Re Amcor Ltd

Case [2019] FCA 346

FEDERAL COURT OF AUSTRALIA

Amcor Limited, in the matter of Amcor Limited [2019] FCA 346

File number(s): VID 1427 of 2018
Judge(s): BEACH J
Date of judgment: 12 March 2019
Date of publication of reasons: 13 March 2019
Catchwords: CORPORATIONS – members’ scheme of arrangement – first court hearing – order sought under s 411(1) of the Corporations Act 2001 (Cth) – nature of CHESS depository interests – whether ineligible foreign shareholders a separate class – exercise of discretion – performance risk – termination fee – exclusivity arrangements – employee incentive arrangements – s 3(a)(10) of the Securities Act 1933 (US) – order made for convening of shareholders’ meeting
Legislation:

Corporations Act 2001 (Cth) Pt 5.1, ss 411(1), 411(17), 412

Corporations Regulations 2001 (Cth) reg 5.1.01, Sch 8

Federal Court (Corporations) Rules 2000 (Cth) rr 2.13, 2.15, 3.4

Insolvency Practice Rules (Corporations) 2016 (Cth) r 75-15(2)

Securities Act of 1933 (US) s 3(a)(10)

Cases cited:

First Pacific Advisors LLC v Boart Longyear Ltd (2017) 320 FLR 78

In the matter of Ixla Ltd [2007] VSC 573

In the matter of Toll Holdings Ltd [2015] VSC 123

Re APN News & Media Ltd (2007) 62 ACSR 400

Re CSR Ltd (2003) 45 ACSR 34

Re Foster’s Group Limited [2011] VSC 93

Re Foundation Healthcare Ltd (2002) 42 ACSR 252

Re Hills Motorway Ltd (2002) 43 ACSR 101

Re Skilled Group Ltd (No 1) (2015) 113 ACSR 525
Date of hearing: 12 March 2019
Registry: Victoria
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Category: Catchwords
Number of paragraphs: 120
Counsel for the Plaintiff: Mr N J Young QC and Mr B K Holmes
Solicitor for the Plaintiff: Herbert Smith Freehills
Counsel for the Bemis Company, Inc: Dr R P Austin
Solicitor for the Bemis Company, Inc: Minter Ellison
Table of Correction
18 March 2019 In paragraph 9, “an indirect” has been replaced with “a direct”.

ORDERS

VID 1427 of 2018

IN THE MATTER OF AMCOR LIMITED
BETWEEN:

AMCOR LIMITED ACN 000 017 372

Plaintiff

BEMIS COMPANY, INC

Interested Person

JUDGE:

BEACH J

DATE OF ORDER:

12 MARCH 2019

OTHER MATTERS:

A.The Court notes that the Australian Securities and Investments Commission (ASIC) was provided with at least 14 days’ notice of the hearing of this application.

B.The Court is satisfied that ASIC has had a reasonable opportunity to:

(a)examine the terms of the proposed scheme of arrangement to which the application relates and a draft explanatory statement relating to that arrangement; and

(b)to make submissions to the Court in relation to the proposed scheme of arrangement and the draft explanatory statement.

C.The Court notes the letter from ASIC to the Directors of Amcor Limited dated 11 March 2019 produced at the hearing.

THE COURT ORDERS THAT:

1.Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting (Scheme Meeting) of the holders of ordinary shares in the Plaintiff (Scheme Shareholders):

(a)to consider, and, if thought fit, to approve (with…

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Re Amcor Ltd [2019] FCA 346
Case
[2019] FCA 346
Decision Date

CaseChat Overview and Summary

Amcor Limited, an Australian company, sought court orders to convene a meeting of its shareholders to consider a scheme of arrangement for the merger of Amcor with New Amcor, an entity incorporated in Delaware, USA. The primary legal issue before the Court was whether the court should order the convening of the meeting to consider the scheme of arrangement under section 411(1) of the Corporations Act 2001 (Cth). The court also had to consider whether the scheme was fit for consideration by the shareholders and whether the shareholders were properly informed about the nature of the scheme before the meeting. The Court found that the scheme was fit for consideration and that the shareholders were adequately informed. The Court held that the scheme of arrangement was of such a nature and cast in such terms that if it achieved the requisite statutory majorities at the Scheme Meeting, the Court would be likely to approve it. The Court concluded that the scheme was fit for consideration and that the shareholders were properly informed as to the nature of the scheme before the meeting. The Court ordered the convening of a meeting of Amcor shareholders to consider the scheme of arrangement. The meeting was to be held on 2 May 2019, commencing at 1.30 pm (Melbourne time) at Clarendon Auditorium, Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf, Victoria. The Court also ordered that voting on the resolution to approve the scheme would be conducted by way of a poll and that a proxy form in respect of the scheme meeting would be valid and effective if completed and delivered in accordance with its terms by 1.30 pm (Melbourne time) on 30 April 2019.

Orders

Orders of the court

1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting (Scheme Meeting) of the holders of ordinary shares in the Plaintiff (Scheme Shareholders):

(a) to consider, and, if thought fit, to approve (with or without modification) the scheme of arrangement (Scheme) proposed to be made between the Plaintiff and its shareholders, the terms of which are as set out in Annexure B to these orders; and

(b) to be held at Clarendon Auditorium, Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf, Victoria on Thursday, 2 May 2019 commencing at 1.30 pm (Melbourne time).

2. The Scheme Meeting be convened by sending on or before 26 March 2019:

(a) in the case of Scheme Shareholders who have elected to receive shareholder communications electronically by way of email (Email Shareholders), an email substantially in the form of Annexure JFM3 to the affidavit of Julie Frances McPherson dated 6 March 2019 (McPherson affidavit) and which contains links to:

(i) a document substantially in the form of the scheme booklet a draft of which is annexure RAL10 to the affidavit of Rodd Ashton Levy dated 12 March 2019 (Scheme Booklet), which contains, among other things, the Notice of Scheme Meeting at Annexure E; and

(ii) a personalised electronic proxy form for the Scheme Meeting, substantially in the form of Annexure RAL7 to the affidavit of Rodd Ashton Levy dated 6 March 2019 (Proxy Form); and

(b) in the case of Scheme Shareholders whose registered address in is in Australia (other than the excluded shareholders referred to in (d) below), the following documents by ordinary post addressed to the relevant addresses recorded in the Plaintiff’s register:

(i) a document substantially in the form of the Scheme Booklet, which contains, among other things, the Notice of Scheme Meeting at Annexure E;

(ii) a personalised Proxy Form; and

(iii) a reply paid envelope for the return of the Proxy Form;

(c) in the case of Scheme Shareholders with registered addresses outside Australia (other than the excluded shareholders referred to in (d) below), the following documents by airmail or international courier service addressed to the relevant addresses recorded in the Plaintiff’s register:

(i) a document substantially in the form of the Scheme Booklet, which contains, among other things, the Notice of Scheme Meeting at Annexure E;

(ii) a personalised Proxy Form; and

(iii) a return envelope for the return of the Proxy Form; and

(d) for the purposes of paragraphs (b) and (c) above, the following classes of shareholders are excluded: (i) any Email Shareholders; (ii) any “Lost Shareholders” as described in the McPherson affidavit ([69] to [80]); and (iii) any “Disclosure Restricted Shareholders” as described in the McPherson affidavit ([81] to [87]).

3. Subject to these Orders, the Scheme Meeting be convened, held and conducted in accordance with the provisions of:

(a) Part 2G.2 of the Act (save for any applicable replaceable rule) that apply to a meeting of the Plaintiff’s members; and

(b) the Plaintiff’s constitution that apply in relation to meetings of members and that are not inconsistent with Part 2G.2 of the Act.

4. Voting on the resolution to approve the Scheme is to be conducted by way of a poll.

5. A Proxy Form in respect of the Scheme Meeting will be valid and effective if, and only if, it is completed and delivered in accordance with its terms by 1.30 pm (Melbourne time) on 30 April 2019.

6. Mr Graeme Liebelt, or failing him, Mr Paul Brasher, be Chair of the Scheme Meeting.

7. The Chair of the Scheme Meeting shall have the power to adjourn the meeting to such time, date and place as he considers appropriate.

8. Compliance with rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules), except insofar as it operates to apply rule 75-15(2) of the Insolvency Practice Rules (Corporations) 2016 (Cth) to the Scheme Meeting, is dispensed with.

9. Compliance with rule 3.4 and Form 6 of the Rules is dispensed with.

10. The Plaintiff publish in The Australian newspaper once on or before 25 April 2019 an advertisement substantially in the form of Annexure A to these Orders.

11. The further hearing of the Originating Process is adjourned to a hearing before the Honourable Justice Beach on 7 May 2019 at 9.30 am (Melbourne time) or as soon thereafter as the business of the Court allows.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ANNEXURE A

Notice of Second Court Hearing

_________________________________________________

Notice of hearing to approve compromise or arrangement

TO all the members of Amcor Limited (ACN 000 017 372) (Amcor)

TAKE NOTICE that at 9.30 am on 7 May 2019 the Federal Court of Australia (Victorian Registry) at 305 William Street Melbourne VIC 3000 will hear an application by Amcor seeking the approval of a compromise or arrangement between Amcor and its members if agreed to by a resolution to be considered, and, if thought fit, passed at a meeting of such members to be held on 2 May 2019 at Clarendon Auditorium, Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf, Victoria, commencing at 1.30 pm (Melbourne time).

If you wish to oppose the approval of the compromise or arrangement, you must file and serve on Amcor a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Amcor at its address for service by 5.00 pm on 6 May 2019.

The address for service of Amcor is: c/o Herbert Smith Freehills, Level 43, 101 Collins Street, Melbourne VIC 3000 [Ref: Ruth Overington/Nicholas Guenther].

ANNEXURE B

Scheme

_________________________________________________

[The order entered is available on the Commonwealth Courts Portal, which attaches the Scheme]

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

But I should stress that not to so formally approve should not be seen as casting any doubt on the accuracy or adequacy of the proposed Scheme Booklet which comprises the explanatory statement or that it is not suitable for registration by ASIC.(c) Conclusion on discretion In my view the Scheme is of such a nature and cast in such terms that if it achieves the requisite statutory majorities at the Scheme Meeting, I would be likely to approve it. It is therefore appropriate to make the orders sought by Amcor convening the meeting save for the approval order just discussed.In summary, the terms of the proposed Scheme are in a conventional form for a merger scheme with scrip consideration and there is no reason why the Scheme, if considered and adopted by the members, is not of such a nature as would be likely to be approved by me at the second hearing. It cannot be said that the Scheme appears on its face so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further. Further, the Amcor shareholders are to be presented with a detailed analysis by KPMG of the Scheme and associated transactions and its advantages and disadvantages, and have the recommendation of the Amcor directors. Finally, the draft Scheme Booklet meets the statutory requirements, has been properly prepared and verified by Amcor, and has been examined by ASIC. Let me deal with one final matter that I should note. If I ultimately makes orders approving the Scheme at a second Court hearing, Amcor and New Amcor apparently intend to rely upon my approval for the purposes of the exemption under s 3(a)(10) of the Securities Act of 1933 (US) in connection with the implementation of the Scheme. Section 3(a)(10) is in the following terms:Except with respect to a security exchanged in a case under title 11 [of the United States Code], any security which is issued in exchange for one or more bona fide outstanding securities, claims or property interests, or partly in such exchange and partly for cash, where the terms and conditions of such issuance and exchange are approved, after a hearing upon the fairness of such terms and conditions at which all persons to whom it is proposed to issue securities in such exchange shall have the right to appear, by any court or by any official or agency of the United States, or by any State or Territorial banking or insurance commission or other governmental authority expressly authorized by law to grant such approval. But one of the conditions for the invocation of the exemption is that I must be advised before any hearing at which the Scheme is approved, that the issuer will rely on the s 3(a)(10) exemption based on my approval in the event that the Scheme is in fact approved. The draft Scheme Booklet contains disclosure in relation to this matter. I note that Amcor and New Amcor intend to rely on this exemption, and that this matter will be raised again with me at the approval hearing. In conclusion, for the foregoing reasons I made orders yesterday afternoon convening a meeting of Amcor shareholders to consider the Scheme.

Ratio Decidendi

Legal Principle Established

Let me elaborate on this question as to whether the Scheme is fit for consideration by the proposed meeting, in the sense that it is of such a nature and cast in such terms that, if it achieves the statutory majority at the members’ meeting, I would be likely to approve it, and then I will say something on the question as to whether the members are to be properly informed as to the nature of the Scheme before the meeting.(a) Is the Scheme fit for consideration? Let me deal with the first matter. In my view in summary, the Scheme is fit for consideration by the proposed meeting. Now the question whether to accept particular consideration for shares is a commercial matter for the members of Amcor to assess. And they ought not be prevented from having the opportunity to do so provided that I can be satisfied that they are acting on sufficient information and with time to consider what they are voting on. But of course, I am required to scrutinise the terms of the Scheme to satisfy myself that there is no element of unfairness in or other undesirable feature of those terms that would be likely to preclude the approval of the Scheme if it came before me for approval. And this is so notwithstanding the unanimous favourable recommendation and voting intention statements from all directors of Amcor and the expression of opinion in the independent expert report that the Scheme is in the best interests of Amcor shareholders. In the present case relevant to this question of fitness, Amcor has drawn my attention to the following particular features of the Scheme:(a)Performance risk.(b)Deemed warranty by Amcor shareholders.(c)Termination Fee.(d)Exclusivity arrangements.(e)Amcor employee incentive arrangements.(f)Section 411(17). Let me discuss each in turn.Performance risk In considering whether to approve the Scheme involving the participation of New Amcor, being a person other than Amcor and its members, as I have already indicated it is necessary to ensure that New Amcor is bound to perform the role assigned to it, and that its obligations are able to be enforced. As I have already indicated, the obligations of New Amcor do not depend upon s 411, which is confined to the obligations of Amcor and its members. Now in this context, in my view the Scheme effectively eliminates any performance risk. In particular, the Scheme provides that the transfer of the Scheme Shares to New Amcor on the Implementation Date is subject to the obligations of New Amcor to provide the Scheme Consideration to the Scheme Shareholders on the Implementation Date. In other words, the former will not occur without performance of the latter. Further, by reason of the Deed Poll, which as I have indicated was executed on 25 February 2019, New Amcor is bound to perform the roles assigned to it, and its obligations are able to be enforced. In particular, in the event that the Scheme becomes effective, New Amcor undertakes under the Deed Poll to the effect that I have discussed earlier.Deemed warranty by Amcor shareholders