Re Poseidon Nickel Ltd
[2024] WASC 516
•10 FEBRUARY 2025
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: RE POSEIDON NICKEL LTD; EX PARTE POSEIDON NICKEL LTD [2024] WASC 516
CORAM: HILL J
HEARD: 23 DECEMBER 2024 & 7 FEBRUARY 2025
DELIVERED : 23 DECEMBER 2024 & 7 FEBRUARY 2025
PUBLISHED : 10 FEBRUARY 2025
FILE NO/S: COR 181 of 2024
MATTER: IN THE MATTER OF POSEIDON NICKEL LTD
EX PARTE
POSEIDON NICKEL LTD
Plaintiff
Catchwords:
Corporations - Two inter-conditional schemes of arrangement - Application for orders convening scheme meetings under s 411(1) of Corporations Act 2001 (Cth) - Independent expert of opinion that proposed schemes are not fair but reasonable and in best interests of securityholders - Whether requirements to order scheme meetings are satisfied - Orders made convening scheme meetings
Corporations - Schemes of arrangement - Whether supplementary disclosure required by plaintiff in relation to announcements made by bidder - Announcements did not alter opinion of independent expert - No impact on schemes
Corporations - Schemes of arrangement - Application for orders approving schemes under s 411(4)(b) of the Corporations Act 2001 (Cth) - Orders made approving schemes
Legislation:
Corporations Act 2001 (Cth) s 411, s 412, s 1319
Corporations Regulations 2001 (Cth) sch 8
Supreme Court (Corporations) (WA) Rules 2004 (WA) r 3.2
Result:
Orders made convening scheme meetings
Orders made approving schemes
Category: B
Representation:
Counsel:
| Plaintiff | : | Mr J Healey |
Solicitors:
| Plaintiff | : | Steinepreis Paganin |
Cases referred to in decision:
Re Amcom Telecommunications Ltd [2015] FCA 341
Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400
Re Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600
Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358
Re International Goldfields Ltd [2004] WASC 112
Re Kangaroo Resources Ltd [2018] WASC 327
Re Nzuri Copper Ltd [2019] WASC 189
Re Pacific Energy Limited [2019] WASC 443
Re Schrole Group Ltd [2024] WASC 515
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re SRG Ltd [2018] FCA 1092
Re TASK Group Holdings Ltd [2024] NSWSC 821
Re Wesfarmers Ltd [2018] WASC 308
Re Wesfarmers Ltd [No 2] [2018] WASC 357
HILL J:
Poseidon Nickel Limited (Poseidon) is an Australian public company listed on the Australian Securities Exchange (ASX). On 25 October 2024, Poseidon announced it had entered into a Scheme Implementation Deed (SID) with Horizon Minerals Limited (Horizon) for the implementation of two inter‑conditional schemes.[1] Under the Schemes, it is proposed that Horizon will acquire all issued ordinary shares in Poseidon (Share Scheme), certain unlisted options in Poseidon will be cancelled (Option Scheme) (together, the Schemes), and Poseidon will become a wholly‑owned subsidiary of Horizon and be delisted from the ASX.
[1] Affidavit of Madeline Sky Ardon filed 11 December 2024 [8], 'MA-1'.
The originating process dated 18 November 2024 came before me for the first court hearing on 23 December 2024. On that date, I ordered the convening of a meeting of Poseidon's Shareholders and a separate meeting of Poseidon's Optionholders (together, the Scheme Meetings) to consider and vote on the proposed Schemes. Orders were also made approving the distribution of a Scheme booklet, and for the convening and conduct of the Scheme Meetings.
The Scheme Meetings were held on 31 January 2025. At each meeting, the resolution was passed by the requisite statutory majorities.[2]
[2] Affidavit of Toby Hicks filed 31 January 2025 [6], [29] - [31].
The originating process came back before me for the second court hearing on 7 February 2025. On this date, I made orders approving the Schemes.
In making each of these orders, I stated that I would subsequently publish written reasons for the orders I made. These are those reasons.
Nature of proposed schemes
Poseidon is a nickel sulphide exploration company which owns the Black Swan, Lake Johnston and Windarra nickel projects in Western Australia.[3] As at 13 December 2024, Poseidon had on issue: 4,203,875,492 fully paid ordinary shares (Shares); 163,447,197 unlisted options exercisable at $0.006 per option and expiring on 3 September 2026 (Options); 21 million other unquoted options (Unquoted Options); and 5,949,598 performance rights (Performance Rights).[4]
[3] Scheme booklet, [6.1] - [6.2].
[4] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [18].
Horizon is an ASX listed gold mining company focused on the exploration and development of gold projects in Western Australia. It owns the Boorara Gold Project and other infrastructure near Kalgoorlie and Coolgardie, Western Australia, as well as a number of other gold projects currently in production or development.[5]
[5] Scheme booklet, [7.1] - [7.2].
If the Schemes are implemented:
(a)Shareholders will receive 0.1156 new Horizon shares for every one Share held at the Record Date (Share Scheme Consideration); and
(b)the Options will be cancelled, and all Optionholders will receive 0.1156 new Horizon options for every one Option held at the Record Date (Option Scheme Consideration),
(together, Scheme Consideration).[6]
[6] Share scheme cl 1.1 (definition of Share Scheme Consideration), cl 5.1; Option scheme cl 1.1 (definition of Option Scheme Consideration), cl 5.1.
Under the SID, Poseidon is required to ensure all Performance Rights vest or lapse in accordance with their terms, or are exercised (if applicable) prior to the Record Date,[7] and that there are no Unquoted Options on issue after the Implementation Date.[8]
[7] SID, cl 5.4.
[8] SID, cl 4.4.
On 13 December 2024, Poseidon entered into cancellation deeds in relation to the Unquoted Options.[9] In relation to the Performance Rights, all Performance Rights will vest in accordance with their terms and convert into Shares prior to the Record Date.[10]
[9] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [20], 'BS-3'.
[10] Scheme booklet, [5.10] - [5.11].
Any Shareholder who, based on their shareholding on the Record Date, would be entitled to receive less than a marketable parcel of Horizon shares on the implementation of the Share Scheme is an Unmarketable Parcel Shareholder. Shareholders whose address is outside of Australia or New Zealand (Ineligible Foreign shareholders) and Unmarketable Parcel Shareholders are ineligible under the Share Scheme to receive Horizon shares. The shares that would have otherwise been issued to these Shareholders will be issued to a sale agent on their behalf and sold on the ASX. The sale proceeds will be remitted to Horizon, who will subsequently make the relevant pro‑rata payment to these Shareholders.[11]
[11] Scheme cl 5.7.
The independent directors of Poseidon have unanimously recommended that, in the absence of a superior proposal, shareholders and optionholders vote in favour of the Schemes. The other director of Poseidon, Mr Hallan, is a non-executive director of both Poseidon and Horizon and, as a result, did not participate in the consideration of or make any recommendation on the Schemes.[12]
[12] Scheme booklet, page iv.
Poseidon retained an independent expert, BDO Corporate Finance (WA) Pty Ltd (BDO), to provide an opinion on the proposed Schemes. BDO concluded that, in the absence of a superior proposal, the proposed Schemes are not fair but reasonable and are in the best interests of shareholders.[13]
[13] Scheme booklet, Annexure A.
The Schemes will not be implemented unless and until a number of conditions precedent are satisfied or waived. The conditions precedent which are required to be satisfied or waived are contained in the SID,[14] and summarised in the Scheme booklet.[15]
[14] SID, cl 2.1.
[15] Scheme booklet, [12.2].
Horizon's obligations under the Schemes are supported by a Share Scheme Deed Poll and an Option Scheme Deed Poll (Deed Polls).[16]
[16] Affidavit of Meredith Nancy Campion filed 16 December 2024, 'MNC-2', 'MNC-3'.
Legal principles in respect of the Scheme
Pursuant to s 411 of the Act, a scheme of arrangement can be used to re‑organise a company which is binding on members where:
(a)the arrangement is agreed by the requisite majorities prescribed by s 411(4)(a) of the Act, namely, 75% of shareholders by value and 50% by number; and
(b)the court approves the arrangement pursuant to s 411(4)(b) of the Act.
There are three stages to an application under s 411 of the Act. First, the court approves the convening of a scheme meeting. Second, the members vote on the proposed scheme at the scheme meeting. Third, assuming the first two stages have occurred, the court approves the proposed scheme.[17]
[17] Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 [7] (Keane CJ & Jacobson J).
There are well‑established principles that apply to each stage. In relation to the first court hearing, the court will order the scheme meeting to be convened if it is satisfied that:[18]
(a)there is a pt 5.1 body;
(b)there is a compromise or arrangement within the meaning of s 411 of the Act;
(c)the proposed scheme booklet contains the prescribed information[19] and provides proper disclosure;[20]
(d)the scheme is bona fide and properly proposed;
(e)the Australian Securities and Investments Commission (ASIC) has had at least 14 days' notice of the proposed hearing date and a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions;[21]
(f)the procedural requirements of the Act and the Supreme Court (Corporations) (WA) Rules 2004 (WA) (Corporations Rules) have been met; and
(g)the scheme is of such a nature that, if it receives the necessary statutory majority at the scheme meeting, the court will be likely to approve it.
[18] Re SRG Ltd [2018] FCA 1092 [11]; Re Wesfarmers Ltd [2018] WASC 308 [60].
[19] Corporations Act 2001 (Cth) s 412(1)(a)(ii); Corporations Regulations 2001 (Cth) reg 5.1.01, sch 8 cl 8301 ‑ 8310.
[20] Corporations Act 2001 (Cth) s 412(1)(a)(i).
[21] Corporations Act 2001 (Cth) s 411(2)(b).
The standard of review that is undertaken by the court at the first hearing is whether the proposed scheme is not inappropriate and is one that sensible businesspeople might consider is of benefit to its members.[22] If the proposed arrangement is one that appears fit for consideration by a meeting of members and is a commercial proposition likely to gain the court's approval if passed by the necessary majority, leave should be given to convene the meeting.[23]
Should orders be made for the convening of the Scheme Meetings and the dispatch of the Scheme booklet?
[22] Re Amcom Telecommunications Ltd [2015] FCA 341 [10].
[23] Re SRG Ltd [12]; Re Wesfarmers Ltd [72] - [76].
At the first court hearing, Poseidon relied on 11 affidavits being:
(a)five affidavits of Madeline Sky Ardon, a senior associate employed by Steinepreis Paganin, the solicitors for Poseidon, filed 11, 12, 17, 20, and 23 December 2024;
(b)an affidavit of Pia Melanie Drummond, a partner of Steinepreis Paganin, filed 11 December 2024;
(c)an affidavit of Toby Albert Hicks, a partner of Steinepreis Paganin, filed 11 December 2024;
(d)an affidavit of Brendan Ernest Shalders, the chief executive officer of Poseidon, affirmed 13 December 2024;
(e)two affidavits of Julian Simon Mahesan Tambyrajah, the chief financial officer and company secretary of Horizon, filed 16 and 21 December 2024; and
(f)an affidavit of Meredith Nancy Campion, a partner of Allen Overy Shearman Sterling, the solicitors for Horizon, filed 16 December 2024.
These affidavits prove the formal matters that Poseidon is required to establish.
On the materials before me, there was nothing to suggest the Schemes were not properly proposed.
There are a number of conditions precedent to the Schemes.[24] Neither Poseidon nor Horizon has any basis to believe that any of these conditions precedent will not be satisfied or waived prior to implementation of the Schemes.[25]
Disclosure and Scheme booklet
[24] SID, cl 2.1.
[25] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [33]; Affidavit of Julian Simon Mahesan Tambyrajah filed 16 December 2024 [27].
I was provided with a final copy of the draft Scheme booklet, which incorporated changes to address ASIC's comments.[26]
[26] Affidavit of Madeline Sky Ardon filed 20 December 2024, 'MA-5'.
I was satisfied that the Scheme Booklet properly disclosed the effect of the proposed Schemes and the material considerations for securityholders.
There is evidence before me as to the due diligence and verification process undertaken by both Poseidon and Horizon.[27] I accept that Poseidon and Horizon have undertaken processes to verify the accuracy of statements attributable to each of them in the Scheme booklet and to ensure that the Scheme booklet does not omit any material information.[28]
[27] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [77] - [85]; Affidavit of Julian Simon Mahesan Tambyrajah filed 16 December 2024 [12] - [25]; Affidavit of Meredith Nancy Campion filed 16 December 2024 [5].
[28] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [86]; Affidavit of Julian Simon Mahesan Tambyrajah filed 16 December 2024 [25].
Based on the checklist provided by counsel for Poseidon,[29] I was satisfied the Scheme booklet contained the prescribed information in accordance with s 412(1)(a)(ii) of the Act and sch 8 of the Corporations Regulations 2001 (Cth).
[29] Plaintiff's submissions filed 18 November 2024, Annexure B.
In written and oral submissions, counsel for Poseidon drew my attention to some specific matters, which are addressed below.
Independent expert's opinion on Schemes
The independent expert, BDO, concluded that the proposed Schemes are not fair but are reasonable. In the absence of a superior proposal, BDO concluded that the proposed Schemes are in the best interests of Shareholders and Optionholders.
In Re Beadell Resources Ltd, Vaughan J (as his Honour then was) summarised the approach that the court should take where the independent expert reaches this conclusion.[30] In essence, provided that securityholders are adequately informed of the independent expert's conclusion and the basis for it, it is ultimately a decision for securityholders, and not the court, whether the scheme is in their best interests.
[30] Re Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600 [60] - [64].
The basis for BDO's assessment that the proposed Schemes are not fair is based on their assessment of the value of a Share or Option (on a control basis) compared to the value of the Share Scheme Consideration or Option Scheme Consideration (on a minority basis). Specifically, BDO assessed the value of a Share (on a control basis) to be between $0.008 and $0.013 per Share, with a preferred value of $0.010. This was higher than their assessment of the value of the Share Scheme Consideration (on a minority basis) of between $0.006 and $0.011, with a preferred value of $0.008.[31] In relation to the Options, BDO assessed the value (on a control basis) to be between $0.005 and $0.009 per Option, with a preferred value of $0.007. This was higher than their assessment of the value of the Option Scheme Consideration (on a minority basis) of between $0.003 and $0.007, with a preferred value of $0.005.[32]
[31] Scheme booklet, Annexure A.
[32] Scheme booklet, Annexure A.
BDO concluded that the proposed Schemes are reasonable because the advantages of the Schemes outweigh their disadvantages. The advantages include the creation of a merged entity with complementary assets and a larger market presence, as well as immediate access to capital to fund ongoing exploration programs. The IER also observed that the Schemes are value accretive on a like‑for‑like basis.[33]
[33] Scheme booklet, Annexure A.
I carefully considered the explanations contained in the IER and was and am satisfied that the matters referred to in the IER justify the conclusion that the Schemes are reasonable. In my view, there is appropriate disclosure of the basis for the opinion of the independent expert. Sufficient information is provided to Shareholders and Optionholders to enable them to assess for themselves the basis of the independent expert's opinion and make an informed decision whether or not to approve the Schemes.
In my view, the independent expert's opinion was not a basis to refuse to convene the Scheme Meetings.
Performance risk
On the evidence before the court, I was and am satisfied that Shareholders and Optionholders are adequately protected against any performance risk.
Under the terms of the Schemes:[34]
(a)Horizon must issue (or procure the issue of) the Scheme Consideration and enter each securityholder's name and registered address into Horizon's registers on the Implementation Date;
(b)Horizon is required to issue the Scheme Consideration on the Implementation Date;
(c)transfer of the Shares and Options is subject to provision of the Scheme Consideration;
(d)beneficial title does not pass unless the Scheme Consideration has been issued in accordance with the Schemes;
(e)Poseidon and each Shareholder and Optionholder will have individual rights against Horizon in the event that Horizon fails to provide the Scheme Consideration.
[34] Share Scheme, cl 5; Option Scheme, cl 5.
These arrangements are supported by the Deed Polls,[35] which can be enforced by any Shareholder and Optionholder.[36]
Exclusivity provisions and break fee
[35] Share Scheme Deed Poll, cl 5; Option Scheme Deed Poll, cl 5.
[36] Share Scheme Deed Poll, cl 2; Option Scheme Deed Poll, cl 2.
The SID contains the customary lock-up devices.[37] In certain circumstances, Poseidon may be liable to pay a break fee of $250,000 (Break Fee).[38] The Break Fee may also be payable by Horizon if it does not complete the transaction.[39]
[37] SID, cl 12.1 - 12.5.
[38] SID, cl 13.
[39] SID, cl 13.
In considering whether the exclusivity provisions impact on completion of the transaction and the duties of directors, the court has regard to:[40]
(a)the period of the exclusivity, which should be no more than a reasonable period and capable of precise ascertainment;
(b)whether the provisions are subject to an overriding obligation that the directors do not breach their fiduciary duties or are otherwise unlawful; and
(c)whether adequate prominence is given to these provisions in the Scheme booklet.
[40] Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 [29] - [35]; Re Kangaroo Resources Ltd [2018] WASC 327 [57] ‑ [61]; RePacific Energy Limited [2019] WASC 443 [58].
In this case, the exclusivity period is, at most, a period of approximately six months. The exclusivity provisions are subject to appropriate fiduciary carve‑outs.
During the commercial negotiations of the SID, all parties were separately advised and represented by external legal advisers,[41] and the commercial justification for the exclusivity provisions and the Break Fee have been explained.[42]
[41] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [110].
[42] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [112] - [113].
The amount of the Break Fee is less than 1% of the equity value of Poseidon based on the Scheme Consideration at the date of entering into the SID, which is within generally accepted commercial parameters.[43] The Break Fee is intended to compensate Horizon and Poseidon for the costs (both costs incurred and opportunity costs) if the Schemes do not proceed for certain reasons. These reasons do not include securityholders voting against the Scheme. In my view, the amount of the Break Fee (and the circumstances in which it is payable) is unlikely to influence Shareholders and Optionholders in their decision to vote on the Schemes.
[43] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024, 'BS15'.
Importantly, the exclusivity arrangements and the Break Fee are prominently disclosed in the Scheme booklet.[44]
Independent directors' benefits and recommendations
[44] Scheme booklet, cl 5.15 (page 38), cl 13.7 (page 137).
The independent directors of Poseidon have recommended that, in the absence of a superior proposal and subject to BDO continuing to conclude the Schemes are in the best interests of Shareholders and Optionholders, Shareholders and Optionholders vote in favour of the Schemes.
Poseidon drew my attention to the fact that both of the independent directors of Poseidon have interests in Shares, as does the other director, Mr Hallam.[45]
[45] Scheme booklet, cl 6.9 (page 160).
Each of the independent directors considered whether they should make a recommendation on the Scheme to securityholders and believed it was appropriate to do so, given the importance of the proposed Scheme.[46]
[46] Affidavit of Brendan Ernest Shalders affirmed 13 December 2024 [119] ‑ [120].
For two primary reasons, I did not consider that it was inappropriate for the independent directors to make a recommendation in respect of the Schemes.
First, the consideration each of the independent directors will receive if the Scheme is implemented is being issued to them as consideration for the Shares each owns in Poseidon. That is, they will receive the same consideration as every other Shareholder. I accept that these interests should not prevent the directors from making a recommendation to Shareholders and Optionholders.
Second, I am satisfied these directors' interests in Poseidon (and those of Mr Hallam) are fully disclosed in the Scheme booklet.
Loan agreement
Horizon has provided Poseidon with an unsecured loan of $2 million to assist Poseidon with working capital until the implementation of the Scheme (Loan Agreement). The terms of the Loan Agreement are disclosed in the Scheme booklet.[47] As at 23 December 2024, Poseidon had drawn down $500,000 under the Loan Agreement.[48]
[47] Scheme booklet, [6.11].
[48] Scheme booklet, [3.4].
In considering agreements where a bidder has provided a loan to the target, the court considers whether it operates as a lock-up device or is a break fee that might prevent shareholders freely considering the proposed scheme.[49]
[49] Re Nzuri Copper Ltd [2019] WASC 189 [67] - [68] (Vaughan J).
In this case, I was and am satisfied that the Loan Agreement is not a lock‑up device that would have a coercive effect on shareholders and option holders preventing them from considering the merits of the proposed Schemes. This is primarily because there is a commercial rationale for the Loan Agreement, the interest rates are on arm's‑length terms, and the repayment dates provide Poseidon sufficient time to seek alternative financing arrangements if the Scheme is not implemented. In my view, the Loan Agreement is a matter for Shareholders and Optionholders to consider at the Scheme Meetings.
Deemed warranties
Poseidon also drew my attention to the deemed warranty provisions in the proposed Schemes.[50] Deemed warranty clauses are not unusual and are acceptable provided there is adequate disclosure.
[50] Scheme booklet, cl 12.7 (page 132).
These provisions are drawn to the attention of Shareholders and Optionholders in the Scheme booklet. I was and am satisfied that adequate disclosure has been given of these clauses.
Dispatch of the Scheme booklet
Poseidon sought orders pursuant to s 1319 of the Act for electronic dispatch of the Scheme booklet and applicable proxy forms by email to securityholders who have nominated to receive communications electronically (Email securityholders). In respect of its securityholders who have nominated to receive communications in hardcopy, hardcopy documents will be dispatched by post.
Securityholders who have not made any election, as well as those Email securityholders in respect of whom notice is received that electronic delivery was ineffective, will be sent a letter with details of the website from which the Scheme booklet can be accessed, together with a copy of the applicable proxy form.
I was and am satisfied that the proposed orders for dispatch of the Scheme booklet are appropriate.
Conclusion and orders
At the first hearing before me, I was satisfied that the substantive and procedural requirements under s 411(1) and s 1319 of the Act had been satisfied and that the proposed Schemes were fit for consideration by Poseidon's members. For these reasons, at the conclusion of the hearing on 23 December 2024, I made orders in terms of Annexure 'A' to this judgment in respect of the Scheme.
Scheme Meetings
The Scheme Meetings were convened and held on 31 January 2024.[51] At the meetings, the resolutions were passed by the requisite statutory majorities.
[51] Affidavit of Toby Hicks filed 31 January 2025 [6], [29] - [31].
90.57% of shareholders were present at the Share Scheme meeting in person and by proxy. 93.39% of shareholders who voted at the meeting were in favour of the resolution to approve the Share Scheme.[52]
[52] Affidavit of Toby Hicks filed 31 January 2025 [25].
93.33% of Option holders were present at the Option Scheme meeting in person and by proxy. 82.% of Option holders who voted at the meeting were in favour of the resolution to approve the Option Scheme.[53]
[53] Affidavit of Toby Hicks filed 31 January 2025 [25].
Should the Schemes be approved?
The originating process was listed before me for the second court hearing on 7 February 2024.
Poseidon relied on six additional affidavits for the second court hearing, being:
(a)three affidavits of Madeline Sky Ardon filed 21 January 2025, 3 February 2025, and affirmed on 6 February 2025;
(b)an affidavit of Toby Hicks filed 31 January 2025;
(c)an affidavit of Kesone Sunphantry, a senior customer success manager at Automic Pty Ltd (Automic) which provides share registry services to Poseidon, filed 4 February 2025; and
(d)an affidavit of Lachlan Hunter Wiley Strong, a manager of investor engagement at Automic, filed 4 February 2025.
Legal principles in respect of the Scheme approval
The approval of the proposed Schemes pursuant to s 411(4)(b) of the Act, or the second court hearing, is the third stage of approval for a scheme of arrangement. The second stage is the approval of the Schemes by the requisite statutory majorities, which occurred at the Scheme Meetings.
At the second court hearing, the court has two tasks:[54]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[55]
(i)the meetings were convened and held in accordance with the court's earlier orders;
(ii)the resolutions were passed with the requisite statutory majorities;
(iii)the plaintiff otherwise complied with the court's earlier orders; and
(b)to determine, in the exercise of the court's discretion, whether to approve the proposed arrangement.
[54] Re Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[55] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under s 411(4)(b) of the Act and is not bound to approve a scheme just because the court previously made orders for the convening of a meeting or because the statutory majorities have been achieved.[56] That said, the court will usually approach the task on the basis that shareholders are better judges of what is in their commercial interests than the court.[57]
[56] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[57] Re Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [32] - [33].
The factors that inform the court's discretion whether or not to approve a scheme are:[58]
[58] Re Seven Network Ltd [No 3] [35] - [40], [50], [52].
(a)whether the members have voted in good faith and not for an improper purpose;
(b)whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it;
(c)whether the plaintiff has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion;
(d)whether there has been full and frank disclosure of all information material to the members' decision;
(e)whether minority shareholders would be oppressed by the scheme;
(f)whether the court is satisfied that the scheme has not been proposed to avoid ch 6 of the Act;
(g)whether ASIC has any objection to the scheme; and
(h)whether the scheme offends public policy.
Compliance with statutory and procedural requirements
I was satisfied, on the basis of the additional affidavits that were filed by Poseidon, that:
(a)a copy of the court's orders made 23 December 2024 was lodged with ASIC that same day;[59]
(b)a copy of the Scheme booklet substantially in the form that was approved for distribution by the court at the first court hearing was lodged with ASIC and registered on 24 December 2024;[60]
(c)the Scheme materials were dispatched to securityholders in accordance with the orders of the court;[61]
(d)in accordance with the orders of the court, the Scheme booklet was available for inspection on Poseidon's website and the ASX announcements platform;[62]
(e)the Scheme Meetings were convened and held on 31 January 2025 in accordance with the orders;[63]
(f)the Schemes were approved by the requisite statutory majorities;[64]
(g)notice of the second court hearing was given by way of an ASX announcement by Poseidon on 31 January 2025;[65] and
(h)ASIC informed Poseidon, pursuant to s 411(17)(b) of the Act, that it has no objection to the proposed Schemes.[66]
[59] Affidavit of Madeline Sky Ardon filed 3 February 2025, 'MA-1'.
[60] Affidavit of Madeline Sky Ardon filed 3 February 2025, 'MA-2'.
[61] Affidavit of Madeline Sky Ardon filed 3 February 2025, 'MA-4', 'MA-5', 'MA-6'.
[62] Affidavit of Madeline Sky Ardon filed 3 February 2025, 'MA-4', 'MA-6'.
[63] Affidavit of Toby Hicks filed 31 January 2025 [6].
[64] Affidavit of Toby Hicks filed 31 January 2025 [29] - [30].
[65] Affidavit of Madeline Sky Ardon affirmed 6 February 2025, 'MA-1'.
[66] Affidavit of Madeline Sky Ardon affirmed 6 February 2025, 'MA-4'.
On this basis, I was satisfied that all statutory pre‑conditions had been met.
Good faith and proper purpose
I was satisfied on the evidence filed by Poseidon that its securityholders voted in good faith and for a proper purpose. The proposed Schemes do not involve any novel treatment of rights. No‑one appeared at the second court hearing to object to the approval of the proposed Schemes.
Fairness and reasonableness
At the first court hearing, based on the evidence before the court, I was satisfied the proposed Schemes were of such a nature that there was no apparent reason that it should not receive approval if the requisite voting majorities were achieved at the Scheme meetings, notwithstanding the opinion of BDO that the Schemes were not fair but reasonable. At this hearing, I expressed my view that the Schemes were fit for consideration by Shareholders and Optionholders.
Nothing occurred since the date of the first court hearing to change this view. The securityholders of Poseidon who voted at the meetings overwhelmingly supported the proposed Schemes.
No Shareholder or Optionholder appeared at the second court hearing to oppose the orders sought by Poseidon. I was satisfied that the proposed Schemes are Schemes that sensible businesspeople might consider to be of benefit to Shareholders and Optionholders.
All relevant matters brought to the court's attention
At the first court hearing, counsel for Poseidon drew my attention to a number of matters, which are summarised at [29] ‑ [54].
At the second court hearing, counsel drew my attention to two additional matters.
First, between the dispatch of the Scheme booklet and the Scheme meetings, two ASX announcements were made by Horizon. The first, on 10 January 2025, announced that Horizon had executed a Share Subscription Agreement for a two‑tranche private placement to issue 213,888,888 ordinary shares to Golden Crane Holdings Limited (Golden Crane).[67] The second, on 15 January 2025, announced that Horizon had undertaken a gold pour at its Boorara Gold Project.[68]
[67] Affidavit of Madeleine Sky Ardon filed 21 January 2025, 'MA-4'.
[68] Affidavit of Madeleine Sky Ardon filed 21 January 2025, 'MA-8'.
The first of these announcements was provided to BDO who confirmed the announcement did not change their opinion on the Schemes.[69] This confirmation was the subject of a joint announcement by Poseidon and Horizon.[70] The announcement was also provided to ASIC[71] and, after consultation with ASIC,[72] was the subject of a further joint announcement by Poseidon and Horizon.[73]
[69] Affidavit of Madeline Sky Ardon filed 21 January 2025, 'MA-2', 'MA-3'.
[70] Affidavit of Madeleine Sky Ardon filed 21 January 2025,'MA-5'.
[71] Affidavit of Madeline Sky Ardon filed 21 January 2025, 'MA-6'.
[72] Affidavit of Madeline Sky Ardon filed 21 January 2025, 'MA-7', 'MA-9' - 'MA-11'.
[73] Affidavit of Madeline Sky Ardon filed 21 January 2025, 'MA-12'.
These matters were disclosed to the court at the time and submissions filed explaining why Poseidon did not consider that supplementary disclosure to securityholders by way of a supplementary Scheme booklet was required. Essentially, it was submitted that because the placement had no impact on the terms of the Schemes, the proposed timetable, or the opinion of the independent expert, it was not necessary for a supplementary Scheme booklet to be issued. I agree with this submission.
In general, supplementary disclosure will be required where the subject matter of the announcement potentially impacts information contained in the scheme booklet and/or where the announcement includes reference to an aspect of the scheme (such as the directors' recommendation) without drawing attention to the contents of the scheme booklet, including the advantages and disadvantages of the scheme.[74]
[74] See for example Re TASK Group Holdings Ltd [2024] NSWSC 821 [3]; Re Schrole Group Ltd [2024] WASC 515 [195] ‑ [212].
In this case, the subject-matter of the announcement on 10 January 2025 did neither. The announcement confirmed that the placement did not impact BDO's opinion on the Schemes and made no other reference to the Schemes. The subsequent announcement on 21 January 2025 confirmed the impact of the placement on the combined group post implementation of the Scheme on the shareholdings of both Golden Crane and Poseidon shareholders, as well as the pro forma financial position. Given the size of the placement, in the context of Horizon's financial position and capital structure, as well as the announcements made by Poseidon, I accept that supplementary disclosure was not required.
For the purposes of the second court hearing, the relevant consideration was whether there has been full and fair disclosure to securityholders of Poseidon as to all matters relevant to their decision. In my view, there was nothing to suggest that any information provided to securityholders was misleading or inaccurate or that there had not been proper disclosure of all information which was material to the decision of securityholders prior to their vote on the Schemes.
Second, all remaining conditions precedent (apart from court approval at the second court hearing) have been satisfied or waived.[75]
Full and fair disclosure
[75] Affidavit of Madeline Sky Ardon affirmed 6 February 2025, 'MA-2', 'MA-3'.
At the first court hearing, based on the evidence before the court, I was satisfied that the Scheme booklet would provide full and fair disclosure to Shareholders and Optionholders.
The additional affidavit evidence filed by Poseidon establishes that the Scheme booklet was dispatched in the form approved for distribution by the court. As summarised above, nothing had arisen to suggest that there was not full and fair disclosure of all information that was material to the decision of Shareholders and Optionholders prior to them voting on the Schemes.
Satisfaction of s 411(17) of the Act and ASIC's view
ASIC provided a written statement to the effect that it does not object to the Schemes pursuant to s 411(17)(b) of the Act.[76] This satisfied the requirements of s 411(17). Having regard to the nature of the proposed transaction, it could not be said the Schemes were proposed to avoid the operation of ch 6 of the Act.
Public policy and oppression of minorities
[76] Affidavit of Madeline Sky Ardon affirmed 6 February 2025, 'MA-4'.
There was no evidence before the court that the proposed Schemes offend any aspect of public policy. Given the nature of the proposed Schemes, it could not be sensibly suggested that the Schemes offend public policy.
Conclusion
At the second hearing, I was satisfied that the substantive and procedural requirements under s 411(4) of the Act had been satisfied and that it was appropriate for the proposed Schemes to be approved.
For these reasons, at the conclusion of the hearing on 7 February 2025, I made orders in terms of Annexure 'B' to this judgment in respect of the Schemes.
ANNEXURE 'A'
ANNEXURE 'B'
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KS
Associate to the Hon Justice Hill
10 FEBRUARY 2025
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