Mulgrave Central Mill Company Ltd, Re

[2007] QSC 315

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

JONES J

Application No 395 of 2007

RE MULGRAVE CENTRAL MILL COMPANY LIMITED Applicant

CAIRNS

..DATE 13/09/2007

JUDGMENT

HIS HONOUR: This summary application made pursuant to section 411(1) of the Corporations Act 2001 by the Mulgrave Central Mill Company Limited is for orders that meetings be convened of the members of each class of the membership of the company to consider, and if thought fit, to approve the scheme of arrangement the details of which are contained in the scheme booklet exhibited to the recent affidavit of James Hesp filed by leave on the 13th of September 2007.

In broad terms, what is proposed is the transfer of assets of Mulgrave Central Mill and certain assets presently owned by Bundaberg Sugar Limited to the company TQ Sugar Limited, a related company of Bundaberg Sugar.

The assets of Bundaberg Sugar concerned are the sugar milling enterprises carried on at South Johnstone, Babinda and on the Atherton Tableland.  The assets of these enterprises are to be acquired by a corporation which is a wholly owned subsidiary of Bundaberg Sugar and then transferred to TQ Sugar Limited in exchange for 60 per cent of the shareholding of that latter company.

The assets of Mulgrave Central Mill would be transferred to TQ Sugar in an exchange for 40 per cent of its shares being distributed to the existing shareholders of Mulgrave Central Mill.  At a time considered by its directors to be appropriate TQ Sugar Limited will seek public listing of the shares on the Australian Stock Exchange.

The implementation of the scheme requires a series of restructuring of the Mulgrave Central Mill shareholding to permit the exchange of Mulgrave Central Mill shares for TQ Sugar Limited shares and the distribution of a cash component to be paid to the Mulgrave Central Mill shareholders.

The proposed meeting of shareholders is to deal successively with the restructuring proposalsand with the general approval of the scheme.  The steps to be taken have been fully explained in the scheme booklet and do not need to be reiterated here.

The scheme booklet is the explanatory note contemplated by section 411 of the Corporations Act and requires the Court's approval. That approval depends upon the statements' compliance with regulation 5.1.0 and the Schedule 8 Part 3 of the legislation particularly clauses 8301, 8302, 8303 and 8307, 83010.

I have perused the sceme booklet and despite noting it being unnecessarily repetitive in some respects, I am satisfied that each of the regulatory requirements have been complied with in the terms of the booklet.  I am indebted to counsel for specifying each of the requirements in the written submissions and I note the compliance of each of the clauses to which I have made reference.

In particular I am satisfied that the directors of the applicant company have each recommended the adoption of the proposed scheme and that the reports of the independent expert supports that recommendation.

I am further satisfied that the proposed arrangements for the holding of the meetings for each class of the members are appropriate and will allow the wishes of the membership of each class to be ascertained.

Two specific issues are raised in respect of the Court's approval. 

The first relates to the feature that certain shares have been vested in the chairman by reason of the holders no longer being suppliers to the mill within the meanings of the constitution of the Mulgrave Central Mill.  It is proposed that the chairman will move to cancel the shares held on trust by him.  Such cancellation will be notified at the commencement of the series of meetings to be convened.  That the actual effect of the cancellation is delayed by reason of section 56 of the legislation, such that, in the ordinary course, the shares will not be cancelled at the time of the proposed meetings.  But there seems no reason to suppose that there will be any impediment to the cancellation taking effect at the end of the 14 day period.  I do not see that as an impediment to the other meetings going ahead as proposed.  Were it otherwise the matter could be reviewed at the final approval application before this Court.

The second issue relates to a proposal made by Maryborough Sugar Factory Limited which was brought to the attention of the shareholders prior to April of 2007.  That proposal in the form then presented was considered by the directors and considered at a meeting of the then shareholders.  Those proposals were considered despite the exclusivity agreement contained within the merger agreement between Bundaberg Sugar and Mulgrave Central Mill.

What has emerged from the meeting is that the directors were directed not to pursue the proposal with Maryborough Sugar Factory Limited but to leave it open to Maryborough Sugar Factory Limited to bring forward any further proposal which it wished to raise. 

It appears that no further proposal has to this point been raised in a way that would make it necessary for the directors to consider.  But as is indicated in the letter of the Mulgrave Central Mill to its shareholders dated the 9th of May 2007 that the option is still open to Maryborough Sugar Factory Limited to pursue a proposal if that company is so advised.

In all the circumstances I am satisfied that the regulatory requirements for convening the meeting and for the shareholders to consider the scheme have been met.

I am satisfied, as I have mentioned, that the arrangements for the shareholders' consideration of the scheme are appropriate.  I will therefore make orders in terms of the draft initialled by me and placed with the papers.

...

HIS HONOUR:  So I will just make that alteration in paragraph 13 to read the 18th of October 2007.

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