred to the Transferee, by way of schemes of arrangement between each of the plaintiffs and their respective sole members. The effect of the proposed schemes is that all of the assets of the 12 plaintiffs will vest in the Transferee. The Transferee will continue to be a wholly owned subsidiary of HP1, which itself will continue to be a wholly owned subsidiary of AGL.
None of the plaintiffs has any known creditors. However, each of the plaintiffs has a contingent liability as a guarantor in respect of obligations of AGL and other companies in the AGL Group. The Transferee is also a guarantor of those obligations, and is therefore already subject to the same contingent liability as the 12 plaintiffs. As at 31 December 2010, the total assets of the Transferee were approximately $111,702,000 and the total liabilities of the Transferee were approximately $9,687,000. At that time, the total assets of the 12 plaintiffs amounted to approximately $325,000. In addition, there will be a tax benefit consequent upon the proposed amalgamation of some $24,000. The effect of the proposed amalgamation will be to increase the assets of the Transferee by some $349,000, such that the net assets of the Transferee will increase from $102,015,000 to $102,364,000.
Clearly enough, there will be no detrimental effect so far as any creditors of the Transferee are concerned. So far as any contingent creditor of the 12 plaintiffs is concerned, there will be no detrimental effect because the contingent creditor, beneficiary of the guarantee, will have a claim on the assets of the Transferee increased by the assets of the 12 plaintiffs, by reason of the guarantee given by the Transferee. Notwithstanding the internal nature of the schemes, an expert opinion has been obtained confirming that there is no detrimental effect on the creditors of either the 12 plaintiffs or the Transferee.
The Australian Securities and Investments Commission (the Commission) has been provided with a copy of the proposed explanatory statement to be given to the members of the 12 plaintiffs. The need to give such a statement is purely formal. In any event, the Commission has, by letter addressed to the solicitors for the 12 plaintiffs, indicated that the Commission has had a reasonable opportunity to examine the terms of the proposed schemes, and the final draft statement. In accordance with the Commission’s relevant policy, the Commission’s letter said that the Commission did not currently intend to appear to make submissions, or intervene to oppose any of the schemes, at the hearing today. That intention was based on information provided to date on the matters to which the Commission would have regard before it will state in writing that it has no objection to a scheme.
The proposed schemes are concerned with the reconstruction and amalgamation of Part 5.1 bodies within the meaning of the Corporations Act 2001 (Cth) (the Corporations Act). The term arrangement, when used in s 411 of the Corporations Act, has a wide meaning. Nevertheless, a proposed transaction must touch or concern the rights and obligations of the company, or its members or creditors, in the sense that there must be some element of accommodation on both sides. Under the proposed schemes, there is an arrangement between the relevant plaintiff and its sole member, under which the sole member will approve the scheme and consent to the reconstruction or amalgamation, notwithstanding that that will have the effect of reducing the value of its shareholding in the relevant plaintiff. Each sole member waives any rights it may have in connection with the relevant reconstruction or amalgamation, and waives any rights it may otherwise have as against the relevant plaintiff in connection with the reconstruction or amalgamation. To that extent, each sole member foregoes the opportunity to carry on any future activity through the relevant plaintiff.
I am satisfied that each scheme is proposed for the purpose of or in connection with the reconstruction or amalgamation of the relevant plaintiff. Under each scheme, the whole of the undertaking and all of the property of each plaintiff will be transferred to the Transferee. Following the implementation of the schemes, the Transferee will assume the undertaking and be the holder of all of the assets and liabilities of each of the 12 plaintiffs. Accordingly, I am satisfied that each scheme is an arrangement between the relevant plaintiff and its sole member for the purposes of s 411 of the Corporations Act, and that it has been proposed for the purposes of or in connection with the scheme for the reconstruction or amalgamation of the plaintiffs, which involves the transfer to the Transferee of the whole of the undertaking and property of each plaintiff. Accordingly, the jurisdiction of the Court under s 413 of the Corporations Act is enlivened in relation to each scheme.
The schemes are such as would be likely to be approved by the Court on the assumption that they are first approved by the requisite majority, which is almost without doubt. In all of the circumstances, I consider that it is appropriate to convene meetings of the 12 plaintiffs as proposed.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 28 June 2011
SCHEDULE A
AGL SOUTHERN HYDRO PTY LIMITED (ACN 088 976 327)
Second Plaintiff
AGL SOUTHERN HYDRO HOLDINGS PTY LIMITED (ACN 104 646 424)
Third Plaintiff
AGL SOUTHERN HYDRO INVESTMENTS PTY LIMITED (ACN 104 071 829)
Fourth Plaintiff
AGL (SHL) PTY LIMITED (ACN 116 830 285)
Fifth Plaintiff
GEOGEN AUSTRALIA PTY LIMITED (ACN 134 542 082)
Sixth Plaintiff
GEOGEN PTY LIMITED (ACN 113 102 686)
Seventh Plaintiff
AGL POWER GENERATION (NSW) PTY LIMITED (ACN 118 099 451)
Eighth Plaintiff
AGL POWER GENERATION (QLD) PTY LIMITED (ACN 119 438 756)
Ninth Plaintiff
AGL PIPELINES INVESTMENTS (QLD) PTY LIMITED (ACN 091 258 472)
Tenth Plaintiff
AGL (SG) PTY LIMITED (ACN 003 324 310)
Eleventh Plaintiff
AGL (SG) (WYONG) OPERATIONS PTY LIMITED (ACN 106 591 119)
Twelfth Plaintiff
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