Re Viking Industries Ltd

[2008] QSC 31

[2008] QSC 31

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

MCMURDO J

No BS 11108 of 2007

IN THE MATTER OF VIKING INDUSTRIES LIMITED ABN 41 010 559 903
VIKING INDUSTRIES LIMITED ABN 41 010 559 903	Applicant

BRISBANE

..DATE 06/02/2008

JUDGMENT

HIS HONOUR:  This is an application under section 411 of the

Corporations Act for the approval of a scheme of arrangement.

The scheme is between the applicant, Viking Industries

Limited, and its shareholders other than the holders of

certain shares described as the "excluded shares".  The scheme

involves the acquisition by Provik, which effectively holds

just under 30 per cent of Viking shares, of the remainder of

Viking shares, at a price of $1.09 per share.  The shares

presently held by Provik or its associates are the excluded

shares.  No party other than the applicant Viking appears on

this application.

The Australian Securities & Investments Commission, ASIC, has

advised by letter dated 4 February 2008, expressly written

under section 411(17)(b), that it has no objection to the

scheme, being satisfied that the scheme has not been proposed

for the purpose of enabling any person to avoid the operation

of any of the provisions of Chapter 6 of the Act.  The letter

further advised that ASIC was not intending to appear at the

hearing.

At the first Court hearing for this scheme on 12 December

2007, I ordered that there be a meeting of members on 31

January 2008.  I approved the terms of the explanatory booklet

then proposed to be sent to members.  I am satisfied that a

booklet, effectively in those terms, was posted to each

member.  That is proved by an affidavit of Mr P N Nicholls, to

which is exhibited a statement in Form 530 signed by him.

There are some differences between the booklet posted to

members and that before me on the first Court hearing, but

they are insignificant, involving differences in pagination,

formatting and the addition of a reference to the Contents

page.  I am also satisfied that the booklet was lodged with

ASIC after the first Court hearing later that day.

I am satisfied that the meeting was duly held and that the

necessary majorities were obtained.  A total of 390 members

holding 98,569,258 shares in Viking were present at the

meeting in person or by proxy and voted.  This represents

36.38 per cent of the members of Viking, holding 59.18 per

cent of the total number of shares.  Three hundred and

sixty-nine members holding 98,081,346 shares voted in favour

of the scheme resolution.  This represents 99.51 per cent of

the votes cast.  The number of members voting in favour of the

scheme resolution represented 94.62 per cent of members

present and voting either in person or by proxy.  Against the

scheme there were the votes of 21 members holding 487,912

shares.

A copy of the minutes of the meeting is exhibited to an

affidavit of Mr Babon, Chairman of the Board of Viking and who

acted as Chairman of the Court ordered meeting.  According to

the minutes there were two questions in response to his

invitation for questions and comments from the floor.  One

member asked whether if the scheme was approved the Court

could disallow that approval.  Another member asked whether

Viking's board was satisfied that the necessary funding was

secure.

It appears that there was no expressed opposition by any

member, consistently with there being no appearance by or on

behalf of any member at yesterday's hearing.  An affidavit

from a solicitor for Viking proves that no person communicated

anything to the effect that he or she intended to appear, as

shareholders were asked to do if intending to appear.  The

hearing was duly advertised in the Courier-Mail on 30 January

2008.

The shares in Viking are valued by an independent report of

Price Waterhouse Coopers Securities Limited.  Mr Wellington

from PWC is a co-author of its report and he has verified the

report by affidavit.  The report was contained in the

explanatory booklet.  The factual content of that booklet

beyond the PWC report is also proved.  According to the PWC

report the scheme is fair and reasonable and in the best

interests of Viking shareholders in the absence of a superior

offer emerging.  PWC valued the various business units of

Viking, concluding that Viking had a range of equity value

from 128.1 million to 133.2 million dollars, equating to a

value per share of seventy-six to eighty cents.  The proposed

price of $1.09 represents a premium of 36.3 to 43.3 per cent

over that value.

The independent directors of Viking unanimously recommended

that upon the basis of PWC's advice, and in the absence of a

superior offer emerging, members should vote in favour of the

scheme.  In my conclusion the price offered is fair and

reasonable. 

The scheme provides for a trust fund into which Provik will pay and from which shareholders will be paid for their shares.  Funds will be held upon an express trust for the shareholders until payment out, avoiding what has been described as a performance risk in such cases.  Further, Provik has executed a Deed Poll in favour of all shareholders by which it undertakes to pay the price.

I have evidence from the director of Provik as to the finance

facility in place for the implementation of this scheme, and

according to that the funding is available and there is no

substantial doubt raised by any other material as to that

matter.  The scheme is the subject of an agreement between

Viking and Provik entitled "The Transaction Implementation

Agreement."  According to certificates executed on behalf of

each of Viking and Provik, all conditions precedent in that

agreement, and in the scheme of arrangement, other than that

relating to Court approval, have been satisfied or waived.

In summary, the applicant has complied with the requirements

of section 411, shareholders have been fairly appraised of

the proposal and have approved it by well more than the

required majorities, and the scheme is fair and reasonable.

The scheme will be approved.  It is appropriate to exempt

Viking from the requirements of section 411(11).

It is ordered that pursuant to section 411(4)(b) of the

Corporations Act, the scheme of arrangement between the

applicant, Viking Industries Limited, and its shareholders,

other than the holders of an excluded share as defined

therein, in the form annexed to a document which I have marked

"A", be approved and that Viking be exempted from compliance

with section 411(11) of the Act in relation to that order.

There will be no order as to costs.

I have initialled the draft order in those terms and placed it

with the papers.

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