FEDERAL COURT OF AUSTRALIA
Horizon Oil Limited, in the matter of Horizon Oil Limited [2014] FCA 733
Citation: Horizon Oil Limited, in the matter of Horizon Oil Limited [2014] FCA 733 Parties: HORIZON OIL LIMITED (ACN 009 799 455) File number: NSD 479 of 2014 Judge: FARRELL J Date of judgment: 8 July 2014 Catchwords: CORPORATIONS – schemes of arrangement – acquisition scheme – application pursuant to s 411(1) of the Corporations Act 2001 (Cth) to convene scheme meeting – holder of partly-paid shares not to participate in scheme – exclusivity provisions – reliance on fiduciary carve-out to “no talk” and “notification” requirements – exemption from Securities Act 1933 (US) registration requirements
CORPORATIONS – scheme of arrangement – application pursuant to s 411(1) of the Corporations Act 2001 (Cth) to convene scheme meeting – contents of scheme booklet – sufficiency of summary if documents available on website
CORPORATIONS – scheme of arrangement – desirable practice where notable events occur – if need to postpone scheme meeting – if need to provide updating information – appropriateness of seeking directions from Court under s 1319 of Corporations Act 2001 (Cth)
Legislation: Corporations Act 2001 (Cth)
Securities Act 1933 (US)Cases cited: Re Associated Advisory Practices Limited [2013] FCA 761
Re Associated Advisory Practices Limited(No 2) [2013] FCA 979Date of hearing: 3 July 2014 Date of last submissions: 3 July 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 44 Counsel for the Plaintiff: Mr IM Jackman SC with Mr DFC Thomas Solicitor for the Plaintiff: King & Wood Mallesons Counsel for Roc Oil Company Limited: Mr P Wood
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 479 of 2014
BETWEEN: HORIZON OIL LIMITED (ACN 009 799 455)
Plaintiff
JUDGE:
FARRELL J
DATE OF ORDER:
3 JULY 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to section 411(1) and section 1319 of the Corporations Act 2001 (Cth) (“Act”), the Plaintiff convene a meeting (“Scheme Meeting”) of the holders of fully paid ordinary shares in the capital of the Plaintiff for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed between the Plaintiff and its shareholders (“Scheme”), being the scheme substantially in the form contained at Attachment D of the scheme book prepared by the Plaintiff in the form of Tab 13 of Exhibit SVL-1 to the Affidavit of Stefan Vincent Luke sworn 3 July 2014 in these proceedings (“Scheme Book”).
2.The Scheme Meeting be held on 7 August 2014 commencing at 11.00am, at The Sydney Boulevard Hotel, 90 William Street, Sydney in the State of New South Wales.
3.The Chairman of the Scheme Meeting be Mr Eric Fraser Ainsworth AM and, in his absence, Mr Andrew Murray Stock.
4.The Chairman appointed to the Scheme Meeting has the power to adjourn the Scheme Meeting in his absolute discretion.
5.Except for procedural motions, all voting at…
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- Case
- [2014] FCA 733
- Decision Date
CaseChat Overview and Summary
The key legal issues the court had to address were whether the scheme documents provided sufficient information for shareholders to make an informed decision, particularly in light of readily available documents such as the Independent Expert’s Report and the Independent Technical Specialist Report. The court also needed to consider whether the summary information in the scheme documents was adequate given the full reports were accessible online, and whether the scheme documents complied with the statutory requirements under the Corporations Act 2001 (Cth).
The court found that the scheme documents were appropriate and compliant with legislative requirements. It held that where the full reports were readily available on the ASX platform or the company’s website, it was acceptable for the scheme documents to refer to these reports instead of reproducing them in full. The court emphasised that it was critical for shareholders to be informed about where the full reports could be accessed. The court was satisfied that the scheme documents provided adequate information for shareholders to make an informed decision, considering the availability of full reports online.
The court concluded that it was appropriate to convene the scheme meeting and addressed ancillary matters, including the potential for exemptions from US Securities Act 1933 regulation requirements. The court's decision was based on the principles outlined in Re Associated Advisory Practices Limited, which underscored the importance of ensuring that shareholders were properly informed and could make an informed decision.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
The proposed Scheme is an “acquisition” scheme under which each registered holder of fully paid Horizon shares will receive 0.724 fully paid shares in Roc Oil Company Limited (Roc) for each fully paid Horizon share on issue on the Record Date (Scheme Consideration). The entitlement of Ineligible Foreign Shareholders is treated in what has become a typical manner: their Share Consideration will be sold in a share sale facility and they will receive the net proceeds proportionately. As at 27 June 2014, there were 20 Ineligible Foreign Shareholders holding 640,640 Horizon shares. Horizon’s capital structure has some complexity. As at 2 July 2014, there were 1,301,981,265 fully paid ordinary shares. In addition, there are partly paid ordinary shares and other rights convertible to ordinary shares:·1,500,000 partly paid ordinary shares;·14,941,667 options;·31,281,639 share appreciation rights (SARs); and ·400 convertible bonds. The manner in which these other equity interests will be addressed is set out at [14]-[21] below.BACKGROUND Horizon is a mid-cap oil and gas company engaged in petroleum exploration, development and production. It has petroleum interests in China, Papua New Guinea, and New Zealand. Its headquarters are in Sydney and its shares are traded on markets operated by the Australian Securities Exchange Limited (ASX). Roc is an Australian registered company, shares in which are traded on markets of the ASX. Roc is an upstream oil and gas company with a presence in China, South East Asia, Australia and the United Kingdom. Roc operates across the full range of upstream business activities from exploration and appraisal to development and production delivery. Roc’s headquarters are in Sydney. On 29 April 2014, Horizon and Roc announced the proposed Scheme (Scheme Announcement) and entered into a Merger Implementation Deed (Implementation Deed). The Scheme Announcement describes the proposed Scheme as an “all scrip merger of equals”. Upon implementation of the Scheme, Roc’s board will comprise three of its current non-executive directors and Roc’s chairman who will remain as chairman. Four of the current non-executive directors of Horizon will become non-executive directors of Roc and the current chief executive officer of Horizon will become the managing director and chief executive officer of Roc. Based on the ratio of the Scheme Consideration, former Horizon shareholders will hold 58% of the issued share capital of Roc. The Scheme Consideration reflects the ratio implied by the volume weighted average price (VWAP) of Horizon and Roc shares in the ten day period which ended on 23 April 2014, the last day on which those shares traded before the Scheme Announcement. Section 7.2E of the Scheme Booklet notes the stability of the implied trading prices of Horizon and Roc shares over the 12 month period before the announcement. Section 7.3D of the Scheme Booklet acknowledges that the value of the Scheme Consideration is uncertain and will depend on the trading price of Roc shares following the implementation of the Scheme. RECOMMENDATIONS AND REPORTSDirectors’ recommendation