DCA Group Limited ABN 67 002 808 746, In the matter of DCA Group Limited ABN 67 002 808 746

[2006] FCA 1491

FEDERAL COURT OF AUSTRALIA

DCA Group Limited ABN 67 002 808 746, In the matter of DCA Group Limited ABN 67 002 808 746 [2006] FCA 1491

DCA GROUP LIMITED ABN 67 002 808 746, IN THE MATTER OF DCA GROUP LIMITED ABN 67 002 808 746

NSD2062 OF 2006

EMMETT J
3 NOVEMBER 2006
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD2062 OF 2006

IN THE MATTER OF DCA GROUP LIMITED ABN 67 002 808 746

:	DCA GROUP LIMITED ABN 67 002 808 746 Applicant
JUDGE:	EMMETT J
DATE OF ORDER:	3 NOVEMBER 2006
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (Act):

a)   The plaintiff, DCA Group Limited (DCA), convene a meeting (Scheme Meeting) of the holders of ordinary shares in DCA (DCA Shareholders) for the purpose of considering and, if thought fit, approving a scheme of arrangement (with or without modification) proposed to be made between DCA and the DCA Shareholders (Scheme), the terms of which are contained in the explanatory statement which forms part of the scheme booklet, of which is Exhibit 1A in this proceeding (Scheme Booklet).

b)   The Scheme Meeting be held at 10:00 am (Sydney time) on 8 December 2006 at the Portside Centre, level 5, Veritas House, 207 Kent street, Sydney, New South Wales 2000.

c)   Robert Edgar Purves or, failing him, Ian Alfred Pollard, or failing both, any other non-executive director of DCA, act as chairman of the Scheme Meeting.;

d)   That the chairman have the power to adjourn the Scheme Meeting for such time that the chairman considers appropriate;

e)   At the Scheme Meeting, a person will be entitled to one vote for each DCA share they are registered as holding at 10:00am on 6 December 2006;

f)    The explanatory statement in the Scheme Booklet be approved;

g)   On or before 9 November 2006, there be dispatched by prepaid post addressed to the relevant addresses set out in the DCA register of members; or personally served:

(a)        A document substantially in the form of the Scheme Booklet (which includes the explanatory statement);

(b)        A proxy form for the Scheme Meeting; and

(c)        An envelope addressed to DCA Group Limited; and

h)   The time by which the DCA Shareholders must return their proxy forms for the Scheme Meeting be 10.00am (Sydney time) on 6 December 2006.

2. Rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the Scheme Meeting.

3.          Notice of the hearing of the application for an order approving the proposed scheme to be published once in “The Australian” newspaper by an advertisement substantially in the form of “Annexure A” to these orders, such advertisement to be published on or before 4 December 2006.

4.          The proceedings be stood over to 9:00 am on 11 December 2006.

5.          These orders be entered forthwith.

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	NSD2062 OF 2006

IN THE MATTER OF DCA GROUP LIMITED ABN 67 002 808 746

DCA GROUP LIMITED ABN 67 002 808 746 Applicant
JUDGE:	EMMETT J
DATE:	3 NOVEMBER 2006
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. I have before me an application by DCA Group Ltd (‘the Company’) to convene a meeting of its shareholders for the purpose of considering a scheme under s 411 of the Corporations Act 2001 (Cth). The Company was incorporated in July 1984 as a diversified investment company and is listed on Australian Stock Exchange Limited. Since 1998, the Company has focused on the healthcare sector. In January 1999, the Company established DC Aged Care Group, a wholly owned subsidiary specialising in investment in Australian residential aged care facilities.

2. The Company proposes to convene a meeting of its members to consider a scheme of arrangement whereby all of the issued shares in the Company will be transferred to CAID Pty Ltd (‘the Bidder’).  However, shares in the Company held by entities associated with the Bidder will not be the subject of the scheme. The consideration for the transfer consists of the sum of $3.46, less the amount of a special dividend of up to a maximum of 15 cents, which may be declared by the Company, if approval sought from the Australian Taxation Office is given.  The original announced proposal involved a payment of $3.50 per share.  However, that was inclusive of a fully franked final dividend of 4 cents per share, which has, in fact, now been paid by the Company, on 25 October 2006. 

3. The scheme booklet that is to be sent to members includes a report by Grant Samuel and Associates Pty Ltd (‘Grant Samuel’), which was engaged by the Company to prepare an independent report on the proposal.  Mr Stephen John Wilson, who is a director of Grant Samuel, has confirmed that the opinions expressed in the report and in Grant Samuel’s accompanying letter, were opinions held by him.  Mr Wilson was primarily responsible for the preparation of the report.  I am satisfied from his experience that he is well qualified to express the opinions that are contained in the report.  The covering letter and report express the opinion that the full underlying value of the Company is in the range of $3.14 to $3.59 per share.  Grant Samuel, therefore, considers that the proposal of $3.46 is fair and reasonable.  They also consider that it is in the best interests of the shareholders of the Company, in the absence of any other offer. 

4. Grant Samuel consider that that value includes a premium for control and exceeds the value at which the Company’s shares could be expected to trade in the absence of any takeover offer.  In their report, Grant Samuel consider a number of challenges facing the Company and observe that the question of value turns on whether or not those challenges are likely to ease in the foreseeable future.  The valuation is premised on a reasonably optimistic view of both the challenges and the opportunities for the Company identified by Grant Samuel. 

5. The scheme is being proposed in pursuance of a Scheme Implementation Agreement entered into between the Bidder and the Company.  That agreement imposes obligations on both parties to proceed with the implementation of a scheme, subject to certain conditions, all of which must be satisfied before the Court will be asked to approve the scheme, assuming that it is approved by the requisite majority of members.  The scheme itself is reasonably straightforward and will contain adequate protection for members whose shares are to be transferred pursuant to the scheme in exchange for a payment in cash. 

6. In addition, the Bidder has executed a deed poll in order to afford to members of the Company affected by the scheme an enforceable obligation to ensure that the scheme consideration is paid.  In all of the circumstances, having considered the proposed scheme booklet, I am satisfied that the proposal is one that reasonable members might be prepared to accept. 

7. The proposed scheme booklet has been submitted to Australian Securities and Investments Commission (‘the Commission’), which has had the opportunity of considering the scheme booklet.  I have evidence that the Commission does not currently propose to appear to make submissions or intervene to oppose the proposed scheme. 

8. The scheme booklet makes reference to various plans in force in relation to executive and employee inducements.  I am satisfied that adequate arrangements have been made in relation to those plans and that those arrangements do not bear on the position of the members, so far as their consideration of the proposed scheme is concerned.  

9. I therefore propose to accede to the application by the Company to convene a meeting of its members to approve a scheme in a form that is to be settled in the course of the day.

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:        10 November 2006

Counsel for the Plaintiff:	Mr IM Jackman SC
Solicitor for the Plaintiff	Freehills
Date of Hearing:	3 November 2006
Date of Judgment:	3 November 2006