Dominion Mining Limited, in the matter of Dominion Mining Limited
[2011] FCA 317
•4 February 2011
FEDERAL COURT OF AUSTRALIA
Dominion Mining Limited, in the matter of Dominion Mining Limited [2011] FCA 317
Citation: Dominion Mining Limited, in the matter of Dominion Mining Limited [2011] FCA 317 Parties: DOMINION MINING LIMITED File number: NSD 1651 of 2010 Judges: EMMETT J Date of judgment: 4 February 2011 Legislation: Corporations Act 2001 (Cth) s 411 Date of hearing: 16 December 2010 and 4 February 2011 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 10 Counsel for the Plaintiff: T. F. Bathurst QC, K. H. Barrett Solicitor for the Plaintiff: Johnson Winter & Slattery
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD1651 of 2010
IN THE MATTER OF DOMINION MINING
DOMINION MINING LIMITED
JUDGE:
EMMETT J
DATE OF ORDER:
4 FEBRUARY 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (the Act), the scheme of arrangement between Dominion Mining Limited (ACN 000 660 864) (Dominion) and the holders of full paid ordinary shares of Dominion be approved.
2.Pursuant to s 411(12) of the Act, Dominion be exempted from compliance with s 411(11) of the Act in respect of the scheme of arrangement referred to in Order 1 above.
3.Pursuant to s 411(4)(b) of the Act, the scheme of arrangement between Dominion and the holders of options to acquire fully paid ordinary shares of Dominion be approved.
4.Pursuant to s 411(12) of the Act, Dominion be exempted from compliance with s 411(11) of the Act in respect of the scheme of arrangement referred to in Order 3 above.
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
NSD1651 of 2010
IN THE MATTER OF DOMINION MINING
DOMINION MINING LIMITED
JUDGE:
EMMETT J
DATE:
4 FEBRUARY 2011
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 16 December 2010, the Court made orders under s 411 of the Corporations Act2001 (Cth) requiring the plaintiff, Dominion Mining Limited (Dominion), to convene a meeting of its members and a meeting of its holders of options for the purpose of considering and, if thought fit, approving schemes of arrangement. The meetings were held on 2 February 2011 and the prospective schemes were approved by majorities as contemplated by s 411(4) of the Corporations Act. Dominion has now applied to the Court for approval of the schemes pursuant to s 411(4)(b) of the Corporations Act. The effect of the implementation of the schemes is that shareholders and option holders in Dominion will hold approximately 24 per cent of the issued share capital of Kingsgate Consolidated Limited (Kingsgate), and that Dominion will be a wholly owned subsidiary of Kingsgate.
In my reasons of 16 December 2010 for convening the meetings, I said something about the circumstances surrounding the propounding of the schemes, and about the background of both Kingsgate and Dominion. The Scheme Implementation Agreement, to which I referred in my earlier reasons, sets out a number of conditions precedent that must be satisfied or waived before the schemes will take effect. I am satisfied, from the evidence, that all of those conditions precedent, save for the approval of the Court pursuant to s 411(4)(b), have been satisfied.
In deciding whether to approve a scheme under s 411, the Court must be satisfied that the meeting of members (or creditors, as the case may be) has approved a resolution with the requisite majority, that procedural matters relating to the convening and conduct of the meetings have been complied with, that the requirements of the Corporations Act have been satisfied, and that the scheme is fair and reasonable. In my earlier reasons I indicated my views concerning the last question.
At the meeting held on 2 February 2011, 978 shareholders of Dominion who were present, in person or by proxy, voted in favour of the resolution to agree to the scheme. 63 shareholders voted against it. The shareholders who voted in favour represented 93.95 per cent of all shareholders present and voting. They held an aggregate holding of 67,113,343 shares, which shares represented 97.99 per cent of the votes cast on the resolution. The shareholders who voted against the resolution held 1,377,360 shares, representing 2.01 per cent of the votes cast. The shares of the shareholders who voted against the resolution represent a very small proportion of the total share capital, which exceeds 100 million shares.
In relation to the resolution concerning option holders, 28 option holders were present in person or by proxy at the meeting held on 2 February 2011, and all voted in favour of the resolution to agree to the scheme.
The affidavit evidence to which I have been taken satisfies me that the orders made on 16 December 2010 were complied with subject to three irregularities, which I shall mention briefly. Order 6 made on 16 December 2010 required that on or before 5pm on 22 December 2010 there be dispatched, by prepaid post, to each Dominion shareholder appearing in Dominion’s register at 5pm on 16 December 2010, share scheme documentation including the Scheme Booklet and relevant proxy forms. The share scheme documentation, including Booklet and proxy forms, was lodged with Australia Post for dispatch to shareholders shortly before 5.50pm on 20 December 2010. The list of Dominion shareholders to whom the documentation was dispatched on 20 December 2010 recorded members as at 4 pm on 14 December 2010, rather than as at 5pm on 16 December 2010. Between 4pm on 14 December and 5pm on 16 December, 25 new shareholders were registered. On 23 December 2010, the share scheme documentation was sent to each of those 25 new shareholders. There was no change to the option holders during that period.
On 24 December 2010, it was discovered that there was an error in the proxy forms sent to Dominion shareholders, in that they did not include the VAC number specific to each shareholder that would allow the shareholder to vote at the Share Scheme Meeting over the internet. Revised proxy forms including individual VAC numbers and a covering letter explaining the error were sent to Dominion shareholders on 24 and 29 December 2010.
On 10 January 2011, it was discovered that there had been a printing error in approximately 0.2 per cent of the 7,000 Scheme Booklets printed, which resulted in certain pages of the Scheme Implementation Agreement being omitted, and other pages of the Agreement being duplicated. The omitted pages were pages in which part of the Scheme Implementation Agreement was recorded. The effect of the Scheme Implementation Agreement was set out elsewhere in the booklet. The Australian Securities and Investments Commission was informed of the printing error, and Dominion made an announcement to the Australian Securities Exchange explaining the error and informing shareholders and option holders that a new copy of the Scheme Booklet would be provided to those who requested it. The announcement also said that a copy of the Scheme Booklet could be obtained from the Dominion website, indicated that part of the Booklet where the Scheme Implementation Agreement was summarised.
I do not consider that any of the above irregularities should stand in the way of the Court’s approval of the schemes. Section 411(17) of the Corporations Act prohibits the Court from approving an arrangement unless either the Court is satisfied that the arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6, which deals with takeovers, or the Australian Securities and Investments Commission indicates in writing that it does not object to the arrangement. The Commission has indicated in writing that it does not object to the arrangement. That is not decisive; however, having regard to the small proportion of shareholders who voted against the scheme I do not consider it a matter for concern that the effective takeover is to be effected by a scheme rather than by Chapter 6. Moreover, as I indicated in my earlier reasons, I consider that the terms of the scheme are such that the Court should be satisfied that they are fair and reasonable. The scheme has received the unanimous support of the directors and, based on the closing price for Kingsgate shares on 19 October 2010 (being the last trading day before the schemes were announced), the share scheme consideration implies a value representing a significant premium over earlier trading prices.
As I indicated in my earlier reasons, KPMG Corporate Finance Aust Limited, an independent expert retained by Dominion to consider the schemes, expressed the opinion that the share scheme consideration is fair and reasonable and that the share scheme is in the best interests of shareholders. KPMG expressed a similar opinion in relation to the option holders scheme. The proposed application today has been advertised in accordance with the rules and the Court’s direction. No shareholder or option holder has indicated any desire to oppose the making of the orders. When the matter was called in Court, there was no appearance for any party other than senior counsel’s appearance for Dominion. In all of the circumstances, I consider it appropriate for the Court to make orders approving both schemes.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 4 April 2011
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