In the matter of Tassal Group Limited (No 2)

[2022] NSWSC 1619

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Tassal Group Limited (No 2) [2022] NSWSC 1619

Hearing dates:

8 November 2022

Date of orders:

8 November 2022

Decision date:

28 November 2022

Jurisdiction:

Equity - Corporations List

Before:

Black J

Decision:

Orders made approving a scheme of arrangement.

Catchwords:

CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement – Where formal requirements satisfied – Whether scheme of arrangement should be approved – Transfer of assets within internal reconstruction of corporate group.

Legislation Cited:

- Corporations Act 2001 (Cth), s 411

Cases Cited:

- Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229

- Re Atlas Iron Ltd (No 2) [2016] FCA 481

- Re Aventus Holdings Limited and Aventus Capital Limited as responsible entity of the Aventus Retail Property Fund [2022] NSWSC 266

- Re Aveo Group Ltd [2019] NSWSC 1679

- Re Central Pacific Minerals NL [2002] FCA 239

- Re Centro Properties Ltd (2011) 86 ACSR 584; [2011] NSWSC 1465

- Re Coca-Cola Amatil Ltd [2021] NSWSC 489

- Re Equinox Resources Ltd (2004) 41 ACSR 692

- Re GBST Holdings Ltd [2019] NSWSC 1503

- Re NRMA Ltd (No 2) (2000) 156 FLR 412

- Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337

- Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486

- Re Seven Network Ltd (2010) 77 ACSR 701; [2010] FCA 400

- Re Tassal Group Ltd [2022] NSWSC 1414

Category:

Principal judgment

Parties:

Tassal Group Limited (Plaintiff)

Representation:

Counsel:
J Williams SC (Plaintiff)
D Thomas SC (Acquirer)

Solicitors:
Herbert Smith Freehills (Plaintiff)
Allens (Acquirer)

File Number(s):

2022/272638

Judgment

1. The Plaintiff, Tassal Group Limited (“Tassal”), seeks orders under s 411(4) of the Corporations Act 2001 (Cth) (“Act”) approving a proposed scheme of arrangement between Tassal and its members, other than Aquaculture Australia Company Pty Ltd (“Cooke Sub”), which is a wholly-owned subsidiary of Cooke Inc and holds approximately 10.49% of the shares in Tassal.

2. By way of background, on 30 September 2022, I made orders convening a meeting of holders of fully paid ordinary shares in Tassal other than Excluded Shareholders (as defined) to consider the scheme and orders approving an explanatory statement to be distributed to scheme participants. I set out my reasons for making those orders in Re Tassal Group Ltd [2022] NSWSC 1414. The scheme meeting was subsequently held on 3 November 2022 and scheme participants approved the scheme by both a majority in number present and voting by more than 75% of the votes cast. Approximately 96.56% of shares by value and approximately 84.92% of scheme participants by number present and voting at the scheme meeting voted in favour of the scheme. No scheme participant or other person indicated an intention to appear at the second Court hearing to object to the scheme or appeared at that hearing.

3. I made the orders sought by Tassal at the conclusion of the second Court hearing on 8 November 2022, and these are my reasons for doing so. I have drawn on the helpful submissions of Mr Williams, who appears for Tassal in the application, in this judgment.

Affidavit evidence

4. Tassal read the affidavit dated 6 November 2022 of Mr James Fazzino, who is chair and an independent non-executive director of Tassal and acted as chair of the scheme meeting held on 3 November 2022. Mr Fazzino outlined the manner in which shareholders participated in that scheme meeting and referred to a question asked by a Tassal shareholder at that meeting and his answer to that question. He addressed the voting procedures at that meeting and the results of voting which satisfied the requisite statutory majorities. Mr Fazzino also outlined the conduct of a proxy adviser meeting which took place in mid-October 2022. He noted that no shareholder had indicated, at the scheme meeting, that he or she intended to appear at the second Court hearing and oppose approval of the scheme. Mr Fazzino also noted that, at the date of his affidavit, Tassal had not received any superior proposal for the acquisition of its shares to that reflected in the scheme. As I noted above, no shareholder appeared at the second Court hearing to oppose approval of the scheme.

5. By her affidavit dated 4 November 2022, Ms Angela Liapis, who is a relationship manager employed by Computershare Investor Services Pty Ltd (“Computershare”) outlined the process adopted for dispatch of documents relating to the scheme to shareholders, in physical and electronic form; the dispatch of email reminders to shareholders; the receipt of proxy votes for the scheme meeting; and the voting that occurred at the scheme meeting. Ms Liapis confirmed the votes cast in relation to the scheme resolution at the second meeting, which satisfied the statutory majorities, and confirmed that Cooke Sub (being the Excluded Shareholder), had not voted on the scheme resolution at the scheme meeting. Ms Liapis also addressed the voting participation rate at the scheme meeting, which was approximately the same by number of shares and significantly higher by number of holders than for Tassal’s recent annual general meetings .

6. By his affidavit dated 7 November 2022, Mr Antony Damian, who is a partner in the firm of solicitors that acts for Tassal in respect of the scheme, addressed the registration of the final scheme booklet to the Australian Securities and Investments (“ASIC”); the advertisement of the second Court hearing; communications with Tassal shareholders between the first Court hearing and the scheme meeting; and other matters. He also confirmed that he had no reason to believe that Cooke Sub had voted at the scheme meeting. Mr Damian also addressed correspondence which had been received from the Department of Natural Resources and Environment Tasmania in respect of a statement in the scheme booklet concerning the Tasmanian Government’s position as to salmon and prawn farming, and I have had regard to that correspondence.

7. By his affidavit dated 4 November 2022, Mr Danny Hunt, who is the chief operating officer (APAC) at Morrow Sodali Pty Ltd, addresses the conduct of an outbound call campaign for Tassal and the conduct of a webpage established by Tassal in respect of the scheme.

8. Tassal also tendered a conditions precedent certificate (Ex A1) executed by each of Tassal and Cooke Inc and a letter (Ex A2) dated 7 November 2022 from ASIC indicating, in its usual form, that it has no objection to the proposed scheme under s 411(17)(b) of the Act.

Determination

9. Mr Williams submits and I accept that, at the second Court hearing, the Court will consider whether the procedural requirements have been satisfied and will exercise its discretion as to whether or not to approve the scheme: Re Central Pacific Minerals NL [2002] FCA 239 (“Central Pacific Minerals”) at [12]; Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 at [7]; Re Aveo Group Ltd [2019] NSWSC 1679 at [15]. As Mr Williams also points out, the Court is not bound to approve a scheme merely because it has previously made orders for the convening of meetings and the statutory majorities have been achieved, but will have regard to the members’ own assessment of their interests, as manifested in the voting at the meeting: Central Pacific Minerals at [13]; Re Seven Network Ltd (2010) 77 ACSR 701; [2010] FCA 400 (“Re Seven Network”) at [31]; Re NRMA Ltd (No 2) (2000) 156 FLR 412 at [22]; Re Atlas Iron Ltd (No 2) [2016] FCA 481 at [5]. While there is no exhaustive statement of the matters as to which the Court must be satisfied before exercising its discretion to approve a scheme, relevant matters include whether the scheme members have voted in good faith and not for an improper purpose; whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone might approve it; whether the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court's discretion; whether there has been full and fair disclosure of all information material to the decision; whether minority shareholders would be oppressed by the scheme; whether the scheme offends public policy; and whether the interests of other groups who are not parties to, but are affected by, the scheme are dealt with appropriately: Re Seven Network at [35]-[40]; Re Centro Properties Ltd (2011) 86 ACSR 584; [2011] NSWSC 1465 at [32]-[33].

10. Mr Williams point out the scheme booklet was registered with ASIC on 30 September 2022 and the version of the scheme booklet that was lodged with ASIC for registration and dispatched to scheme participants was in the same form as the document approved by the Court on 30 September 2022. Ms Liapis sets out the steps taken in relation to the printing of the scheme booklet and proxy forms and dispatch of those documents in her affidavit, to which I have referred above. Computershare also dispatched two reminder emails to Electronic Recipients (as defined), on 21 October 2022 and on 28 October 2022. Ms Liapis also sets out the steps taken in relation to the receipt of proxy forms, the collation of proxies, the preparation of a proxy report and the registration, voting and poll procedures at the scheme meeting in her affidavit, to which I referred above.

11. As I noted above, Tassal retained Morrow Sodali to provide services in relation to an outbound telephone call campaign to scheme participants regarding the scheme, which was conducted between 4 October 2022 and 30 October 2022 and involved calls being made to approximately 8,043 scheme participants, of which approximately 3,094 scheme participants answered the call. Call operators were instructed to follow the form of script approved at the first Court hearing in their calls to scheme participants and to respond to scheme participants’ questions in accordance with an approved script and to notify their supervisor, Mr Hunt, if they departed from the approved script in a material manner during any of their calls. Mr Hunt’s evidence is that none of the call operators reported a material departure from the approved script during those calls.

12. As I also noted above, the conduct of the scheme meeting is addressed in Mr Fazzino’s affidavit. The scheme resolution was, as also I noted above, approved by the requisite majorities for the purposes of s 411(4)(a)(ii) of the Act. Mr Williams points out that Cooke Sub was the only Excluded Shareholder and, as I noted above, it did not vote its shares on the scheme resolution. The draft orders include an order under s 411(6) of the Act amending the scheme to identify Cooke Sub as the Excluded Shareholder, consistent with the approach taken to identify excluded shareholders by name in Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337 at [6]-[7]; Re Coca-Cola Amatil Ltd [2021] NSWSC 489 at [14]; Re Isentia Group Ltd [2021] NSWSC 1069 at [15]; and Re Aventus Holdings Limited and Aventus Capital Limited as responsible entity of the Aventus Retail Property Fund [2022] NSWSC 266 at [14].

13. In accordance with the Court’s orders made on 30 September 2022, Tassal published a notice of this second Court hearing for approval of the scheme in a national newspaper on 1 November 2022. As I noted above, Tassal has tendered a certificate indicating that all of the relevant conditions precedent to the scheme have been satisfied or waived, other than the condition relating to Court approval of the scheme. As I also noted above, ASIC has confirmed that it has no objection to the scheme under s 411(17)(b) of the Act, and that is sufficient to satisfy the requirements of s 411(17) of the Act. Mr Williams submits and I accept that the procedural requirements in respect of the proposed scheme have been satisfied. He points out that the independent expert has concluded that the scheme is fair and reasonable and in the best interests of Tassal shareholders (other than Excluded Shareholders) in the absence of a superior proposal, and the scheme participants have agreed to the scheme by the requisite majorities. He submits and I accept that it is an appropriate exercise of the Court’s discretion to approve the scheme pursuant to 411(4)(b) of the Act.

14. Mr Williams also submits and I accept that there is no utility in annexing the orders made in this scheme to Tassal’s constitution, where it does not effect any change to that constitution, and I will exempt Tassal from compliance with s 411(11) of the Act on that basis: Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 at [65]; Re Equinox Resources Ltd (2004) 41 ACSR 692; Re GBST Holdings Ltd [2019] NSWSC 1503 at [15].

Conclusion

15. For these reasons, I made the orders sought by Tassal at the conclusion of the second Court hearing on 8 November 2022.

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Decision last updated: 30 November 2022