Re Zenith Energy Ltd; [No 2] - [2020] WASC 275

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   RE ZENITH ENERGY LTD; EX PARTE ZENITH ENERGY LTD [No 2] [2020] WASC 275
CORAM:   HILL J
HEARD:   22 JULY 2020
DELIVERED          :   22 JULY 2020
FILE NO/S:   COR 51 of 2020
EX PARTE

ZENITH ENERGY LTD
Plaintiff

Catchwords:

Corporations - Scheme of arrangement - Application for orders pursuant to s 1319 of the Corporations Act 2001 (Cth) - Supplementary disclosure regarding increase in consideration - Whether court should give leave to dispatch a supplementary disclosure statement

Legislation:

Corporations Act 2001 (Cth), s 411(1), s 1319

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff

S K Dharmananda SC & J Sippe

Solicitors:

Plaintiff

Allens

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

Re Amcom Telecommunications (No 2) [2015] FCA 410
Re Amcom Telecommunications Limited (No 3) [2015] FCA 596
Re Aurora Oil & Gas Ltd [2014] FCA 612
Re Cellestis Ltd (No 2) [2011] VSC 329
Re Konekt Limited (No 2) [2019] FCA 1997
Re Prime Media Group Ltd [2019] NSWSC 1888
Re Prime Media Group Ltd; Re Seven Network Ltd (No 2) [2010] FCA 355
Re Zenith Energy Ltd; Ex Parte Zenith Energy Ltd [2020] WASC 266

HILL J:

By interlocutory process dated 21 July 2020, Zenith Energy Ltd (Zenith Energy) sought directions under s 1319 of the Corporations Act 2001 (Cth) (Act) for the dispatch of supplementary materials to its shareholders for meetings scheduled to be held on 31 July 2020.
In support of its application, the plaintiff relies on the affidavit of Andrew James Pascoe affirmed 21 July 2020.
The interlocutory application came on for hearing before me on an urgent basis on 22 July 2020. At the conclusion of the hearing, I made orders in terms of the interlocutory process and indicated that I would subsequently publish brief reasons for my decision. These are those reasons.

Factual background

On 25 June 2020, the court made orders for two meetings of members of Zenith Energy to be convened at 10.00 am (AWST) on 31 July 2020 to consider a proposed scheme of arrangement (Scheme) and for the dispatch of a Scheme booklet to shareholders.[1] Proxies for the Scheme meetings are required to be lodged by 10.00 am (AWST) on 29 July 2020.
[1] Re Zenith Energy Ltd; Ex Parte Zenith Energy Ltd [2020] WASC 266.
On 21 July 2020, Zenith Energy entered into a second Deed of Amendment and Restatement in relation to the Scheme Implementation Deed (Second SID).[2] Under the Second SID, the bidder, Elemental Infrastructure BidCo Pty Ltd (Elemental), agreed to increase the cash consideration under the Scheme from $1.01 to $1.05 (Increased Cash Consideration).
[2] Affidavit of Andrew James Pascoe filed 21 July 2020 [6], 'AJP45'.
Zenith Energy made an announcement to the Australian Stock Exchange (ASX) on 21 July 2020 in relation to its entry into the Second SID and stated that the Increased Cash Consideration was Elemental's 'best and final' offer.[3] In the same announcement, Zenith Energy announced that the board…

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 Zenith Energy Ltd; [No 2]

Details

AGLC: Re Zenith Energy Ltd; [No 2] [2020] WASC 275
Case: [2020] WASC 275
Decision Date: 22 JULY 2020

CaseChat Overview and Summary

The case involved an application by Zenith Energy Limited for orders pursuant to section 1319 of the Corporations Act 2001. The company sought to implement a scheme of arrangement to facilitate its acquisition by a larger corporation. The dispute centred on whether the Court should grant leave to dispatch a supplementary disclosure statement to the creditors of Zenith Energy Ltd, detailing an increase in the proposed consideration for their shares. This was a crucial matter as it affected the fairness and transparency of the proposed scheme.

The primary legal issue before the Court was whether it should permit the supplementary disclosure regarding the increased consideration to be made to the relevant stakeholders. This required the Court to consider the principles of fairness and transparency in corporate schemes of arrangement. It also needed to assess whether the supplementary disclosure would assist the creditors in making an informed decision regarding the proposed scheme.

The Court held that the supplementary disclosure should be allowed as it was necessary to ensure that the creditors had all the relevant information to make an informed decision about the proposed scheme. The Court noted that the additional information regarding the increased consideration was significant and material, and its disclosure was crucial for the creditors to fully understand the implications of the scheme. The Court concluded that the supplementary disclosure was necessary to uphold the principles of fairness and transparency in the scheme of arrangement process.

In conclusion, the Court granted leave for the supplementary disclosure statement to be dispatched to the creditors. This decision was based on the importance of ensuring that the creditors had all the necessary information to make an informed decision about the proposed scheme. The Court emphasised that the principles of fairness and transparency in corporate schemes of arrangement were paramount, and that the supplementary disclosure was a necessary step to uphold these principles.

Orders