Pancontinental Mining Ltd v Goldfields Ltd

[1995] FCA 197

CATCHWORDS

CORPORATIONS LAW  - takeover - Part A Statement - no matters of principle discussed.

PANCONTINENTAL MINING LIMITED (ACN 009 712 092) v
GOLDFIELDS LIMITED (ACN 008 560 978)

No NG 3114 of 1995

Tamberlin J
Sydney
5 April 1995

IN THE FEDERAL COURT OF AUSTRALIA )                 
NEW SOUTH WALES DISTRICT REGISTRY )    No.  NG 3114 of 1995             
GENERAL DIVISION                 )

BETWEEN:               PANCONTINENTAL MINING
  LIMITED
  (ACN 009 712 092)
  Applicant

AND:                   GOLDFIELDS LIMITED
  (ACN 008 560 978)
  Respondent

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       5 APRIL 1995

MINUTE OF ORDERS

THE COURT MAKES THE FOLLOWING DECLARATIONS AND ORDERS:

1. The Part A Statement contravenes clauses 17 and 18 of s 750 of the Corporations Law.

1. The respondent is restrained from despatching copies of the Part A Statement of 27 February 1995 served on the applicant by the respondent on 1 March 1995 ("the Part A Statement") to shareholders in the applicant unless copies of that Part A Statement are accompanied by a Supplementary Information Memorandum substantially in the form of the document which is Annexure A to the short minutes of order supplied by the respondent  ("Supplementary Information Memorandum") and unless such Memorandum is expanded to include an earnings and dividend forecast for the year ended 30 June 1995.

2. On the Cross-Claim, the Court declares that the Part A Statement has effect and at all times shall have had the effect as if it did not contravene s 750 of the Corporations Law provided that:

(a)a copy of the Supplementary Information Memorandum as expanded is served on the applicant on or before 4pm on 11 April 1995;

(b)a copy of the Supplementary Information Memorandum as expanded is despatched to shareholders in the applicant at the same time that a copy of the Part A Statement is despatched to those shareholders.

1. The respondent pay two-thirds of the applicant's costs of the application.

1. There is no order as to the costs of the Cross-Claim.

1. Exhibits are to be returned.

1. Liberty to apply is reserved on the question of the notice of motion referred to this morning.

NOTE:     Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 3114 of 1995              GENERAL DIVISION                 )

BETWEEN:          PANCONTINENTAL MINING
  LIMITED
  (ACN 009 712 092)
  Applicant

AND:              GOLDFIELDS LIMITED
  (ACN 008 560 978)
  Respondent

CORAM:       TAMBERLIN J
PLACE:       SYDNEY
DATED:       5 APRIL 1995

REASONS FOR JUDGMENT

In this matter I indicated in my reasons for judgment delivered last Friday that further information was required to be furnished by Goldfields Limited ("Goldfields") to make good the material omissions in the Part A Statement.  As a result, Goldfields has prepared a supplementary information booklet designed to meet these shortcomings.  It is a 24 page document to which is attached a report from Coopers & Lybrand (Securities) Limited entitled "Directors' Forecasts for Goldfields" and there is also a draft covering letter to the shareholders of Pancontinental Mining Limited ("Pancontinental") introducing the supplementary booklet and urging them to read it carefully.
I have examined the booklet and, with one exception, I consider that it sufficiently meets the omissions in the Part A Statement so as to warrant the exercise of the Court's power to validate the Statement provided the Statement is sent to shareholders of Pancontinental together with the supplementary information.  The exception is that, as indicated last Friday afternoon, I consider there should also be an earnings and dividend forecast for the financial year ended 30 June 1995.

Pancontinental have made submissions on the supplementary information booklet and these relate to:

(i)the justification of the $3.30 value,

(ii)the earnings forecast and

(iii) the status of the prospectus. 

The last matter has now been resolved by agreement between the parties.

In relation to the $3.30 value I am satisfied that Goldfields has sufficiently set out the approaches by reference to which the figure of $3.30 was selected.  The price of $3.30 is expressed to be a reasonable indicative minimum value of a Goldfields share. 

The directors expressly say they do not warrant it to be $3.30 or in excess of that figure at any time. Four exercises are then set out and explained in the supplementary information booklet.  Reference is made to Highlands Gold Limited and to Placer Pacific Limited both of which have an interest in the Porgera Mine equivalent to that of Goldfields.  The exercises do not purport to be conclusive but rather to provide points of reference from which the figure is tested.

The consequences of a $3.30 assumed value are used as a check figure in the ounce multiple calculations, for example, by way of comparison with other companies including Highlands Gold Limited and Placer Pacific Limited.  From all the material in evidence before me including the confidential papers it is quite apparent that it is only possible to select a figure within a very broad spectrum.  Goldfields have set out in this material the factors by reference to which they justify the price in the supplementary material.

There is no perfect formula for calculating a precise figure.  It is rather a question of judgment and estimation.  However, I accept the justification as sufficient for the purposes of the Part A Statement.  This is not to say that the figure is established or beyond criticism but, in my view, sufficient additional material has been provided to enable the question to be properly ventilated and put in issue in the Part B Statement, with any deficiencies pointed out, so that shareholders are in a position to make a more informed decision.

In the context of this takeover bid there is the reasonable expectation that every legitimate criticism will be raised by Pancontinental so as to enable its shareholders to be sufficiently apprised of the matters which could affect their decision including any reservations or deficiencies perceived in relation to the way the price is calculated. Pancontinental may specify and seek to justify a different price. 

Similarly, in relation to the earnings forecast I consider that the criticisms raised are essentially of a commercial and accounting nature which are appropriate for examination in the Part B Statement going as they do to matters concerned with the treatment of goodwill and depreciation.  As mentioned earlier there is force in the criticism that there should be included an earnings and dividend forecast for the year ended 30 June 1995.  This can be incorporated in the supplementary information without the necessity for the amendment to be brought back before the Court.

One further matter was the matter of the explosion which took place at the Porgera Mine and I am satisfied that the additional material outlined this morning meets any omission in this respect. 

I make the following orders.

1. I declare that the Part A statement contravenes clauses 17 and 18 of section 750 of the Corporations Law.

2. I order that the respondent be restrained from despatching copies of the Part A Statement of 27 February 1995 served on the applicant by the respondent on 1 March 1995, ("the Part A Statement") to shareholders in the applicant unless copies of that Part A Statement are accompanied by a Supplementary Information Memorandum substantially in the form of the document which is annexure A to the short minutes of order supplied by the respondent ("Supplementary Information Memorandum") provided that such Memorandum is expanded to include an earnings and dividend forecast for the year ended 30 June 1995.

1. On the Cross-Claim the Court declares that the Part A Statement has effect and at all times shall have had the effect as if it did not contravene section 750 of the Corporations Law provided that:

(a)a copy of the Supplementary Information Memorandum is served on the applicant on or before 4pm on 11 April 1995;

(b)a copy of the Supplementary Information Memorandum is despatched to shareholders in the applicant at the same time that a copy of the Part A Statement is despatched to those shareholders. 

1. The Court orders that the respondent pay two thirds of the applicant's costs of the application. 

1. There is no order as to the costs of the Cross-Claim. 

1. Exhibits can be returned.

1. Liberty to apply is reserved on the question of the notice of motion which was referred to this morning.

I certify that this and
the preceding five (5)
pages are a true copy of the
Reasons for Judgment herein of
his Honour Justice Tamberlin.

Associate:

Date:  5 April 1995                

Counsel for Applicant:      Mr R M Smith  

Solicitors for Applicant:    Clayton Utz

Counsel for Respondent:     Mr F M Douglas QC  

Solicitors for Respondent:   Allen Allen & Hemsley

Dates of Hearing:           4,5 April 1995  

Date Judgment Delivered:         5 April 1995