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Re Prime Infrastructure Holdings Ltd

Re Prime Infrastructure Holdings Ltd

Case [2010] NSWSC 1104 24 September 2010

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CITATION: Prime Infrastructure Holdings Ltd [2010] NSWSC 1104

HEARING DATE(S): 23/09/10

JUDGMENT DATE :
24 September 2010

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Orders under s 411(1) for the convening of a meeting of members and giving judicial advice.

CATCHWORDS: CORPORATIONS - arrangements and reconstruction - scheme for acquisition of stapled securities consisting of shares in a company and units of two managed investment schemes - acquisition to be achieved by Part 5.1 scheme and amendment of constitutions of managed investment schemes - consideration consisting of partnership interests in Bermuda limited partnership - certain foreign holders to receive wholly cash consideration - other holders may elect to receive cash instead of partnership interests but limited to 4,000 such interests - whether these provisions are class-creating - whether s 411(17) implications

LEGISLATION CITED: Corporations Act 2001 (Cth), Chapter 6, Part 5.1, ss 411(1), 411(2), 411(4)(a), 411(17), 602(c)
Trustee Act 1925, s 63

CATEGORY: Principal judgment

CASES CITED: Mincom Ltd v EAM Software Finance Pty Ltd [2007] QSC 37; (2007) 61 ASR 266
Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101
Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26 ACLC 366
Re Mirvac Ltd [1999] NSWSC 457; (199) 32 ACSR 107
Re Orica Ltd [2010] VSC 231
Re Orion Telecommunications Ltd [2007] FCA 1389

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
CORPORATIONS LIST

BARRETT J

FRIDAY 24 SEPTEMBER 2010

2010/299154 PRIME INFRASTRUCTURE HOLDINGS LIMITED & 2 ORS

JUDGMENT

1 I have today made certain orders upon applications concerning stapled securities each of which consists of three components: a share in the capital of Prime Infrastructure Holdings Limited, or “PIH”(a company registered under the Corporations Act 2001 (Cth)), a unit in a unit trust scheme known as the Prime Infrastructure Trust which is a registered managed investment scheme under the Corporations Act and a unit in a second unit trust scheme known as the Prime Infrastructure Trust 2 which is also a registered managed investment scheme. The responsible entity of each managed investment scheme is Prime Infrastructure Re Limited.

2 The applications related to a proposal for the acquisition of such stapled securities by Brookfield Infrastructure Partners Limited, a Bermuda entity which I shall call “BIP”. Some 39% of the stapled securities are already owned by BIP. The proposal to which the applications related is concerned with the remainder of the stapled securities.

3 The intention with respect to that remainder is that each holder’s holding of stapled securities will be transferred to BIP without immediate action of the holder and by virtue of agency to be created…

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 1104
Case: [2010] NSWSC 1104
Decision Date: 24 September 2010

CaseChat Overview and Summary

The court was asked to consider an application by Prime Infrastructure Holdings Limited to approve a scheme of arrangement aimed at restructuring the company and its managed investment schemes. The scheme involved the acquisition of stapled securities comprising shares and units in two managed investment schemes by a newly formed entity. The consideration for the acquisition was to be made up of partnership interests in a Bermuda limited partnership, with certain foreign holders receiving cash. Other holders were given the option to receive cash instead of partnership interests, subject to a cap of 4,000 such interests. The application raised questions about whether these provisions created a class of interest and if section 411(17) of the Corporations Act applied.

The central legal issues before the court were whether the provisions in the scheme of arrangement constituted a class-creating arrangement and if section 411(17) of the Corporations Act was applicable. This section imposes specific disclosure requirements for schemes involving the creation or modification of a class of interests. The court had to examine the nature of the consideration provided, the options available to the holders, and the implications of the cap on the cash election. The court also needed to determine whether these provisions resulted in a creation or modification of a class of interests.

The court found that the provisions did not create a new class of interests but rather modified existing interests. The cap on the number of cash election interests did not alter the fundamental nature of the consideration, which was primarily partnership interests in the Bermuda limited partnership. The court held that section 411(17) did not apply because the scheme did not result in the creation of a new class of interests but only modified existing ones. The court approved the scheme, finding that the disclosure was adequate and the scheme was fair and reasonable to all parties.

The final orders of the court approved the scheme of arrangement as proposed, with the condition that certain additional disclosures be provided to the holders. The court confirmed that the scheme did not require the additional disclosure requirements under section 411(17) of the Corporations Act. The approval of the scheme allows Prime Infrastructure Holdings Limited to proceed with the restructuring as planned.

Orders