IN THE MATTER of HEALTHSCOPE LIMITED (ACN 006 405 152)
HEALTHSCOPE LIMITED (ACN 006 405 152)
Plaintiff
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JUDGE:
Davies J
WHERE HELD:
Melbourne
DATE OF HEARING:
20 August 2010
DATE OF JUDGMENT:
3 September 2010
CASE MAY BE CITED AS:
Re Healthscope Limited
MEDIUM NEUTRAL CITATION:
[2010] VSC 367
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CORPORATIONS – Schemes of arrangement – Orders convening meeting – Considerations – Role of the Court – Exclusivity clauses – Corporations Act 2001 (Cth) s 411.
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APPEARANCES:
Counsel
Solicitors
For the Plaintiff
Mr. J G Santamaria QC with Mr. G J Ahern
Minter Ellison
For Asia Pacific Healthcare Group Pty Ltd
Mr. J B R Beach QC with Dr. C O Parkinson
Freehills
HER HONOUR:
On 20 August 2010, I made an order under s 411(1) of the Corporations Act 2001 (Cth) (“the Act”) for the convening a meeting of the shareholders of Healthscope Limited (“Healthscope”) to consider and, if thought fit, to resolve to approve a scheme of arrangement (“the proposed scheme”). These are my reasons for making the order.
The proposed scheme is the acquisition of the ordinary shares in Healthscope by Asia Pacific Healthcare Group Pty Ltd (“Asia Pacific Healthcare”) in consideration for the payment to Healthscope shareholders of the amount of $6.26 per share less the amount of any dividend paid by Healthscope prior to the implementation date of the scheme (“the scheme consideration”). If the proposed scheme is implemented, Healthscope will become a wholly owned subsidiary of Asia Pacific Healthcare and will be de-listed from the ASX. The proposed implementation date is expected to be 12 October 2010.
Asia Pacific Healthcare was established for the purpose of the bid. That company is indirectly owned by funds advised and managed by two American private equity firms, the Carlyle Group and TPG Capital (collectively the “Consortium members”). The proposal from the Consortium members followed a competitive bidding process for Healthscope.
On 19 July 2010 Healthscope announced that it had signed a Scheme Implementation Agreement with Asia Pacific Healthcare and the Consortium members for Asia Pacific Healthcare to acquire all Healthscope’s issued shares through a scheme of arrangement between Healthscope and its shareholders. The proposed scheme is subject to certain conditions precedent, including the approval of Healthscope shareholders at a meeting called for that purpose, and Court approval under s 411 of the Act.
The proposed scheme is unanimously recommended by the Healthscope directors, in the absence of a superior proposal and has been independently reviewed by an independent expert, Grant Samuel & Associates Pty Limited. The independent expert is of the view that the scheme consideration is fair and reasonable, that the prospects of a superior proposal are remote and that the proposed scheme is in the best interests of the Healthscope shareholders.
An explanatory booklet has been prepared to send to Healthscope’s shareholders for the purpose of the shareholders voting on the…
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.
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AGLC
Re Healthscope Limited [2010] VSC 367
Case
[2010] VSC 367
Decision Date
CaseChat Overview and Summary
In the case before the Australian court, Healthscope Limited sought an order convening a meeting of its members to approve a proposed scheme of arrangement. The dispute centred on the validity and enforceability of exclusivity clauses included in the scheme, which would restrict the company from engaging in negotiations with other parties during a specified period. The case was heard in the Federal Court of Australia.
The primary legal issue before the court was whether the exclusivity clauses in the proposed scheme were valid and enforceable under the Corporations Act 2001. The court had to consider the role of the Court in convening meetings for the approval of schemes of arrangement, and whether the exclusivity clauses were consistent with the statutory framework governing such schemes. Specifically, the court needed to determine if the clauses complied with the requirements of section 411 of the Corporations Act, which sets out the criteria for convening meetings to approve a scheme of arrangement.
The court examined the provisions of section 411 and found that the exclusivity clauses were not in breach of the statutory requirements. The court held that the clauses were reasonable and necessary to protect the interests of the company and its members, as they provided certainty and stability in the context of a proposed corporate transaction. The court also noted that the clauses did not prevent the company from taking other necessary steps to protect its interests, such as seeking legal advice or obtaining financing. Consequently, the court granted the order convening the meeting, allowing the members to consider and vote on the proposed scheme of arrangement.
The court's decision confirmed that exclusivity clauses can be included in schemes of arrangement, provided they are reasonable and in the best interests of the company and its members. The court emphasised that the primary consideration in approving a scheme is whether it is fair and reasonable to all parties affected by it, including the members. The court also highlighted the importance of striking a balance between protecting the interests of the company and its members, and allowing for flexibility in the negotiation and execution of corporate transactions.