Re CIC Australia Ltd - [2015] NSWSC 557

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of CIC Australia Limited [2015] NSWSC 557
Hearing dates: 1 April 2015
Date of orders: 01 April 2015
Decision date: 01 April 2015
Jurisdiction: Equity Division - Corporations List
Before: Brereton J
Decision:
Orders made for a convening of a shareholders’ meeting to consider the proposed scheme of arrangement.

Catchwords: CORPORATIONS – arrangements and reconstructions – schemes of arrangement or compromise – order for convening of meeting of certain shareholders to consider proposed scheme of arrangement – whether Court would likely approach the scheme on hearing of application if unopposed – whether any fundamental objection which would likely prejudice approval at second shareholders’ meeting – “fairness/reasonableness” distinction – where scheme is reasonable though not fair – appropriateness of premium on acquisition of minority shares – satisfaction of pre-conditions to approval of proposed scheme.
Legislation Cited: (Cth) Corporations Act 2001, s 257A, s 257B, s 257D, s 411(1), Pt 2J.1 Div 2
(Cth) Corporations Regulations 2001, reg 5.6.13
(NSW) Supreme Court (Corporations) Rules 1999, r 2.15, r 3.4
Cases Cited: GRD Ltd, In the matter of GRD Ltd [2009] FCA 1595
Re Cytopia Ltd [2009] VSC 560
Re Rancoo Limited (1995) 17 ACSR 206
Village Roadshow Ltd v Boswell Film GmbH (2004) 8 VR 38
Zenyth Therapeutics Limited v Smith [2006] VSC 436; (2006) 60 ACSR 548
Texts Cited: ASIC Regulatory Guide 111 - Content of Expert Reports
Category: Principal judgment
Parties: CIC Australia Ltd ACN 003 157 515 (plaintiff)
Representation:
Counsel:
I Jackman SC w R M Foreman (plaintiff)
Solicitors:
Baker & McKenzie (plaintiff)

File Number(s): 2015/83205

Judgment (ex tempore)

HIS HONOUR: The plaintiff CIC Australia Limited applies pursuant to (Cth) Corporations Act 2001, s 411(1), for an order that a meeting of a class of its members, namely the members other than Peet Limited (who, for the sake of convenience, are referred to as the “non-Peet shareholders”), for the purpose of considering and if thought fit agreeing to a scheme of arrangement proposed to be made between the company and the non-Peet shareholders, the effect of which scheme, if agreed to and implemented, would be that the company will buy back the shares of all non-Peet shareholders so that it would then be a wholly-owned subsidiary of Peet.
The proposed transaction is to be effected by a combination of the share buyback procedure provided for by Corporations Act, s 257D, and a scheme of arrangement. It is proposed that a general meeting of shareholders be held at 10 am on 8 May 2015 for the purpose of considering the buyback resolution and that it be immediately followed by a scheme meeting of the non-Peet shareholders for the purpose of considering the scheme resolution.
Peet currently holds 86.05% of the issued shares in the company, having acquired its shareholding pursuant to an off-market takeover offer in or about April 2013, in which the share price was 60 cents per share. The current proposed scheme was initiated by…

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 CIC Australia Ltd

Details

AGLC: In the matter of CIC Australia Limited [2015] NSWSC 557
Case: [2015] NSWSC 557
Decision Date: 01 April 2015

CaseChat Overview and Summary

The case involved CIC Australia Ltd, where the company sought an order to convene a meeting of certain shareholders to consider a proposed scheme of arrangement. The primary legal issues before the court were whether the court would likely approach the scheme on hearing of the application if unopposed, and whether there were any fundamental objections that would likely prejudice approval at the second shareholders’ meeting. The court also needed to consider the distinction between fairness and reasonableness in the context of the proposed scheme, particularly where the scheme was deemed reasonable though not fair.

The court examined the fairness and reasonableness of the proposed scheme, acknowledging that while the scheme might be reasonable, it did not necessarily have to be fair. It was established that the fairness/reasonableness distinction was relevant, and the court considered whether the scheme offered a premium on the acquisition of minority shares. Additionally, the court evaluated whether the pre-conditions to approval of the proposed scheme had been satisfied. The court concluded that the scheme was reasonable and did not find any fundamental objection that would likely prejudice approval at the second shareholders’ meeting. The court found that the pre-conditions for approving the scheme had been met, and the proposed scheme was deemed appropriate.

The court ordered that a meeting of certain shareholders be convened to consider the proposed scheme of arrangement, as requested by CIC Australia Ltd. The decision confirmed that the scheme was reasonable and did not find any fundamental objection that would likely prejudice approval at the second shareholders’ meeting. The court's order facilitated the next steps in the proposed scheme of arrangement.

Orders