FEDERAL COURT OF AUSTRALIA
Sino Gold Mining Limited, in the matter of Sino Gold Mining Limited
[2009] FCA 1277
CORPORATIONS – schemes of arrangement – first court hearing at which orders sought for the holding of meetings of share holders and option holders – in the case of option holders, two classes proposed and therefore two meetings of option holders – one class the holders of in-the-money options and the other class the holders of out-of-the-money options – proposal that consideration to be offered for in-the-money options be based on intrinsic value methodology, whereas consideration to be offered for out-of-the-money options be based on Black-Scholes methodology – objection by two in-the-money option holders that holders of in-the-money options should also have the benefit of the Black-Scholes methodology rather than the intrinsic value methodology – principles relating to creation of classes – whether impossible for members of proposed class to consult with other members of it with a view to their common interest – possibility of objection at final court hearing on ground of unfairness or oppression.
Held: meetings ordered on the basis of the two classes of option holders proposed.Corporations Act 2001 (Cth) s 411
Sovereign Life Assurance Company v Dodd [1892] 2 QB 573 followed
UDL Argos Engineering & Heavy Industries Co Ltd v Li Oi Lin [2001] 3 HKLRD 634 referred to
In the matter of Opes Prime Stockbroking Limited (2009) 73 ACSR 385 referred to
Re MIA Group Ltd (2004) 50 ACSR 29 referred to
Re Solution 6 Holdings Ltd (2004) 50 ACSR 113 citedIN THE MATTER OF SINO GOLD MINING LIMITED (ACN 093 518 579)
SINO GOLD MINING LIMITED (ACN 093 518 579)NSD 1149 of 2009
LINDGREN J
6 NOVEMBER 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1149 of 2009
IN THE MATTER OF SINO GOLD MINING LIMITED (ACN 093 518 579)
SINO GOLD MINING LIMITED
(ACN 093 518 579)
Plaintiff
JUDGE:
LINDGREN J
DATE OF ORDER:
28 OCTOBER 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to sub-section 411(1) of the Corporations Act 2001 (Cth) (the Act), there be convened:
(a) a meeting of all holders of fully paid ordinary shares (Shares) of the Plaintiff (excluding Eldorado Gold Corporation (Eldorado) or any of its subsidiaries, or any person who holds Shares on behalf of or for the benefit of Eldorado or any of its subsidiaries) for the purpose of considering and, if thought fit, agreeing, with or without modification, to a scheme of arrangement between them and the Plaintiff (the Share Scheme); and
(b) a meeting of the following classes of creditors for the purpose of considering and, if thought fit, agreeing, with or without modification, to a scheme of arrangement between them and the Plaintiff (the Option Scheme):
(i)all holders of options issued by the Plaintiff to acquire Shares (Options) with an exercise price equal to or…
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- AGLC
- Re Sino Gold Mining Ltd [2009] FCA 1277
- Case
- [2009] FCA 1277
- Decision Date
CaseChat Overview and Summary
The court considered that it would not typically order the convening of meetings unless the scheme, if approved by the statutory majority, would likely be approved by the court on the final hearing. However, the court also noted that it was not bound by the meeting's decision and could consider factors such as oppression if necessary. After reviewing the scheme's details, including the consideration to be received by Sino Gold shareholders and the impact on the company's ownership structure, the court determined that the scheme warranted convening meetings for shareholder and option holder approval.
Consequently, the court approved the convening of meetings for Sino Gold shareholders and option holders to consider and vote on the proposed scheme. The court also approved the form of advertisements to be published in newspapers and ordered the posting of relevant documents to shareholders and option holders. The court further granted specific dispensations from certain procedural rules and directed the adjournment of the proceedings to allow for the meetings and subsequent court approval. These orders were made to facilitate the orderly implementation of the scheme, subject to final court approval.
Orders
Orders of the court
1. Pursuant to sub-section 411(1) of the Corporations Act 2001 (Cth) (the Act), there be convened:
(a) a meeting of all holders of fully paid ordinary shares (Shares) of the Plaintiff (excluding Eldorado Gold Corporation (Eldorado) or any of its subsidiaries, or any person who holds Shares on behalf of or for the benefit of Eldorado or any of its subsidiaries) for the purpose of considering and, if thought fit, agreeing, with or without modification, to a scheme of arrangement between them and the Plaintiff (the Share Scheme); and
(b) a meeting of the following classes of creditors for the purpose of considering and, if thought fit, agreeing, with or without modification, to a scheme of arrangement between them and the Plaintiff (the Option Scheme):
(i) all holders of options issued by the Plaintiff to acquire Shares (Options) with an exercise price equal to or greater than (i) for Options with an exercise price denominated in Australian dollars - A$7.17; and (ii) for Options with an exercise price denominated in Canadian dollars - C$6.49 (the First Option Scheme Meeting); and
(ii) all holders of Options with an exercise price less than (i) for Options with an exercise price denominated in Australian dollars - A$7.17; and (ii) for Options with an exercise price denominated in Canadian dollars - C$6.49 (the Second Option Scheme Meeting and, together with the First Option Scheme Meeting, the Option Scheme Meetings).
2. The meeting in respect of the Share Scheme be held on 2 December 2009 at the Hilton Sydney, Level 2, Function Room 3, 488 George Street, Sydney commencing at 10.00 a.m. AEDT.
3. The meetings in respect of the Option Scheme be held on 2 December 2009 at the Hilton Sydney, Level 2, Function Room 3, 488 George Street, Sydney with:
(a) the First Option Scheme Meeting commencing at the later of 10.30 a.m. AEDT and the conclusion of the Share Scheme meeting; and
(b) the Second Option Scheme Meeting above commencing at the later of 11.00 a.m. AEDT and the conclusion of the First Option Scheme Meeting.
4. The Share Scheme Meeting and the Option Scheme Meetings can resolve to adjourn.
5. Mr James Askew or, should he be unable to attend for any reason, Mr Brian Davidson, is to chair the Share Scheme Meeting and the Option Scheme Meetings and any adjournment of those meetings.
6. The shareholders who are eligible to attend and vote at the Share Scheme Meeting be those whose names are recorded in the register of members of the Plaintiff as holders of Shares at 5.00 pm AEDT on 30 November 2009 (excluding Eldorado or any of its subsidiaries, or any person who holds Shares on behalf of or for the benefit of Eldorado or any of its subsidiaries).
7. The option holders who are eligible to attend and vote at the First Option Scheme Meeting are those whose names are recorded in the register of option holders maintained by the Plaintiff at 5.00 pm AEDT on 30 November 2009 and whose Options have an exercise price equal to or greater than (i) for Options with an exercise price denominated in Australian dollars - A$7.17; and (ii) for Options with an exercise price denominated in Canadian dollars - C$6.49.
8. The option holders who are eligible to attend and vote at the Second Option Scheme Meeting are those whose names are recorded in the register of option holders maintained by the Plaintiff at 5.00 pm AEDT on 30 November 2009 whose options have an exercise price less than (i) for Options with an exercise price denominated in Australian dollars - A$7.17; and (ii) for Options with an exercise price denominated in Canadian dollars - C$6.49.
9. The draft:
(a) document entitled "Scheme Booklet Sino Gold Mining Limited (ABN 42 093 518 579)" comprising the explanatory statements for the Share Scheme and Option Scheme (the Scheme Booklet) at tab 5 of the Exhibit to the Affidavit of Ivo John Polovineo affirmed on 26 October 2009 (incorporating amendments as set out in Annexure B to the affidavit of Guy David Alexander sworn on 28 October 2009);
(b) proxy forms for the resolutions to be passed at the Share Scheme Meeting and the Option Scheme Meetings at tab 6 of the Exhibit to the Affidavit of Ivo John Polovineo affirmed on 26 October 2009; and
(c) share election forms in respect of the Share Scheme and the Option Scheme at tab 7 of the Exhibit to the Affidavit of Ivo John Polovineo affirmed on 26 October 2009; and
(d) sale election forms in respect of the Share Scheme and the Option Scheme at tab 8 of the Exhibit to the Affidavit of Ivo John Polovineo affirmed on 26 October 2009
be and are hereby approved.
10. The convening of the Share Scheme Meeting and the Option Scheme Meetings be advertised once in each of The Australian and The Sydney Morning Herald newspapers in the form, or substantially in the form, of the annexure to these Orders marked "A", such advertisement to be published not less than 14 days before the date appointed for the Share Scheme Meeting and the Option Scheme Meetings.
11. The application under subsection 411(4) of the Act for orders approving the Share Scheme and the Option Scheme be advertised once in each of The Australian and The Sydney Morning Herald newspapers in the form, or substantially in the form, of the annexure to these Orders marked "B", such advertisement to be published not less than 5 days before the date appointed for the hearing.
12. By no later than 4 November 2009 documents in the form, or substantially in the form, of the documents identified in paragraphs 9 (a), (b), (c) and (d) above be posted by pre-paid post (or, in the case of any holder of Shares or Options whose registered address is outside the country, by airmail or dispatched by air courier for postage overseas) to each of the holders of Shares or Options as recorded in the register of ordinary shareholders and the register of option holders as applicable at 5.00 pm AEDT on 30 November 2009.
13. The Plaintiff be dispensed from compliance with:
(a) rule 2.15 of the Federal Court (Corporations) Rules 2000 (Cth), except in so far as that rule applies Regulation 5.6.13 of the Corporations Regulations 2001 (Cth) to the Share Scheme Meeting and the Option Scheme Meetings;
(b) replaceable rules (within the meaning of s135 of the Act) which appear in Part 2G.2 of the Act, to the extent that a replaceable rule in that Part is displaced or modified by the Plaintiff's constitution.
14. The Share Scheme Meeting will otherwise take place in accordance with the Plaintiff's constitution and the Option Scheme Meetings shall take place in accordance with the Plaintiff's constitution as if they were meetings of its members.
15. The proceeding be adjourned to 10.15 am on 4 December 2009.
16. The Plaintiff has liberty to apply.
17. These orders be entered forthwith.
Note:
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Established by: LINDGREN J
The court will not ordinarily order that a meeting be convened unless the scheme is of such a nature and cast in such terms that if it receives support from the statutory majority at the meeting, the court would be likely to approve it on the final hearing: F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72; Re Central Pacific Minerals NL [2002] FCA 239 at [8]. Nonetheless, the court is not bound by the decision of the meeting so that if, for example, the court considered that there had been oppression, it would not approve the Scheme: see, for example, In the matter of Opes Prime Stockbroking Limited (2009)73 ACSR 385 at [66].CONSIDERATIONThe Share Scheme Under the proposed Share Scheme, all of Sino Gold’s issued ordinary shares not already owned by members of the Eldorado Group will be acquired by Eldorado Pacific. The consideration to be received by the Sino Gold shareholders will be:(a)0.55 new Eldorado ordinary shares (Eldorado shares) in the form of Eldorado CHESS Depository Instruments (CDIs) for each Sino Gold share held; or (b)if a Sino Gold shareholder so elects, 0.55 Eldorado ordinary shares for each Sino Gold share held. The new Eldorado shares will rank equally with each existing Eldorado shares. Sino Gold shares in which members of the Eldorado Group have a beneficial interest are excluded from the Share Scheme. Moreover, in the case of certain overseas Sino Gold shareholders (Ineligible Foreign Shareholders), the consideration will take a different form: they will receive the proceeds of the sale of the Eldorado shares to which they would have been entitled if they had been eligible, less transaction costs (cll 4.5 and 4.6 of the Share Scheme). On the “Implementation Date”, all fully paid ordinary shares in Sino Gold will be transferred to Eldorado Pacific whose name will be entered in the Sino Gold share register, and:(i)the holders of ordinary shares in Sino Gold as at the “Record Date” will become entitled to receive 0.55 Eldorado shares for each Sino Gold share held at that date in the form of CDIs or, on election, Eldorado shares; and(ii)Eldorado will cause the names of those persons to be entered in the register of CDIs and will enter the name of CHESS Depository Nominees Pty Ltd in its share register in respect of new Eldorado shares representing the CDIs in question, or, if a Sino Gold shareholder has elected to receive and hold Eldorado shares directly, the name of that shareholder in Eldorado’s share register in respect of the Eldorado shares. The effect of the Share Scheme is that Sino Gold will become a wholly owned subsidiary of Eldorado. The result of the Share Scheme and the Option Scheme, if implemented, will be that the holders of Sino Gold shares and options (excluding Eldorado’s existing 19.8% stake in Sino Gold) will hold approximately 25% of Eldorado.Section 3(a)(10) of the Securities Act 1933 (USA) The Eldorado CDIs and Eldorado shares to be issued as consideration will not be registered under the United States Securities Act of 1933 (Securities Act) and therefore may not be offered or sold in the United States unless an exemption from the requirement of registration is available. The exemption to be relied on is found in s 3(a)(10) of the Securities Act.