In the matter of Westfield Holdings Limited and ors; In the matter of RE1 Limited (ABN 80 145 743 862) and RE2 Limited as responsible entities for Westfield Retail Trust 1 and Westfield Retail Trust 2 (No 2)
[2014] NSWSC 601
•09 May 2014
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Westfield Holdings Limited & ors; In the matter of RE1 Limited (ABN 80 145 743 862) and RE2 Limited as responsible entities for Westfield Retail Trust 1 and Westfield Retail Trust 2 (No 2) [2014] NSWSC 601 Hearing dates: 9 May 2014 Decision date: 09 May 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Supplementary explanatory statement approved. Supplementary advice given.
Catchwords: CORPORATIONS - reconstructions and schemes - proposal revised after order for meeting made.
CORPORATIONS - managed investments - responsible entity - trust scheme of arrangement - application for judicial advice - where proposal revised after original orders for convening meeting and approving explanatory statement.Legislation Cited: (CTH) Corporations Act 2001, s 601GC
(NSW) Trustee Act 1925, s 23, s 92Cases Cited: In the matter of Westfield Holdings Limited & ors; In the matter of RE1 Limited and RE2 Limited [2014] NSWSC 158 Category: Interlocutory applications Parties: 20142014/94612
Westfield Holdings Limited (first plaintiff)
Westfield Management Limited as responsible entity of the Westfield Trust (second plaintiff) Westfield America Management Limited as responsible entity of the Westfield America Trust (third plaintiff)
2014/110824
RE1 Limited as responsible entity for Westfield Retail Trust 1 (first plaintiff)
RE2 Limited as responsible entity for Westfield Retail Trust 2 (second plaintiff)
Westfield Holdings LtdRepresentation: Counsel:
I Jackman SC (plaintiffs in 14/94612)
N Hutley SC (plaintiffs in 14/110824)
Solicitors:
King & Wood Mallesons (plaintiffs in 14/94612)
Ashurst (plaintiffs in 14/110824)
File Number(s): 2014/94612 2014/110824
Judgment (ex tempore)
HIS HONOUR: On 11 April 2014 I made orders in each of these matters to the effect of requiring or authorising the convening of scheme meetings and the distribution of securityholder booklets in connection with the proposed restructure of the Westfield Group and the Westfield Retail Trusts. In doing so, I took into account two independent experts' reports, one in each matter, which each expressed the conclusion that, in the absence of a superior proposal, the proposed transactions were in the interests of the securityholders in the relevant group.
Since then, securityholders in the Westfield Retail Trust have approached the Westfield Group and raised a number of issues concerning the proposed transaction. As a result, a revised proposal has been propounded by Westfield Holdings Limited and subsequently accepted by the responsible entities of the retail trusts. In essence, that proposal, while described (in the language which appears to commend itself to management) as reflecting a reduced contribution of debt to the Scentre Group, really represents a transfer of value of about $300 million from the proposed international Westfield Group to the proposed Australian and New Zealand group, to be called Scentre.
Such an outcome is plainly in the interests of the securityholders in the Westfield Retail Trust group, and there is no difficulty at all in reaching the conclusion that, if the earlier proposal was to be submitted to a meeting, then it is appropriate that a revised proposal more in their interests be so submitted.
On the other side of the transactions, the proposal is to the relative disadvantage of the securityholders in Westfield Group. However, in terms of the value of that group as a whole, it is - though apparently large in raw terms - marginal in relative terms. Moreover, Grant Samuel the independent expert retained to provide an opinion in connection with the proposed restructure of the Westfield Group has opined that, while the adjustment to the proposal is unfavourable for Westfield Group securityholders, the adjusted proposal is in the best interests of Westfield Group securityholders in the absence of a superior proposal.
Ultimately, whether the proposal is sufficiently attractive to the securityholders in the absence of a superior proposal is a matter properly left to them to determine in the meeting to be conducted. The court's role is not to facilitate a negotiation of the best possible proposal for each affected party, but a much more restrained one of simply being satisfied that the proposal is not one that it would be improper to submit or which, if submitted, would be doomed to failure. In light of the opinion of Grant Samuel, the matter is plainly one which ought to be submitted.
As before, a rigorous process of verification of the statements and representations made in the proposed supplementary securityholder booklets has been carried out. The explanatory statements have been the subject of scrutiny by ASIC which does not wish to offer any comments, and at least in principle ASIC has indicated that it proposes to grant the regulatory relief that has been sought.
So far as concerns the securityholders booklet to be distributed to the securityholders in the Westfield Group, it seems to me desirable that the circumstance that the revised proposal is less advantageous for them than the previous proposal ought not be obscured, and it is appropriate that the caveat included in Grant Samuel's opinion be included where that opinion is referred to in the chairman's letter. Counsel has indicated that such an amendment would be acceptable.
In proceedings 2014/94612, (Application of Westfield Holdings Limited and others in the matter of Westfield Holdings Limited), the court orders that:
(1) Upon the undertaking of Mr Alexander Morris solicitor to pay the appropriate filing fees, the plaintiffs have leave to file a notice of motion seeking the relief set out in the draft order initialled by me, dated this day, and placed with the papers, and located at tab three of the judge's bundle.
(2) The notice of motion be filed in the registry today and be returnable instanter.
(3) The supplementary securityholder booklet substantially in the form contained at Tab 3 of Exhibit SJT-2 to the affidavit of Simon Julian Tuxen sworn 8 May 2014 ("Supplementary Securityholder Booklet"), being exhibit PX 12, is approved for distribution to shareholders of the first plaintiff subject to the insertion in the fifth paragraph of the second column of the chairman's letter at page 4, after the words "has confirmed that" of the matter ",while the adjustment is unfavourable for Westfield Group shareholders,".
(4) Pursuant to the (NSW) Trustee Act 1925 s 23, the second plaintiff is justified in distributing to the members of the Westfield Trust an explanatory statement substantially in the form of the supplementary securityholder booklet, and the third plaintiff is justified in distributing to the members of the Westfield America Trust an explanatory statement substantially in the form of the supplementary booklet in both cases subject to the amendment referred to in order 3.
(5) The proceedings be adjourned to Friday 13 June 2014 at 10am.
(6) There be liberty to apply by arrangement with my associate.
(7) These orders are to be entered forthwith.
In proceedings 2014/110824 (Application of RE1 Limited and another), the court orders that:
(1) Upon the undertaking of Mr Wen-Ts'ai Lim, solicitor, to pay the appropriate filing fees, the plaintiffs have leave to file a notice of motion claiming the relief referred to in paragraphs one and two of the document entitled Draft Amended Summons, initialled by me, dated this day, and placed with the papers.
(2) The notice of motion be filed in the registry today and be returnable instanter.
(3) RE1 and RE2 are still justified in convening a meeting of securityholders for the purpose of considering, and if thought fit voting, on the proposal resolutions being resolutions two, three, four and five set out in the notice of meetings in annexure A of the securityholder booklet, including any modifications arising out of the revised proposal.
(4) RE1 and RE2 will are justified in distributing the securityholder booklet substantially in the form of the document at tab three of the statement of facts being exhibit SX13 herein to securityholders.
(5) Subject to securityholders approving the proposal resolutions, including with any modifications arising out of the revised proposal, RE1 and RE2 are justified in proceeding on the basis that amending the WRT1 and WRT2 constitutions in the manner contemplated by the WRT1 supplementary deed and the WRT2 supplementary deed would be within the powers of alteration conferred by those constitutions and s 601GC of the (CTH) Corporations Act 2001.
(6) The costs of each of the plaintiffs be paid out of the assets of Westfield Retail Trust No 1 and Westfield Retail Trust No 2 respectively on the trustee basis pursuant to the Trustee Act s 93.
(7) These orders are to be entered forthwith.
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Decision last updated: 08 August 2014
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