FEDERAL COURT OF AUSTRALIA
APN News & Media Limited, in the matter of APN News &
Media Limited [2007] FCA 770
CORPORATIONS – scheme of arrangement – application for order under s 411(1) of the Corporations Act 2001 (Cth) that company convene meeting of its members to consider scheme of arrangement – consideration of particular factors – “no-shop restriction” – “break fee” – deemed warranty that shares are free from encumbrances and that shareholders are entitled to transfer them Held: order made
Corporations Act 2001 (Cth) s 411(1)
In re Paramount Communications Inc Shareholders’ Litigation 637 A2d 34 (Del Supr 1993) referred to
Re Arthur Yates & Co Ltd (2001) 36 ACSR 758 discussed
Re Ballarat Goldfields NL (2002) 41 ACSR 691 cited
Re Brambles Industries Ltd (2006) 59 ACSR 501 cited
Re KAZ Group Ltd [2004] FCA 738 cited
Re Mincom Ltd (2007) 25 ACLC 163 discussed
Re National Can Industries Ltd (No 1) (2003) 48 ACSR 409 discussed
Re Normandy Mining Ltd (No 3) (2002) 20 ACLC 471 cited
Re SFE Corporation Ltd [2006] FCA 670 discussed
Re Stork ICM Australia Pty Ltd (2006) 25 ACLC 208 cited
Re Tempo Services Ltd (2005) 53 ACSR 523 cited
Re WebCentral Group Ltd (No 2) (2006) 58 ACSR 742 distinguishedIN THE MATTER OF APN NEWS & MEDIA LIMITED (ABN 95 008 637 643)
NSD 303 OF 2007
LINDGREN J
20 APRIL 2007
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 303 OF 2007
IN THE MATTER OF APN NEWS & MEDIA LIMITED (ABN 95 008 637 643)
APN NEWS & MEDIA LIMITED
(ABN 95 008 637 643)
PlaintiffJUDGE:
LINDGREN J
DATE OF ORDER:
20 APRIL 2007
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (the Act):
(a)The Plaintiff, APN News & Media Limited ABN 95 008 637 643 (APN), convene a meeting (Scheme Meeting) of the holders of ordinary shares in APN other than Independent News & Media (Australia) Limited (APN Shareholders) for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement (with or without modification) proposed to be made between APN and the APN Shareholders (Scheme), the terms of which are contained in the Explanatory Statement which comprises the scheme booklet, which is Exhibit YL1 in this proceeding (Scheme Booklet);
(b)The Scheme Meeting be held on 25 May 2007 at the Intercontinental Hotel, Corner of Bridge & Philip Streets, Sydney, New South Wales at 11.00 am (Sydney time).
(c)Albert Edward Harris AC or, failing him, Kevin John Luscombe AM, or failing both, any other non-executive director of APN, act as Chairman of the Scheme Meeting;
(d)The Chairman have the power to adjourn the Scheme Meeting for such time that the Chairman considers appropriate;
(e)At the Scheme Meeting, a person will be entitled to one vote for each APN share they are registered as holding at 7 pm on 23 May 2007;
(f)The Explanatory Statement comprising the Scheme…
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- Case
- [2007] FCA 770
- Decision Date
CaseChat Overview and Summary
The legal issues before the court included the adequacy of the explanatory statement, specifically whether it included all necessary information required by sections 411(3) and 412(1)(a) of the Act and the Regulations. The court also had to interpret the term "liquidated amount" in the context of the proposed break fee, which was to be paid by APN to Independent News & Media Australia Limited (INMAL) under certain conditions. The interpretation of this term was crucial as it determined the enforceability of the break fee provision under various legal standards.
The court concluded that the explanatory statement provided by APN's legal advisers was comprehensive and met the requirements set out in the Act and the Regulations. The court found that the term "liquidated amount" did not equate to "liquidated damages" and was instead a predetermined sum agreed upon for the purpose of resolving potential disputes. This interpretation was based on the rationale provided in clause 12.1 of the Share Purchase Agreement between APN and INMAL. The court also noted that the break fee would only be payable under specific circumstances, such as a competing transaction or failure of the APN Independent Committee to support the scheme, but not if the offeree shareholders simply did not agree to the scheme. The court ordered APN to convene a meeting of its shareholders to consider the proposed scheme and approved the explanatory statement, ensuring that shareholders had the opportunity to review and vote on the scheme.
Orders
Orders of the court
1. Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (the Act):
(a) The Plaintiff, APN News & Media Limited ABN 95 008 637 643 (APN), convene a meeting (Scheme Meeting) of the holders of ordinary shares in APN other than Independent News & Media (Australia) Limited (APN Shareholders) for the purpose of considering and, if thought fit, agreeing to a scheme of arrangement (with or without modification) proposed to be made between APN and the APN Shareholders (Scheme), the terms of which are contained in the Explanatory Statement which comprises the scheme booklet, which is Exhibit YL1 in this proceeding (Scheme Booklet);
(b) The Scheme Meeting be held on 25 May 2007 at the Intercontinental Hotel, Corner of Bridge & Philip Streets, Sydney, New South Wales at 11.00 am (Sydney time).
(c) Albert Edward Harris AC or, failing him, Kevin John Luscombe AM, or failing both, any other non-executive director of APN, act as Chairman of the Scheme Meeting;
(d) The Chairman have the power to adjourn the Scheme Meeting for such time that the Chairman considers appropriate;
(e) At the Scheme Meeting, a person will be entitled to one vote for each APN share they are registered as holding at 7 pm on 23 May 2007;
(f) The Explanatory Statement comprising the Scheme Booklet be approved;
(g) On or before Tuesday 24 April 2007, there be:
(1) in the case of each APN Shareholder who has a registered address in Australia, dispatched by prepaid post addressed to the relevant address set out in the APN register of members (Register) as at 20 April 2007; and
(2) in the case of each APN Shareholder who has a registered address outside of Australia, dispatched by prepaid airmail or air courier addressed to the relevant address as recorded in the Register as at 20 April 2007; or
(3) in either case, personally served:
(i) A document substantially in the form of the Scheme Booklet (which includes the Explanatory Statement);
(ii) A proxy form for the Scheme Meeting; and
(iii) An envelope addressed to Computershare Investor Services Pty Ltd, and
(h) The time by which the APN Shareholders must return their proxy forms for the Scheme Meeting be 11 am (Sydney time) on 23 May 2007.
2. Rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) shall not apply to the Scheme Meeting except insofar as that rule applies Regulation 5.6.13 of the Corporations Regulations 2001 (Cth).
3. Notice of the hearing of the application for an order approving the proposed Scheme to be published once in The Australian newspaper by advertisement substantially in the form of Annexure A to these Orders, such advertisement to be published on or before 26 May 2007.
4. The proceedings be stood over to 9am on 28 May 2007.
5. Liberty to apply.
6. These orders be entered forthwith.
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
Ratio Decidendi
Legal Principle Established
Established by: LINDGREN J
The expression “liquidated amount” may suggest the idea of “liquidated damages” but the amount does not represent a pre-agreed amount of the damages that would be payable by APN for a breach by it of the SIA. The genesis and nature of the provision is explained in cl 12.1 of the SIA:12.1 RationaleAPN acknowledges and agrees, for the purposes of this clause 12, as follows.(a)INMAL has required the inclusion of this clause 12, in the absence of which it would not have entered into this Agreement or otherwise agreed to implement the Scheme.(b)APN and the APN Independent Committee believe that the Scheme may provide significant benefits to APN and the Scheme Participants and that it agrees to the inclusion of this clause 12 in order to secure INMAL’s execution of this Agreement and its agreement to implement the Scheme. I need not set out all the circumstances in which the break fee is payable. They are described in cl 12.2 of the SIA. In the “Scheme Highlights” section of the Scheme Booklet, the break fee provision is summarised as follows:APN has agreed to pay INMAL a liquidated amount of $27.5 million if (amongst other things) a Competing Transaction is announced before the End Date and the person proposing the transaction:•acquires a relevant interest in at least 50% of the APN Shares and the Competing Transaction becomes unconditional; or•acquires an interest in all or a substantial part of APN’s business or assets.The words “amongst other things” refer to five other sets of circumstances that are set out in paras (b)–(f) of cl 12.2. Perhaps the most important of these is that the APN Independent Committee fails unanimously to continue to support and recommend the Scheme, other than as a result of the Independent Expert giving an opinion that the Scheme is not in the best interests of Scheme participants. The break fee is not, however, payable if the Offeree Shareholders simply do not agree to the Scheme. Clause 12.3 and cl 12.4 of the SIA provide:12.3 Compliance with lawIf a court, arbitral tribunal or the Takeovers Panel determines that the agreement by APN to make the Payment, or the making of any Payment, to INMAL pursuant to clause 12.2:(a)constituted, or constitutes, or would constitute, a breach of the fiduciary or statutory duties of any member of the APN Independent Committee to APN; or(b)constituted, or constitutes, or would constitute, unacceptable circumstances within the meaning of the Corporations Act; or(c) was, or is, or would be, unlawful for any other reason,then, to that extent (and only to that extent) APN will not be obliged to make that payment and INMAL must refund to APN that payment if already made. To the extent reasonably possible, APN must submit in any relevant proceedings that no such determination should be made or that if any such determination is to be made, it should apply only to the extent that the Payment is made or to be made in excess of the amount of the actual costs incurred, directly or indirectly, by INMAL, the Consortium and their Related Bodies Corporate as a result of the Scheme not being implemented in accordance with this Agreement.12.4 AcknowledgementINMAL acknowledges and agrees on its own behalf and on behalf of the Consortium, to the extent permitted by law, its sole remedy against APN for any breach of this Agreement (including any breach of a warranty or representation), will be to terminate this Agreement under clause 14 and seek and enforce the payment of the Payment.