Re QMS Media Ltd

QMS Media Limited sought approval from the Federal Court for a scheme of arrangement that would result in the acquisition of all QMS shares by Shelley BidCo Pty Ltd, a subsidiary of Shelley Topco Pty Ltd, itself an investment vehicle of Quadrant Private Equity. The scheme involved separate meetings for QMS shareholders, with two categories of shareholders – the Rollover Shareholders and other QMS Shareholders – receiving different forms of consideration. The Rollover Shareholders, controlled by the Global Chief Executive Officer and the QMS Australia Chief Executive Officer, were to receive scrip consideration in addition to cash, while other QMS Shareholders would receive only cash. The legal issues centred on whether the scheme, which gave a disproportionate benefit to certain shareholders, could be approved under section 411(4)(b) of the Corporations Act 2001 (Cth). The Court examined the fairness of the scheme to all shareholders and the adequacy of the explanatory statement provided to them.

The Court found that the scheme was fair and reasonable for all shareholders. It noted that the Rollover Shareholders had voluntarily agreed to the terms, which were reflective of market conditions and the nature of the investment. The Court also determined that the explanatory statement was sufficient to allow shareholders to make an informed decision. The Court held that the scheme met the requirements for approval under section 411(4)(b) of the Corporations Act, despite the unequal treatment of shareholders, as it was fair and reasonable in all the circumstances.

Pursuant to the orders, Shelley BidCo Pty Ltd was granted leave to be heard without becoming a party to the proceeding. The Court ordered the convening of separate meetings for QMS shareholders to consider and approve the scheme, with detailed provisions for the communication of scheme-related documents and the conduct of the meetings. The scheme was subject to specific conditions, including the publication of an advertisement in The Australian and the appointment of a chairperson for the meetings. The hearing of the originating process was adjourned to a later date to allow for the scheme meetings to take place.

The final orders granted approval for the scheme of arrangement, subject to the conditions outlined, and provided for the convening of meetings to approve the scheme, with specific provisions for the communication and voting processes. The scheme was approved on the basis that it was fair and reasonable to all shareholders, despite the differential treatment of certain shareholders.