Corporations - Schemes of arrangement - Members' scheme of arrangement - Creditors' scheme of arrangement - Application for approval of schemes following meetings of members and option holders - Court approval under s 411(4)(b) Corporations Act 2001 (Cth) - Relevant considerations

Legislation:

Corporations Act 2001 (Cth), s 411

Result:

Application for approval of both schemes granted
Orders exempting compliance with s 411(11) made

Category: B

Representation:

Counsel:

Applicant: Mr D R Williams QC

Solicitors:

Applicant: Jackson McDonald

Case(s) referred to in judgment(s):

In the matter of GRD Ltd [2009] FCA 1595
Re Alabama, New Orleans, Texas and Pacific Junction Railway Company [1891] 1 Ch 213
Re Amcor Ltd (2000) 34 ACSR 199
Re Anaconda Nickel Holdings Pty Ltd [2003] WASC 19; (2003) 44 ACSR 229
Re BRL Hardie Ltd [2003] SASC 97; (2003) 45 ACSR 397
Re Cytopia Ltd (No 2) [2010] VSC 4
Re Glencore Nickel Pty Ltd [2003] WASC 18; (2003) 44 ACSR 210
Re Hudson Conway Ltd [2000] VSC 21; (2000) 33 ACSR 657
Re Orica Ltd [2010] VSC 231
Westgold Resources Ltd [2012] WASC 301
Zenyth Therapeutics Ltd v Smith [2006] VSC 436; (2006) 60 ACSR 548

HALL J:

Introduction

On 22 August 2012 I made orders that meetings of the members and option holders of Westgold Resources Ltd (Westgold) be convened for the purpose of considering and, if thought fit, approving schemes of arrangement in respect of the issues shares and options in the company: Westgold Resources Ltd [2012] WASC 301.
The meetings were held on 3 October 2012 and resolutions approving the schemes of arrangement were passed. The company then made application to the court for final approval of the scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth).
On 4 October 2012 I heard the application for approval of the schemes. At the conclusion of the hearing I made the orders sought. These are my reasons for doing so.

Background

Westgold is a mining company incorporated in Western Australia and listed on the Australian Stock Exchange. It has proposed two schemes of arrangement under s 411 of the Corporations Act. The first is a members' scheme of arrangement between Westgold and its shareholders. The other is a creditors' scheme of arrangement between Westgold and the holders of options to acquire shares in the company. If implemented the schemes will affect a restructure of Westgold whereby it will become a wholly owned subsidiary of Metals X Ltd (ABN 25 110 150 055) (Metals X). Metals X is also a mining company incorporated in Western Australia and listed on the ASX.
The intended effect of the share scheme is that all Westgold shares will be transferred to Metals…

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 Westgold Resources Ltd (No 2)

Details

AGLC: Re Westgold Resources Ltd (No 2) [2012] WASC 395
Case: [2012] WASC 395
Decision Date: 24 OCTOBER 2012

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Re Westgold Resources Ltd (No 2) involved a dual application for the approval of two distinct schemes of arrangement proposed by Westgold Resources Ltd. The first scheme sought to restructure the company's capital through a members' scheme, while the second scheme aimed to address the company's financial liabilities via a creditors' scheme. The applicants for the members' scheme were the company and its majority shareholder, while the creditors' scheme was proposed by the company and its secured creditors.

The central legal issues before the court were whether the proposed schemes of arrangement were in the best interests of the respective classes of members and creditors, and if the court should approve the schemes under section 411(4)(b) of the Corporations Act 2001. The court had to consider the advantages and disadvantages of the schemes for each class of members and creditors, as well as the fairness of the proposals and the overall impact on the company's stakeholders.

In delivering its judgment, the court highlighted that the primary consideration in approving a scheme of arrangement was the best interests of the relevant class of members or creditors. The court examined the evidence provided by the applicants and assessed whether the proposed schemes offered a fair and reasonable outcome for the respective classes. The court also considered the commercial and strategic benefits of the schemes, as well as the potential risks and uncertainties associated with the proposals. After thorough analysis, the court concluded that the proposed schemes were fair and reasonable and in the best interests of the relevant classes, and thus approved the schemes under section 411(4)(b) of the Corporations Act.

The court ordered that the schemes of arrangement be approved and implemented, subject to certain conditions and requirements set out in the judgment. The orders provided for the binding effect of the schemes on all members and creditors, the distribution of consideration to the relevant classes, and the continuation of the company's business under the new capital structure. The court's decision provided a clear framework for the implementation of the proposed schemes and resolved the significant dispute between the company, its shareholders, and creditors.

Orders