Golden Circle Limited, Re - [2008] QSC 298

[2008] QSC 298

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

JUSTICE MCMURDO

No 9981 of 2008

IN THE MATTER OF GOLDEN CIRCLE LIMITED (ACN 054 355 618)

Applicant

BRISBANE

..DATE 24/10/2008

ORDER

HIS HONOUR: This is the first Court hearing of an application

by Golden Circle Ltd for approval of a scheme of arrangement

under section 411 of the Corporations Act.

The applicant is a public company listed on the National Stock

Exchange. The proposed scheme is for the acquisition of all

of its issued shares involving $126,733,567 fully paid

ordinary shares for a price of $1.65.

The shares are to be acquired by HJ Heinz Company Australia

Pty Ltd. The price is to be paid immediately prior to the

transfer of the shares and it is proposed that that occur

before the end of this calendar year.

The board of the applicant has appointed Ernst & Young

Transaction Services Ltd to assess this proposal. Ernst &

Young has valued the applicant's shares on a capitalisation

of earnings basis. In its opinion the value of the shares is

in a range of $1.15 to $1.33 per share. Further in its

opinion the Heinz offer is fair and reasonable and is in the

best interests of shareholders, absent, of course, a superior

offer.

It is the unanimous view of the board of the applicant, based

upon this advice from Ernst & Young, that the Heinz offer

should be accepted, again of course, subject to a superior

offer.

The company has recently undergone some structural change. It

was for many years a cooperative conducted by fruit growers.

At present about 60 per cent of its shareholders are growers

supplying their product to the company. Under the company's

constitution there is still a requirement that at least two

members of the board be growers. At present the board of

seven includes three persons who are growers. A further

35 per cent of the shares are held by an investor which is

Anchorage Golden Circle Pty Ltd, which I will call Anchorage.

The board of seven includes two persons, including the

chairman, who are non-executive directors and are associated

with Anchorage. As I mentioned another three directors are

growers and the other directors are independent non-executive

directors, one with extensive experience in the food industry

and another a practising lawyer with experience as a company

director. As I have said it is the unanimous view of the

board that shareholders should accept this proposal.

I was assisted with submissions from, Mr McKenna SC and Mr

O'Sullivan appearing for the applicant, in several respects

including the question of whether there is relevantly one

class of shareholders which should consider the proposal or

whether the orders should provide for voting within separate

classes. I accept their submission that there should be but

one class, that is, all of the holders of the shares, but I

should mention the matters to which my attention has been

drawn in that respect.

It was pointed out, as I have already…

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.

Continue reading Golden Circle Limited, Re

Details

AGLC: Re Golden Circle Limited [2008] QSC 298
Case: [2008] QSC 298
Decision Date: 24 October 2008

CaseChat Overview and Summary

The Supreme Court of Queensland presided over a case involving Golden Circle Limited, a company listed on the National Stock Exchange, which applied for approval of a scheme of arrangement under section 411 of the Corporations Act. The proposed scheme involved the acquisition of all issued shares of Golden Circle Limited by HJ Heinz Company Australia Pty Ltd at a price of $1.65 per share. The Court was tasked with determining whether the proposed scheme should proceed to a shareholder meeting for approval.

The key legal issue was whether the scheme should proceed with one class of shareholders or whether there should be separate classes for voting. The applicant argued for a single class of shareholders, while the Court considered arguments for separate classes based on the shareholding structure, including the significant number of grower shareholders, a small number of foreign shareholders, and employee option holders. The Court concluded that the scheme should proceed with one class of shareholders, as there was no basis for requiring separate meetings.

Justice McMurdo was satisfied that the proposed scheme met the requirements of section 411 of the Corporations Act and approved the explanatory statement. The Court also noted that ASIC had reviewed the scheme and would not oppose it at this hearing. The Court ordered the convening of a shareholder meeting on December 1, 2008, for the approval of the explanatory statement and the proposed scheme. The application was adjourned until December 8, 2008, for the second Court hearing.

Orders