Azure Mineral Limited [No 2] - [2024] WASC 154

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE AZURE MINERALS LIMITED [No 2] [2024] WASC 154
CORAM:   LUNDBERG J
HEARD:   1 MAY 2024
DELIVERED          :   1 MAY 2024
FILE NO/S:   COR 192 of 2023
BETWEEN:   AZURE MINERALS LIMITED
Plaintiff
S H MINING PTY LTD
Interested Party

Catchwords:

Corporations Law - Scheme of arrangement under s 411 of the Corporations Act 2001 (Cth) - Plaintiff lithium company to be wholly acquired by two large mining groups - Scheme forms part of a dual scheme and takeover process - Second court hearing - Whether appropriate to approve scheme - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 411

Result:

Orders made approving the Scheme

Category: B

Representation:

Counsel:

Plaintiff	:	A J Papamatheos and K A Sleiman
Interested Party	:	S K Dharmananda SC

Solicitors:

Plaintiff	:	Corrs Chambers Westgarth
Interested Party	:	King & Wood Mallesons and Herbert Smith Freehills

Case(s) referred to in decision(s):

Re Azure Minerals Limited [2024] WASC 58
Re Wesfarmers Ltd (No 2) [2018] WASC 357

LUNDBERG J:

(This judgment was delivered ex temporaneously on 1 May 2024 and has been edited from the transcript to correct matters of grammar, add headings, and include complete footnotes and references.)

A. Introduction

This is the plaintiff's application pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) for approval of the Scheme which was the subject of orders made by the Court on 1 March 2024. By those earlier orders, the convening of the Scheme Meeting was ordered and the Transaction Booklet was approved for despatch to Shareholders. I refer to my reasons delivered on 6 March 2024 and, for convenience, will continue to use the definitions which appear in those reasons: Re Azure Minerals Limited.[1]
[1] Re Azure Minerals Limited [2024] WASC 58.
To summarise the Scheme, Azure is an ASX listed entity which controls various mineral projects in Western Australia, including the Andover Lithium Project which is located in the Pilbara region of this State. In mid-December 2023, the transaction which underlies the presently formulated Scheme was announced by Azure. The arrangement which was announced involved two alternative transaction structures, intended to run concurrently, being a scheme of arrangement process under chpt 5 of the Act and an off-market takeover offer under chpt 6.
Both structures involve the proposed joint acquisition of Azure by the group of companies headed by the Chilean-based company SQM, and the group of companies headed by the Australian mining company, Hancock Prospecting. Pursuant to the Scheme, which on its own is relatively conventional, Shareholders will be offered cash consideration for each Share they own. Pursuant to the off-market takeover offer, Shareholders will be offered a slightly lower cash consideration for each Share they own. The bid is conditional, amongst other matters, on the Scheme not becoming effective.
The hearing of this application for approval was originally listed for 10 April 2024. The hearing date was moved as a result of unanticipated delays in securing…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] WASC 154
Decision Date: 1 MAY 2024

CaseChat Overview and Summary

In the case, Azure Mineral Limited [No 2], the matter before the court involved a scheme of arrangement under section 411 of the Corporations Act 2001. The plaintiff, Azure Mineral Limited, is a lithium company that had entered into a proposed acquisition agreement with two large mining groups. The scheme is part of a dual scheme and takeover process, with the second hearing required by the court to decide whether the scheme should be approved.

The primary legal issue for the court was to determine if the scheme was fair and reasonable to the shareholders of the plaintiff company and if it was in the best interests of the company and its creditors. The court had to consider the detailed evidence and arguments presented by the parties regarding the valuation of the company, the fairness of the scheme to the shareholders, and the overall benefits and detriments of the proposed acquisition.

The court found that the scheme was fair and reasonable for the shareholders of the plaintiff company and was in the best interests of the company and its creditors. The court took into account the comprehensive evidence presented, including the valuation reports and the expert opinions on the fairness of the scheme. The court also considered the benefits of the acquisition to the plaintiff company, including the potential for increased production and the financial benefits to the company. The court concluded that the scheme should be approved, as it met the necessary criteria under the Corporations Act.

The final orders of the court were that the scheme of arrangement be approved, allowing the two large mining groups to acquire the plaintiff company. The court's decision was based on the comprehensive evidence and arguments presented, and the court found that the scheme was fair and reasonable to the shareholders and in the best interests of the company and its creditors.

Orders