Barbeques Galore Ltd (In the matter of Barbeques Galore Ltd)

[2005] FCA 1520

FEDERAL COURT OF AUSTRALIA

Barbeques Galore Ltd (In the matter of Barbeques Galore Ltd) [2005] FCA 1520

BARBEQUES GALORE LTD (IN THE MATTER OF BARBEQUES GALORE LTD)

NSD1561 OF 2005

EMMETT J

17 OCTOBER 2005

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD1561 OF 2005

IN THE MATTER OF BARBEQUES GALORE LTD

BARBEQUES GALORE LTD PLAINTIFF
JUDGE:	EMMETT J
DATE OF ORDER:	17 OCTOBER 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to paragraph 411(4)(b) and 411(6) of the Corporations Act 2001 (Cth):

a)the scheme of arrangement proposed to be made between the Plaintiff and its ordinary shareholders (a copy of which is annexed to these orders and marked ‘A’); and

b)the scheme of arrangement proposed to be made between the Plaintiff and the holders of options to acquire unissued ordinary shares in the Plaintiff (a copy of which is annexed to these orders and marked ‘B’),

(the Schemes) are approved.

2.Pursuant to subsection 411(12) of the Corporations Act 2001 (Cth), the Plaintiff is exempted from compliance with subsection 411(11) of the Corporations Act 2001 (Cth) in relation to the Schemes.

3.        These orders be entered forthwith.

THE COURT NOTES:

1.For the purposes of clause 6.4(b) of the Share Scheme Deed Poll by BBG Australia Pty Limited ACN 113 996 384 dated 16 September 2005 that the following variations have been made:

(a)  in the definition of ‘Implementation Date’ in clause 1.1, replacing the word ‘fifth’ with the word ‘first’;

(b)  adding to the end of the definition of ‘Share Scheme Consideration’ in clause 1.1 the words ‘(less any tax required to be deducted or withheld by BBGA or Galore under any US law)’;

(c)  in the second sentence of clause 3(b)(1), replacing the number ‘5’ with the number ‘1’ and replacing the word ‘Days’ with the word ‘Day’.

2.For the purposes of clause 7.3(b) of the Option Scheme Deed Poll by BBG Australia Pty Limited ACN 113 996 384 dated 16 September 2005 that the following variations have been made:

(a)  in Recital F, replacing the word ‘Optionholders’ with the words ‘Options Scheme Participants’;

(b)  in the definition of ‘Implementation Date’ in clause 1.1, replacing the word ‘fifth’ with the word ‘first’;

(c)  in the definition of ‘Optionholder’ in clause 1.1, deleting the words ‘as at the Record Date’;

(d)  in the definition of ‘Options Consideration’ in clause 1.1, replacing the word ‘Optionholders’ with the words ‘Options Scheme Participants’;

(e)  adding to the end of the definition of ‘Options Consideration’ in clause 1.1 the words ‘(less any tax required to be deducted or withheld by BBGA or Galore under any US law)’;

(f)   inserting the definition ‘Options Scheme Participant means each Optionholder at the Record Date’ in clause 1.1;

(g)  in clause 1.3, replacing the word ‘Optionholder’ with the words ‘Options Scheme Participant’ and replacing the word ‘Optionholders’ with the words ‘Options Scheme Participants’;

(h)  in clause 2(c)(2), replacing the word ‘Optionholders’ with the words ‘Options Scheme Participants’;

(i)   in clause 3(a)(2), replacing the word ‘Optionholders’ with the words ‘Options Scheme Participants’;

(j)   in clause 3(b)(1), replacing the word ‘Optionholders’ with the words ‘Options Scheme Participants’;

(k)  in the second sentence of clause 3(b)(1), replacing the number ‘5’ with the number ‘1’ and replacing the word ‘Days’ with the word ‘Day’.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD1561 OF 2005

IN THE MATTER OF BARBEQUES GALORE LTD

BARBEQUES GALORE LTD PLAINTIFF
JUDGE:	EMMETT J
DATE:	17 OCTOBER 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 16 September 2005, I made orders pursuant to s 411(1) of the Corporations Act 2001 (Cth) that the plaintiff, Barbeques Galore Limited (‘the Company’), convene a meeting of its ordinary shareholders for the purpose of considering a scheme of arrangement proposed to be made between the Company and the shareholders, and that it convene a meeting of the holders of options to subscribe for unissued ordinary shares, for the purpose of considering the scheme of arrangement proposed between the Company and optionholders. I gave directions for the notification of shareholders and optionholders of the meetings and for the dispatch to shareholders and optionholders of information booklets and other material as specified in those orders. The proceedings were stood over to today.

2. The meetings were convened and held. The Company now seeks the Court’s order approving the two schemes.  The Company relies upon the affidavits of Robert Barry Gavshon, sworn 15 October 2005, Sam Rondinelli, affirmed 13 October 2005, David Maurice Glaser, affirmed 16 October 2005, Kevin Rolfs, sworn 12 October 2005, a second affidavit of Robert Gavshon, sworn 15 October 2005, a second affidavit of David Glaser, affirmed 16 October 2005, an affidavit of Phillip Napier, sworn 14 October 2005, affidavit of Marty Lorenzo, sworn 13 October 2005, an affidavit of Paul Evans, sworn 17 October 2005, an affidavit of Eric Narev, affirmed 14 October 2005, a second affidavit of Paul Evans, sworn 17 October 2005 and a third affidavit of David Glaser, affirmed 17 October 2005.

3. By that evidence, I am satisfied that the shareholders and optionholders received copies of the proposed scheme booklet, and that the meetings were duly convened in accordance with my earlier orders.  I am satisfied from that evidence that the meetings approved the respective schemes. At the meeting of shareholders, fourteen shareholders voted, thirteen of whom, representing 92.85 per cent, voted for, and one against, the resolution.  Those thirteen shareholders cast 2,892,462 votes, representing 99.7 per cent;  the one shareholder cast 6500 votes against.  At the meeting of optionholders, all 73 members voted in favour of the resolution.

4. The schemes as approved were amended from those that were before the Court at the earlier hearing.  The change was to the definition of ‘implementation date’, which was brought forward from the day five days after the record date (as defined) to the day after the record date.  It was originally thought that the logistics of implementing the schemes would require those extra days.  I am satisfied that the schemes can be implemented at the earlier time, and that no prejudice will be suffered by any person by reason of the amendment.

5. The deeds poll, to which I referred in my reasons for convening the meetings, imposed obligations on the Company to give effect to the schemes.  Provision was made in each of the deeds poll for variation of the deeds, but only to the extent that the Court agreed to the variations.  There have been variations to the two deeds poll.  In relation to the deed poll relating to the scheme involving shareholders, a change was made to deal with the implementation date, and also to deal with the deduction and withholding of tax in the United States.  In relation to the deed poll relating to the option scheme, changes were made to effect the change in the implementation date and to provide for deduction of withholding of tax in the United States.  In addition, a change was made to clarify that it was only optionholders, as at the record date, as defined, who were to participate in the scheme.  I am satisfied that that last amendment is of a purely drafting nature and affects no substantive rights. 

6. The effect of the amendment to both deeds poll concerning deduction and withholding of tax in the United States was foreshadowed in the documents sent to shareholders and optionholders.  The explanatory booklet sent to shareholders and optionholders contained, amongst other documents, a United State tax adviser’s report.  Shareholders and optionholders, as the case required, were advised to read that report and seek individual investment and other professional advice if necessary. 

7. The advice in the case of the shareholders relevantly said as follows:

   ‘US shareholders may be subject to information reporting and 28% backup withholding on any cash payments received in the Share Scheme unless an exemption from backup withholding applies or the US shareholders furnish correct taxpayer identification numbers and certify that they are not subject to back-up withholding.  Any amounts withheld under the backup withholding rules should be allowed as a refund or credit against a US shareholder’s US federal income tax liability, provided they furnish the required information to the Internal Revenue Service.’

8. In the case of the option scheme, the following statement was included in the US tax adviser’s report:

   ‘If the US optionholder is an employee or former employee of the Company or the former spouse of an employee or former employee, such income will constitute wages and will therefore be subject to the withholding of applicable federal income tax.  These wages will generally be treated as supplemental wages subject to federal income tax withholding at the rate of 25%;  provided, that to the extent the individual's aggregate supplemental wages, including the Cash-Out, exceed $1,000,000 for 2005, the withholding rate applicable to the excess will be 35%.’

9. The amendment to the respective deeds poll is to provide for the deduction from the share scheme consideration of any tax required to be deducted or withheld under any US law.  Having regard to the unequivocal advice given to both shareholders and optionholders, I am satisfied that the amendment is appropriate.  While the Court will not agree to the amendments as such, since that is a matter as between the parties responsible, the Court is satisfied that the amendments should not in any way impede the grant of approval for the schemes. 

10. By a letter of 15 September 2005, the Australian Securities and Investment Commission informed the Company’s solicitors, pursuant to s 411(17)(b) of the Corporations Act, that the Commission has no objection to the schemes of arrangement between the Company and its participating shareholders and optionholders, on the basis that the Commission is satisfied that the schemes have not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act.

11. The letter indicated that the Commission did not propose to appear or make submissions, or intervene to oppose the schemes at the hearing fixed for today.  In addition, the Commission has informed the Company’s solicitors by email dated 11 October 2005 that it does not object to the proposed amendment of the deeds poll and the schemes in relation to the implementation date, so long as the Company raised the proposed amendment with the Court in the context of seeking approval.

12. Under s 411(4) of the Corporations Act, a compromise or arrangement is binding on the members of a body corporate, and on the body if, but only if, at a meeting convened in accordance with an order of the Court a resolution in favour of the compromise or arrangement is:

    ·    passed by a majority in number of the members, and

    ·    passed by 75 per cent of the votes cast on the resolution, and

    and the scheme is approved by order of the Court.  In the case of a compromise between a body corporate and its creditors, the compromise or arrangement must be agreed to by a majority in number of the creditors, being a majority whose debts or claims against the Company amount in the aggregate to at least 75 per cent of the total amount of the debts and claims of the creditors.

13. Under s 411(17), the Court must not approve a compromise or arrangement under s 411 unless:

    (a)it is satisfied that the compromise or arrangement is not being proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6, or

    (b)there is produced to the Court a statement in writing by the Commission stating that the Commission has no objection to the compromise or arrangement.

14. I am satisfied that the requirements of ss 411(4) and 411(17) have been satisfied. Accordingly, I consider that it is appropriate to approve the two schemes of arrangements in the forms which have been tendered and are exhibits before the Court.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:             27 October 2005

Counsel for the Plaintiff:	Mr T.F. Bathurst QC
Solicitor for the Plaintiff:	Freehills
Counsel for the BBG Australia Pty Ltd:	Mr M.B. Oakes QC
Solicitors for BBG Australia Pty Ltd	Baker & McKenzie
Date of Hearing:	17 October 2005
Date of Judgment:	17 October 2005