Re Crusader Limited

IN THE SUPREME COURT
OF QUEENSLAND

Brisbane
  O.S. No.  221 of 1995

[Re Crusader Limited]

IN THE MATTER OF

The Corporations Law

- and -

IN THE MATTER OF

Crusader Limited ACN 009 785 326

JUDGMENT - THOMAS J.

Judgment delivered 26 May 1995

This is an application by Crusader Limited ("the company") for the approval of an arrangement agreed upon by a body of creditors on 9 May 1995.
          It is opposed by four objectors.

INDEX

Background Facts	2
Composition or Arrangement	3
Adequacy of Information Statement	5
Different Classes of Creditors	13
Involuntary Membership	17
Whether Prospectus Necessary	19
Whether Scheme Unreasonable	20
Other Matters	21
Orders	22
Costs	22

BACKGROUND FACTS

On 8 February 1989, the company issued approximately 13.385 million convertible unsecured notes by way of an underwritten non-renouncible pro rata offer to its then shareholders.  The issue price of each note was $1.50.

Features of the note included that it was convertible at the option of the note-holder on the last day of the months of November and May in any year, and on maturity on the maturity date of 31 January 1999.  Upon conversion the note holder would become entitled to one fully paid ordinary share of 20c in the capital of the company at a premium of $1.30.  In the absence of exercise of that option, each note would be repayable in cash on the maturity date.  The notes bore interest at the rate of 12% per annum until conversion or maturity.
          The present proposal is an arrangement to bring forward the maturity date of the notes to 22 May 1995.  On that date all notes are proposed to be redeemed.  Note holders will receive in respect of each note, one fully paid 20c share in Crusader plus 60c cash.  The current market value of such shares is in the vicinity of $1.40.  It follows that note holders will not be able to elect to have their notes redeemed for cash alone.
          The company's reasons for proposing the arrangement are essentially commercial.  They include the circumstance that the present interest burden under the notes is regarded as excessive or inconvenient.  Further, the notes are thinly traded.  This would seem to result from the fact that relatively speaking this was not a particularly large issue, and because approximately 50% of the notes are held by the company's major shareholder (Triton) and its Australian subsidiary.  In 1994, the company stated an intention to buy back half of the notes, but in the event did not proceed to do so.
          Application was made to the Court by the company on 19 April 1995 under s.411(1) of The Corporations Law for an order that the proffered explanatory statement be used and that a meeting of a class of creditors be convened.  Notice was given to the ASC which appeared on the application and made submissions.  Byrne J. made the order including a direction that the explanatory statement be sent to note-holders, and for the holding of the…