FEDERAL COURT OF AUSTRALIA
Solco Ltd, in the matter of Solco Ltd [2015] FCA 635
Citation: Solco Ltd, in the matter of Solco Ltd [2015] FCA 635 Parties: SOLCO LTD ACN 084 656 691 File number: WAD 126 of 2015 Judge: MCKERRACHER J Date of judgment: 24 June 2015 Catchwords: CORPORATIONS – application under s 1322(4) of the Corporations Act 2001 (Cth) (Act) by issuer of securities for extension of the period of time for admission to quotation on the Australian Securities Exchange in respect of shares issued pursuant to a prospectus – relevant period of time prescribed by ss 723(3)(b) and 724(1)(b)(ii) of the Act – application under s 254E of the Act for validation of the issue of shares made pursuant to the prospectus Legislation: Corporations Act 2001 (Cth) ss 254E, 723, 724, 1322 Cases cited: Re Golden Gate Petroleum Ltd (2004) 50 ACSR 659
Re Insurance Australia Group Ltd (2003) 128 FCR 581
Re Laserbond Limited [2007] FCA 2056
Re NuSep Ltd (2007) 62 ACSR 301
Re Tony Barlow Australia Limited (2005) 53 ACSR 1
Re Wave Capital Ltd (2003) 47 ACSR 418Date of hearing: 2 June 2015 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 37 Counsel for the Plaintiff: Mr G Young Solicitor for the Plaintiff: Steinepreis Paganin
IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
WAD 126 of 2015
IN THE MATTER OF SOLCO LTD ACN 084 656 691
BETWEEN: SOLCO LTD ACN 084 656 691
Plaintiff
JUDGE:
MCKERRACHER J
DATE OF ORDER:
2 JUNE 2015
WHERE MADE:
PERTH
THE COURT ORDERS THAT:
1.Pursuant to section 1322(4)(d) of the Corporations Act 2001 (Cth) (Act), the period set out in sub-sections 723(3)(b) and 724(1)(b)(ii) of the Act for the admission to quotation by ASX Limited (ASX) of securities of the Plaintiff issued pursuant to the prospectus dated 25 November 2014 (Prospectus) be extended to the date which is 2 months after the date of the Second Supplementary Prospectus for the offer to be lodged with the Australian Securities and Investments Commission (ASIC), a draft of which is annexure ALD-4 to the affidavit of Andrew Lawrence Disney affirmed on 29 May 2015.
2.Subject to the Plaintiff’s securities being admitted to quotation by the ASX within the period of 2 months after the date of the Second Supplementary Prospectus, then pursuant to s 254E of the Act the issue of shares by the Plaintiff pursuant to the Prospectus is hereby validated and confirmed.
3.The Plaintiff do forthwith:
a.lodge a copy of these orders with ASIC; and
b.make an announcement to the ASX disclosing the terms of these orders.
4.The Plaintiff lodge the Second Supplementary Prospectus (in the form of the draft which is annexure ALD-4 to the affidavit of Andrew Lawrence Disney affirmed on 29 May 2015, together with any amendments required or approved by ASIC or by ASIC and the ASX) with ASIC forthwith.
5.The Plaintiff and all other…
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- AGLC
- Re Solco Ltd [2015] FCA 635
- Case
- [2015] FCA 635
- Decision Date
CaseChat Overview and Summary
The court considered the nature of the transaction and the rights of subscribers. It was noted that subscribers had had two opportunities to withdraw their applications for shares. The court found that the transactions involved in the back door listing were the acquisition of Go Group from Urban Group and a 1 for 1 rights issue share offer to existing shareholders. The court also noted that ASX's concerns about the set off of funds had been resolved. ASIC's concerns about the disclosures in the prospectus and subsequent events were addressed through negotiations leading to the preparation of a supplementary prospectus.
The court granted the application for an extension of time for admission to quotation and validation of the issue of shares. It ordered that the period for admission to quotation be extended to two months after the date of the Second Supplementary Prospectus. The validation of the issue of shares was subject to the securities being admitted to quotation within the extended period. The court also directed Solco Ltd to lodge the orders with ASIC, make an announcement to the ASX, and submit the Second Supplementary Prospectus with ASIC. Interested or affected parties were given liberty to apply to vary the orders with prior notice.
Orders
Orders of the court
1. Pursuant to section 1322(4)(d) of the Corporations Act 2001 (Cth) (Act), the period set out in sub-sections 723(3)(b) and 724(1)(b)(ii) of the Act for the admission to quotation by ASX Limited (ASX) of securities of the Plaintiff issued pursuant to the prospectus dated 25 November 2014 (Prospectus) be extended to the date which is 2 months after the date of the Second Supplementary Prospectus for the offer to be lodged with the Australian Securities and Investments Commission (ASIC), a draft of which is annexure ALD-4 to the affidavit of Andrew Lawrence Disney affirmed on 29 May 2015.
2. Subject to the Plaintiff’s securities being admitted to quotation by the ASX within the period of 2 months after the date of the Second Supplementary Prospectus, then pursuant to s 254E of the Act the issue of shares by the Plaintiff pursuant to the Prospectus is hereby validated and confirmed.
3. The Plaintiff do forthwith:
a. lodge a copy of these orders with ASIC; and
b. make an announcement to the ASX disclosing the terms of these orders.
4. The Plaintiff lodge the Second Supplementary Prospectus (in the form of the draft which is annexure ALD-4 to the affidavit of Andrew Lawrence Disney affirmed on 29 May 2015, together with any amendments required or approved by ASIC or by ASIC and the ASX) with ASIC forthwith.
5. The Plaintiff and all other interested or affected parties have liberty to apply to vary these orders upon first giving 24 hours prior written notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
That substantive affidavit evidence in support reveals that the transactions involved in the back door listing were:(a)the acquisition of the Go Group from Urban Group in consideration of the issue of 627,606,378 fully paid ordinary shares of Solco (Consideration Shares); and(b)a 1 for 1 rights issue share offer to existing shareholders of Solco with an associated shortfall offer, to raise up to $4,100,000 before costs, with a minimum subscription of $3,000,000; Urban Group agreed to underwrite $3,000,000 of this capital raising (underwriting agreement). The acquisition of Go Group was approved at the annual general meeting of Solco on 28 November 2014. On 20 February 2015, ASX sent Solco’s then solicitors a conditional re-instatement letter. The former solicitors advised Solco that they considered that ASX would admit the shares to be issued under the Prospectus to quotation by 25 February 2015. On 23 and 24 February 2015, in anticipation of re-admission of the securities of Solco to quotation within the three month period, Solco completed the acquisition of the Go Group. This included the issue of the Consideration Shares, appointing three nominees of Urban Group as directors of Solco and issuing 153,000,000 shares to subscribers under the Prospectus. Approximately 70,600,000 of these were pursuant to the Underwriting Agreement. On 25 February 2015, being the last day of the three month period for admission to quotation, at 1.02 pm WST ASX advised Solco’s then solicitors that ASX would not be reinstating Solco’s shares to quotation. An urgent application was made at around 5.00 pm on 25 February 2015 to ASIC to extend the three month periods for the shares to be admitted to quotation by ASX under s 723 and s 724 of the Act. ASIC refused the application on 16 March 2015. On 12 March 2015 the current solicitors were appointed in place of Solco’s former solicitors.The position taken by ASX The matters that led to the ASX decision not to re-admit Solco’s shares to quotation, principally arose from the set off of funds due to the Urban Group in relation to the acquisition, against funds due from the Urban Group to meet its underwriting obligations. The concerns of ASX about that aspect of the transaction have now been resolved. On 24 April 2015, ASX advised that it did not oppose the orders proposed in the Originating Process and did not intend to appear at the final hearing.Negotiations with ASIC – ‘withdrawal rights’ In the meantime, on 20 March 2015, ASIC advised of concerns that it had with the disclosures in the Prospectus dated 25 November 2014, together with concerns about disclosures relating to events subsequent to the date of the Prospectus. For a period of about 4 weeks until 15 April 2015 there were negotiations concerning required disclosures, including certain audited accounts of entities and businesses. On 28 April 2015, ASIC advised that it considered that a one month withdrawal right should be offered by way of a supplementary prospectus before the Court hearing, and expected a further one month withdrawal right would be required following the Court hearing upon Solco lodging a further supplementary prospectus providing all disclosures necessary to resolve ASIC’s concerns.