Re Bolnisi Gold NL - [2007] FCA 1668

FEDERAL COURT OF AUSTRALIA
Bolnisi Gold NL, in the matter of Bolnisi Gold NL [2007] FCA 1668
CORPORATIONS – scheme of arrangement – cash and scrip scheme – condition subsequent – scheme conditional on a certain plan of arrangement being approved under Canadian law – “no shop” and “break fee” provisions – deemed warranty of freedom from encumbrances.
Held: order made that meeting of company’s members be convened to consider and, if thought fit, agree to the scheme.
Corporations Act 2001 (Cth) ss 411, 412
Securities Act 1933 (US) s 3(a)(10)
Re APN News & Media Ltd (2007) 62 ACSR 400 cited
Re Investa Properties Ltd [2007] FCA 1104 cited
Re NRMA Ltd (2000) 33 ACSR 595 followed
Re Solution 6 Holdings Ltd (2004) 50 ACSR 113 cited
IN THE MATTER OF BOLNISI GOLD NL (ABN 14 008 587 086)
NSD 2007 OF 2007
LINDGREN J
2 NOVEMBER 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 2007 OF 2007

IN THE MATTER OF BOLNISI GOLD NL (ABN 14 008 587 086)

BOLNISI GOLD NL (ABN 14 008 587 086)
Plaintiff

JUDGE:

LINDGREN J

DATE OF ORDER:

25 OCTOBER 2007

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1) Pursuant to section 411(1) of the Corporations Act 2001 (Cth):
(a)the plaintiff convene a meeting of its members for the purpose of considering and if thought fit, approving (with or without modification) a scheme of arrangement between the plaintiff and its shareholders (the Scheme), being the scheme substantially in the form of the draft contained in the explanatory statement in relation to the Scheme, being Exhibit A (Scheme Booklet);
(b)the meeting referred to in subparagraph (a) (Meeting of Shareholders) be held on 4 December 2007 at the Hobart Room, The Menzies Hotel, 14 Carrington Street, Sydney, in the state of New South Wales at 9.00am;
(c)Norman Alfred Seckold, or failing him, Peter James Nightingale be chairperson of the Meeting of Shareholders;
(d)the chairperson appointed to the Meeting of Shareholders has the power to adjourn the meeting in its absolute discretion;
(e)the Scheme Booklet be approved for distribution to the plaintiff's shareholders; and
(f)the Scheme Booklet to be dispatched to each of the shareholders of the plaintiff be in the form or to the effect of Exhibit A and may be posted by pre-paid post, in the case of a shareholder of the plaintiff whose registered address is outside the country, or despatched by air courier for overseas pre-paid post.

2)   Regulations 5.6.12 and 5.6.14 to 5.6.36A of the Corporations Regulations 2001 (Cth) shall not apply to the Meeting of Shareholders.
3)   The plaintiff publish a Notice of Hearing of any application to approve the Scheme in the form of Annexure ‘A’ hereto no later than 4 December 2007 and the plaintiff is relieved from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 to the extent necessary.
4)   This proceeding to be stood over to 5 December…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Bolnisi Gold NL

Details

AGLC: Re Bolnisi Gold NL [2007] FCA 1668
Case: [2007] FCA 1668
Decision Date: 2 November 2007 (Publication of reasons); 25 October 2007 (Judgment Date)

CaseChat Overview and Summary

In the matter of Re Bolnisi Gold NL, the Australian Federal Court was called upon to consider the approval of a proposed scheme of arrangement between Bolnisi Gold NL and its shareholders, including the significant involvement of Coeur Mining Inc. The dispute centred on whether the scheme should proceed, with particular attention to the details of the option deeds between Bolnisi directors and Coeur, and the manner in which the scheme consideration would be provided to the shareholders.

The court had to determine whether the scheme was fair and reasonable to the shareholders of Bolnisi and whether it complied with the statutory requirements under the Corporations Act 2001. Specifically, the court examined whether the option deeds with Coeur, which allowed Coeur to acquire additional shares if it did not gain full control through the scheme, were properly disclosed and whether the scheme consideration would be adequately provided before the transfer of shares.

The court concluded that the scheme was fair and reasonable, as the option deeds were adequately disclosed and the scheme consideration would be provided before the transfer of shares. The court was satisfied that the scheme complied with the statutory requirements, including the need for independent expert reports and ASIC's approval. The court found that Bolnisi shareholders should have the opportunity to consider and, if they so wished, agree to the scheme.

Accordingly, the court made orders convening a meeting of Bolnisi shareholders to consider and potentially approve the scheme, as well as orders regarding the publication of notices and the conduct of the meeting. The scheme was to become effective upon the lodging of the court order with ASIC, ensuring that Coeur would be obliged to implement the scheme.

Orders

Orders of the court

1) Pursuant to section 411(1) of the Corporations Act 2001 (Cth):

(a) the plaintiff convene a meeting of its members for the purpose of considering and if thought fit, approving (with or without modification) a scheme of arrangement between the plaintiff and its shareholders (the Scheme), being the scheme substantially in the form of the draft contained in the explanatory statement in relation to the Scheme, being Exhibit A (Scheme Booklet);

(b) the meeting referred to in subparagraph (a) (Meeting of Shareholders) be held on 4 December 2007 at the Hobart Room, The Menzies Hotel, 14 Carrington Street, Sydney, in the state of New South Wales at 9.00am;

(d) the chairperson appointed to the Meeting of Shareholders has the power to adjourn the meeting in its absolute discretion;

(e) the Scheme Booklet be approved for distribution to the plaintiff's shareholders; and

(f) the Scheme Booklet to be dispatched to each of the shareholders of the plaintiff be in the form or to the effect of Exhibit A and may be posted by pre-paid post, in the case of a shareholder of the plaintiff whose registered address is outside the country, or despatched by air courier for overseas pre-paid post.

2) Regulations 5.6.12 and 5.6.14 to 5.6.36A of the Corporations Regulations 2001 (Cth) shall not apply to the Meeting of Shareholders.

3) The plaintiff publish a Notice of Hearing of any application to approve the Scheme in the form of Annexure ‘A’ hereto no later than 4 December 2007 and the plaintiff is relieved from compliance with Rule 3.4 of the Federal Court (Corporations) Rules 2000 to the extent necessary.

4) This proceeding to be stood over to 5 December 2007 at 4.30pm before Justice Lindgren for the hearing of any application to approve the Scheme.

5) There be liberty to restore on 2 days’ notice.

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

LINDGREN J

Counsel’s submissions addressed other matters of detail on which I was also satisfied. I will have a copy of counsel’s submissions placed on the Court file so that that will be available to be read by anyone interested.CONCLUSION For the above reasons I considered that Bolnisi shareholders should have the opportunity of considering the Scheme and if they think fit, of agreeing to it, and I made the orders mentioned on 25 October 2007 accordingly.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN J

The directors of Bolnisi, or, where relevant, their associates on their behalf, have entered into Option Deeds with Coeur, under which Coeur will have an option to buy the shares in Bolnisi in which the directors or their associates have an interest. In summary, the effect of the Option Deeds is that if Coeur does not acquire 100 percent of the shares in Bolnisi by reason of the Scheme, it will nonetheless have the right to call for a transfer to it from Bolnisi directors and their associates of shares amounting to 19.99 percent of all Bolnisi’s shares. The existence and effect of the Option Deeds are disclosed in the Scheme Booklet.Cash and scrip components of the Scheme consideration Under cl 5.2 of the Scheme, on the business day prior to the Implementation Date, Coeur is to deposit in cleared funds an amount equal to the aggregate amount of the cash component of the Scheme consideration into a trust account operated by Bolnisi as trustee for the Scheme Shareholders, to be held by Bolnisi on trust for them (except that any interest on the amounts deposited, less bank fees and other charges, is to be to Coeur’s account). On the Implementation Date, Bolnisi is to pay the cash component to the Scheme Shareholders from the trust account. In relation to the scrip component of the Scheme consideration, under cl 5.3 of the Scheme, on the Implementation Date the names of the Scheme Shareholders are to be entered in the shareholder register of Coeur, and uncertificated holding statements are to be despatched to them representing the total number of Coeur shares issued to them. There is an alternative procedure that is to be followed where Bolnisi shareholders elect to receive CDIs (see cl 5.3(a)(2) of the Scheme). Accordingly, the Scheme consideration must be provided before the Bolnisi shares are transferred, and there is no question of the Bolnisi shareholders being divested of their shares and being left to sue Coeur for the outstanding consideration. The Scheme will become effective on the date on which an office copy of the Court order approving the Scheme under s 411 of the Act is lodged with the Australian Securities and Investment Commission (ASIC): s 411(10) of the Act. Coeur will be obliged to implement the Scheme, not only by reason of the MIA, but also by reason of a Deed Poll executed by it in favour of each Bolnisi shareholder, by which Coeur again undertakes to comply with and perform its obligations under the Scheme, and in which Coeur acknowledges that the Deed Poll may be relied upon and enforced by any Bolnisi shareholder.ASIC There was before the Court the “usual letter” from ASIC indicating that it did not wish to appear at the first court hearing or to make any submissions in opposition to the making of an order for the convening of the Scheme meeting. Section 411(2)(a) was complied with, and I was satisfied that ASIC had had a reasonable opportunity to do the things referred to in s 411(2)(b) of the Act.Independent expert’s Report

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 2007 OF 2007

JUDGE:	LINDGREN J
DATE OF ORDER:	25 OCTOBER 2007
WHERE MADE:	SYDNEY