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Re Prime Infrastructure Holdings Ltd

Re Prime Infrastructure Holdings Ltd

Case [2010] NSWSC 1337 18 November 2010

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CITATION: Prime Infrastructure Holdings Ltd [2010] NSWSC 1337

HEARING DATE(S): 24/09/10, 15/11/10

JUDGMENT DATE :
18 November 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Order approving Part 5.1 scheme subject to amendment

CATCHWORDS: CORPORATIONS - arrangements and reconstructions - scheme of arrangement between a company and its members other than acquirer, a named associate of acquirer, any "subsidiary" of acquirer and anyone holding securities on behalf of or for the benefit of acquirer, its named associate or any "subsidiary" of acquirer - application for approval of scheme - need for amendment to define with precision members not bound - such amendment within s 411(6) power to approve subject to amendment

LEGISLATION CITED: Corporations Act 2001 (Cth), Part 5.1, ss 411(4)(b), 411(6)

CATEGORY: Principal judgment

CASES CITED: Re Investorinfo Ltd [2005] FCA 1848; (2005) 24 ACLC 44
Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1104

PARTIES: Prime Infrastructure Holdings Limited - First Plaintiff
Prime Infrastructure Re Limited - Second Plaintiff
Prime Infrastructure Re Limited - Third Plaintiff

FILE NUMBER(S): SC 2010/299154

COUNSEL: Mr T F Bathurst QC - Plaintiffs
Mr A J Meagher SC - Brookfield Infrastructure Partners Ltd by leave

SOLICITORS: Freehills - Plaintiffs
Mallesons Stephen Jaques - Brookfield Infrastructure Partners Ltd

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONSLIST

BARRETT J

THURSDAY 18 NOVEMBER 2010

2010/299154 PRIME INFRASTRUCTURE HOLDINGS LIMITED & 2 ORS

JUDGMENT

1 On 17 November 2010, orders were made to bring into operation the acquisition mechanism in respect of Prime Infrastructure stapled securities that was the subject of reasons published on 24 September 2010: Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1104.

2 One matter that arose calls for comment.

3 The element of the acquisition mechanism consisting of a compromise or arrangement under Part 5.1 of the Corporations Act 2001 (Cth) was expressed to be a scheme of arrangement between the company (called “PIHL”) and the “holders of fully paid ordinary shares in PIHL (other than the Excluded Security Holder”).

4 There was a definition of “Excluded Securityholder” as follows:

Excluded Securityholder:

5 Other definitions elucidated the meaning of “BIP”, “Prime Stapled Securities” and “Subsidiary” in ways to which it is not necessary to refer.

6 It seemed to me undesirable to make an order under s 411(4)(b) of the Corporations Act approving the scheme of arrangement until it had been amended to identify with clarity and precision each “Excluded Securityholder”.

7 Without such an amendment, one would never know whether or not a particular holder of securities was bound by the scheme. At least two possibilities would exist in relation to every holder that was a corporation: that it…

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.

Continue reading Re Prime Infrastructure Holdings Ltd

Details

AGLC: Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337
Case: [2010] NSWSC 1337
Decision Date: 18 November 2010

CaseChat Overview and Summary

This case involved an application by Prime Infrastructure Holdings Limited for approval of a scheme of arrangement under Part 2F.1 of the Corporations Act 2001. The application was brought in relation to a proposed demerger of Prime Infrastructure's business into a new company, and the subsequent acquisition of the new company by certain entities. The members of Prime Infrastructure were not the only parties involved, as the scheme also affected a named associate of the acquirer, any subsidiary of the acquirer, and anyone holding securities on behalf of or for the benefit of the acquirer, its named associate or any subsidiary of the acquirer.

The primary legal issue before the court was whether the scheme could be approved under section 411(6) of the Corporations Act, given that it did not precisely define the members who would not be bound by the scheme. The court was tasked with determining whether the court had the power to approve the scheme subject to an amendment that would more precisely define the members not bound by the scheme. The court considered the relevant statutory provisions and case law to determine whether such an amendment would fall within the court's power to approve the scheme.

The court found that the scheme, as initially proposed, did not precisely define the members who would not be bound by the scheme, which was a requirement under section 411(6) of the Corporations Act. However, the court also found that the power to approve the scheme was not limited to approving the scheme as it stood, and that the court could approve the scheme subject to an amendment that would more precisely define the members not bound by the scheme. The court held that such an amendment would fall within the court's power to approve the scheme, as it would not change the fundamental nature of the scheme or the rights of the parties involved.

The court made an order approving the scheme, subject to the amendment to more precisely define the members not bound by the scheme. The court also made orders for costs and directions for the preparation of the scheme documents. The court's decision provides guidance to companies and their legal advisers on the requirements for approving a scheme of arrangement under the Corporations Act, and the court's power to approve a scheme subject to amendment.

Orders