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CRESO PHARMA LIMITED

CRESO PHARMA LIMITED

Case [2019] WASC 472 23 December 2019

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   CRESO PHARMA LIMITED [2019] WASC 472
CORAM:   HILL J
HEARD:   17 SEPTEMBER 2019
DELIVERED          :   2 OCTOBER 2019
PUBLISHED           :   23 DECEMBER 2019
FILE NO/S:   COR 175 of 2019
EX PARTE

CRESO PHARMA LIMITED
Plaintiff

Catchwords:

Corporations law - Scheme of arrangement - Application for orders convening scheme meeting under s 411(1) of the Corporations Act 2001 (Cth) - Share scheme considered not fair but reasonable by independent expert - Related option scheme considered fair and reasonable - Naked no vote break fee - Whether directors should make voting recommendation to members - Where bridging finance provided by bidder - Whether requirements to order scheme meeting are satisfied - Orders made convening meeting

Legislation:

Corporations Act 2001 (WA), s 411
Supreme Court (Corporations) (WA) Rules 2004 (WA)

Result:

Orders made convening meeting

Category: B

Representation:

Counsel:

Plaintiff	:	Mr A J Papamatheos
Interested party	:	Mr M J Feutrill SC

Solicitors:

Plaintiff	:	Steinepreis Paganin
Interested party	:	Minter Ellison

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

Re Amcom Telecommunications Ltd [2015] FCA 341
Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
Re Atlantic Gold NL [2014] FCA 697
Re Beadell Resources Ltd; Ex parte Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600
Re Bolnisi Gold NL [No 2] [2007] FCA 2078; (2007) 165 FCR 45
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re Doray Minerals [2019] WASC 57
Re Dreamscape Networks Ltd; Ex parte Dreamscape Networks Ltd [2019] WASC 412
Re DUET Management Company 1 Ltd [2013] NSWSC 817; (2013) 95 ACSR 34
Re Investa Properties Ltd [2007] FCA 1104
Re Kangaroo Resources Ltd; Ex Parte Kangaroo Resources Ltd [No 2] [2018] WASC 388
Re Marengo Mining Ltd [2012] FCA 1220
Re Nzuri Copper Ltd; Ex parte Nzuri Copper Ltd [2019] WASC 189
Re Opes Prime Stockbroking Ltd [2009] FCA 813
Re Scarborough Equities Ltd [No 2] [2009] FCA 484
Re SRG Limited [2018] FCA 1092
Re Wellcom Group Ltd [2019] FCA 1655
Re Wesfarmers Ltd; Ex Parte Wesfarmers Ltd [2018] WASC 308

HILL J:

Overview

By an originating process dated 30 August 2019 the plaintiff, Creso Pharma Limited (Creso Pharma), sought orders pursuant to s 411 of the Corporations Act 2001 (Cth) (Act) convening a meeting of its members to consider two proposed schemes of arrangement (Schemes). Pursuant to the Schemes, being a share scheme and an option scheme, it was proposed that Creso Pharma become a wholly owned subsidiary of PharmaCielo Limited (PharmaCielo).[1]
[1] Affidavit of Katina Maria Bacopanos filed 30 August 2019, par 6.
The matter came before me for the first court hearing on 2 October 2019. At the conclusion of this hearing, I made orders pursuant to s 411(1) of the Act to convene a meeting of Creso Pharma's members to consider and vote on the proposed Schemes. I also made ancillary orders as to the convening and conduct of…

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

AGLC: CRESO PHARMA LIMITED [2019] WASC 472
Case: [2019] WASC 472
Decision Date: 23 DECEMBER 2019

CaseChat Overview and Summary

In this case, the applicant, Creso Pharma Limited, sought orders to convene a scheme meeting pursuant to section 411(1) of the Corporations Act 2001. The application was opposed by certain dissenting shareholders who objected to the fairness of the proposed scheme. The central issue was whether the requisite conditions under section 411(1) of the Corporations Act were met, particularly considering the independent expert's assessment that while the share scheme was not fair but reasonable, the related option scheme was fair and reasonable. Additionally, the matter of whether the directors should recommend a vote to members and the provision of bridging finance by the bidder were scrutinized.

The court considered whether the requirements of section 411(1) were satisfied, focusing on the independent expert's assessment and the overall fairness of the scheme to shareholders. It was noted that the independent expert had opined that the share scheme was not fair but reasonable, while the related option scheme was deemed fair and reasonable. The court also examined the implications of the proposed naked no vote break fee and the provision of bridging finance by the bidder. Ultimately, the court concluded that the statutory requirements for convening a scheme meeting were met, given the independent expert's findings and the overall fairness to shareholders.

In light of the analysis, the court determined that the applicant had satisfied the necessary criteria to convene the scheme meeting. The court made orders convening the scheme meeting, allowing the process to proceed under the terms proposed by the applicant. The dissenting shareholders' objections were not sufficient to prevent the meeting from being convened. The final orders granted the applicant's request to convene the meeting, enabling the proposed scheme to move forward as intended.

Orders