FEDERAL COURT OF AUSTRALIA
Healthscope Limited, in the matter of Healthscope Limited [2019] FCA 542
File number(s): VID 253 of 2019 Judge(s): BEACH J Date of judgment: 16 April 2019 Date of publication of reasons: 18 April 2019 Catchwords: CORPORATIONS – members’ scheme of arrangement – first court hearing – order sought under s 411(1) of the Corporations Act 2001 (Cth) – separate classes of members – whether there should be separate scheme meetings – relevance of benefit to one class not qua shareholder – relevance of benefit not from scheme terms per se – performance risk – break fee – reverse break fee – exclusivity arrangements – employee incentive arrangements – conditional take-over bid – one transaction booklet with scheme explanatory statement and takeover material including bidder’s statement and target’s statement – exercise of discretion – order made for convening of meeting Legislation: Corporations Act 2001 (Cth) Pts 5.1, 6.5, ss 256C(4), 411(1),(2),(4), and (17), 412(1)
Corporations Regulations 2001 (Cth) reg 5.1.01, Sch 8
Federal Court (Corporations) Rules 2000 (Cth) rr 2.13, 2.15, 3.4
Cases cited: Amcor Limited, in the matter of Amcor Limited [2019] FCA 346
First Pacific Advisors LLC v Boart Longyear Ltd (2017) 320 FLR 78
In the matter of Pulse Health Limited [2017] NSWSC 651
In the matter of Westfield Corporation Limited [2018] NSWSC 584
Re APN News & Media Ltd (2007) 62 ACSR 400
Re Boart Longyear Ltd (2017) 121 ACSR 328
Re Foster’s Group Limited [2011] VSC 93
Re Foundation Healthcare Ltd (2002) 42 ACSR 252
Re Opes Prime Stockbroking Ltd (No 2) (2009) 179 FCR 20
Re Skilled Group Ltd (No 1) (2015) 113 ACSR 525
Sovereign Life Assurance Co v Dodd [1892] 2 QB 573
Tronex Limited, in the matter of Tronex Limited [2019] FCA 312
Date of hearing: 16 April 2019 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 192 Counsel for the Plaintiff: Mr P D Crutchfield QC and Mr B K Holmes Solicitor for the Plaintiff: Herbert Smith Freehills Counsel for the Intervener: Mr G J Ahern and Mr R J Boadle Solicitor for the Intervener: Australian Securities and Investments Commission Counsel for the Interested Parties: Mr N Young QC and Mr N De Young Solicitor for the Interested Parties: King & Wood Mallesons ORDERS
VID 253 of 2019 IN THE MATTER OF HEALTHSCOPE LIMITED
BETWEEN: HEALTHSCOPE LIMITED ACN 144 840 639
Plaintiff
AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Intervener
ANZ HOSPITALS PTY LTD (ACN 631 014 938)
Interested Party
ANZ HOSPITAL TOPCO LTD (ACN 631 014 965)
Interested Party
BCP VIG HOLDINGS L.P.
Interested Party
JUDGE:
BEACH J
DATE OF ORDER:
16 APRIL 2019
OTHER MATTERS:
A.The Court notes that the Australian Securities and Investments Commission (ASIC) was provided with at least 14 days’ notice of the hearing of this application.
B.The Court is satisfied that AISC has had a reasonable opportunity to:
(a)examine the terms of the proposed scheme of arrangement to which the…
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- AGLC
- Re Healthscope Ltd [2019] FCA 542
- Case
- [2019] FCA 542
- Decision Date
CaseChat Overview and Summary
Orders
Orders of the court
1. Pursuant to s 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting (Scheme Meeting) of the holders of ordinary shares in the Plaintiff (Scheme Shareholders):
(a) to consider, and, if thought fit, to approve (with or without modification) the scheme of arrangement (Scheme) proposed to be made between the Plaintiff and its shareholders, the terms of which are as set out in Annexure B to these orders; and
(b) to be held at Mayfair Ballroom, Grand Hyatt Melbourne, 123 Collins Street, Melbourne, Victoria on Wednesday, 22 May 2019 commencing at 10.00 am (Melbourne time).
2. The Scheme Meeting be convened by sending on or before 23 April 2019:
(a) in the case of Scheme Shareholders who have nominated an electronic address for the purposes of receiving electronic copies of shareholder communications (including notices of meetings and proxy forms but excluding annual reports and shareholder statements) (Email Shareholders), an email substantially in the form of one of the two emails at Annexure IAP4 to the affidavit Ingrid Anne Player dated 11 April 2019 and which contains links to:
(i) an electronic copy of a document substantially in the form of the transaction booklet, a draft of which is at Annexure RAL11 to the affidavit of Rodd Ashton Levy dated 15 April 2019 (Transaction Booklet), in a form that allows text within the copy to be searched by a computer, and which contains, among other things, the Notice of Scheme Meeting at Annexure E; and
(ii) an online portal or website that is accessible by the shareholder and which enables the shareholder to lodge their proxy and voting instructions online;
(b) in the case of Scheme Shareholders whose registered address is in Australia (excluding any Email Shareholders), the following documents by ordinary post addressed to the relevant addresses recorded in the Plaintiff’s register:
(i) a document substantially in the form of the Transaction Booklet (which contains, among other things, the Notice of Scheme Meeting at Annexure E);
(ii) a personalised proxy form for the Scheme Meeting, substantially in the form of Annexure RAL8 to the affidavit of Rodd Ashton Levy dated 12 April 2019 (Proxy Form); and
(iii) a reply paid envelope for the return of the Proxy Form; and
(c) in the case of Scheme Shareholders with registered addresses outside Australia (excluding any Email Shareholders), the following documents by airmail or international courier service addressed to the relevant addresses recorded in the Plaintiff’s register:
(i) a document substantially in the form of the Transaction Booklet (which contains, among other things, the Notice of Scheme Meeting at Annexure E);
(ii) a personalised Proxy Form; and
(iii) a return envelope for the return of the Proxy Form.
3. Subject to these Orders, the Scheme Meeting be convened, held and conducted in accordance with the provisions of:
(a) Part 2G.2 of the Act (save for any applicable replaceable rule) that apply to a meeting of the Plaintiff’s members; and
(b) the Plaintiff’s constitution that apply in relation to meetings of members and that are not inconsistent with Part 2G.2 of the Act.
4. Voting on the resolution to approve the Scheme is to be conducted by way of a poll.
5. A Proxy Form in respect of the Scheme Meeting will be valid and effective if, and only if, it is completed and delivered in accordance with its terms by 4.00 pm (Melbourne time) on 20 May 2019.
6. Ms Paula Dwyer, or failing her, Mr Antoni Cipa, be Chair of the Scheme Meeting.
7. The Chair of the Scheme Meeting shall have the power to adjourn the meeting to such time, date and place as she or he considers appropriate.
8. Compliance with rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth) (Rules), except insofar as it operates to apply rule 75-15(2) of the Insolvency Practice Rules (Corporations) 2016 (Cth) to the Scheme Meeting, is dispensed with.
9. Compliance with rule 3.4 and Form 6 of the Rules is dispensed with.
10. The Plaintiff publish in The Australian newspaper once on or before 15 May 2019 an advertisement substantially in the form of Annexure A to these Orders.
11. The further hearing of the Originating Process is adjourned to a hearing before the Honourable Justice Beach on 24 May 2019 at 9.30 am (Melbourne time) or as soon thereafter as the business of the Court allows.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
Notice of Second Court Hearing
_________________________________________________
Notice of hearing to approve compromise or arrangement
TO all the members of Healthscope Limited (ACN 144 840 639) (Healthscope)
TAKE NOTICE that at 9:30 am on 24 May 2019 the Federal Court of Australia (Victorian Registry) at 305 William Street Melbourne VIC 3000 will hear an application by Healthscope seeking the approval of a compromise or arrangement between Healthscope and its members if agreed to by a resolution to be considered, and, if thought fit, passed at a meeting of such members to be held on 22 May 2019 at Mayfair Ballroom, Grand Hyatt Melbourne, 123 Collins Street, Melbourne, Victoria, commencing at 10:00am (Melbourne time).
If you wish to oppose the approval of the compromise or arrangement, you must file and serve on Healthscope a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Healthscope at its address for service by 5.00 pm on 23 May 2019.
The address for service of Healthscope is: c/o Herbert Smith Freehills, Level 43, 101 Collins
Street, Melbourne VIC 3000 (Ref: Ruth Overington).
ANNEXURE B
Scheme
_________________________________________________
[The order entered is available on the Commonwealth Courts Portal, which attaches the Scheme]
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
In summary I will not order separate meetings.IS THE SCHEME FIT FOR CONSIDERATION? In my view, the Scheme is fit for consideration by the proposed meeting. Now the question whether to accept particular consideration for shares is a commercial matter for the members of Healthscope to assess. And they ought not be prevented from having the opportunity to do so provided that I can be satisfied that they are acting on sufficient information and with time to consider what they are voting on. But of course, I am required to scrutinise the terms of the Scheme to satisfy myself that there is no element of unfairness in or other undesirable feature of those terms that would be likely to preclude the approval of the Scheme if it came before me for approval. And this is so notwithstanding the unanimous favourable recommendation and voting intention statements from all directors of Healthscope and the favourable expression of opinion in the independent expert’s report. In the present case relevant to this question of fitness, Healthscope has drawn my attention to the following particular features of the Scheme which warrant discussion.(a)Performance risk.(b)Break fee and reverse break fee.(c)Exclusivity arrangements.(d)Employee incentive arrangements.(e)Section 411(17). Let me discuss each in turn.(a) Performance risk Clause 4.2(a) of the Scheme provides that the obligation of Scheme shareholders to transfer the Scheme shares to Brookfield BidCo on the implementation date is subject to the obligations of Brookfield BidCo to provide the Scheme consideration to the Scheme shareholders on the implementation date in accordance with cl 5 of the Scheme. Furthermore, the implementation deed requires that Brookfield HoldCo and Brookfield BidCo execute a deed poll under which they covenant in favour of Scheme shareholders to perform the obligations attributed to them under the implementation deed and the Scheme. The implementation deed required that the executed deed poll be in the form of attachment B to the implementation deed, or such other form as agreed in writing between Healthscope, Brookfield HoldCo and Brookfield BidCo. Such a deed poll has now been executed, but the deed poll has been amended in some minor respects since the version attached to the implementation deed. These modifications have been agreed between the parties to the implementation deed. In the event that the Scheme becomes effective, each of Brookfield HoldCo and Brookfield BidCo undertake in cl 3.1 of the deed poll to, subject to and in accordance with the provisions of the Scheme, deposit or procure the deposit of the aggregate Scheme cash consideration into a trust account nominated by Healthscope for the purposes of receiving the aggregate Scheme cash consideration by no later than one business day before the implementation date, issue or procure the issuing of the Scheme scrip consideration (following the application of the scaleback arrangements) to each Scheme shareholder or custodian entitled to receive the Scheme scrip consideration on the implementation date, and undertake or procure the undertaking of all other actions attributed to any of them under the Scheme.