Kirkcaldie & Stains Limited
[2016] NZHC 112
•9 February 2016
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2015-485-989 [2016] NZHC 112
IN THE MATTER OF an arrangement under Part 15 of the
Companies Act 1993
BETWEEN
KIRKCALDIE & STAINS LIMITED First Applicant
AND
THE KIRKCALDIE & STAINS TRUSTEE COMPANY LIMITED Second Applicant
On the Papers Counsel:
H Wilson and G Fitzgerald for the Applicants
Judgment:
9 February 2016
JUDGMENT OF ASSOCIATE JUDGE SMITH
[1] The first applicant (Kirkcaldie) applies under pt 15 of the Companies Act 1993 (the Act) for orders approving an arrangement under which four out of every five shares in Kirkcaldie registered in the name of each shareholder at a prescribed date (the Record Date) will be cancelled, with $2.3602 per share paid to each registered holder of a cancelled share. A copy of the proposed arrangement is annexed to this judgment.
[2] The second applicant (the trustee company) is a wholly-owned subsidiary of Kirkcaldie, and has acted as trustee of Kirkcaldie’s employee share scheme (the Scheme) which was established in 1998. The Scheme is no longer operating. The trustee company holds 35,850 shares in Kirkcaldie.1 It is proposed that the trustee company will participate in the arrangement so that four fifths of the trustee
company’s shares will be cancelled and it will be paid $2.3602 for each of the
1 These shares have been held pursuant to s 82(6) of the Act, under which a subsidiary may hold shares in its holding company in the capacity as personal representative or as trustee.
KIRKCALDIE & STAINS LIMITED v THE KIRKCALDIE & STAINS TRUSTEE COMPANY LIMITED [2016] NZHC 112 [9 February 2016]
cancelled shares. The arrangement then proposes that, following the payment out to each shareholder of the amount payable for their cancelled shares, the residual 7,170 shares in Kirkcaldie held by the trustee company will be cancelled, and the Scheme will be wound up.
[3] The application is made ex parte, and separate orders have been sought dispensing with service and representation of other parties.
Background
[4] For many years Kirkcaldie has operated a well known department store on Lambton Quay, Wellington. However, over the last decade Kirkcaldie has been facing a more challenging retail environment, and has suffered declining store revenues.
[5] On 4 June 2015, Kirkcaldie entered into a conditional agreement for the sale of its retail business to David Jones Pty Ltd (David Jones), a wholly-owned subsidiary of Woolworths Holdings Ltd (a company listed on the South African stock exchange).
[6] Under the agreement with David Jones, David Jones was to acquire Kirkcaldie’s main store lease at Lambton Quay, together with associated brands and trademarks. The agreement with David Jones was expressly conditional on Kirkcaldie’s shareholders approving the sale and the terms and conditions of the sale agreement by 31 July 2015. The agreement was further conditional on David Jones receiving all consents required under the Overseas Investments Act 2005, and the Overseas Investment Regulations, by 30 November 2015.
[7] Kirkcaldie’s shareholders approved the sale at a special meeting held on 31
July 2015, and David Jones has since obtained the necessary consents under the
Overseas Investment Act and Regulations. The sale was due to be settled on
1 February 2016.
[8] The agreement with David Jones has resulted in Kirkcaldie ceasing to operate from the Lambton Quay store, and it intends to wind down all of its operations. In
an affidavit filed in support of the application, Kirkcaldie’s chief executive Ms Del Sante-Bland states that by April 2016, Kirkcaldie expects that all of its current retail and business activities will have come to an end. By then it will have sold all of its stock and fixed assets such as store fit-out and equipment, and it is anticipated that it will no longer have any employees. All leases held by Kirkcaldie will be assigned or disposed of to third parties, or otherwise brought to an end. Kirkcaldie will be left with assets consisting only of cash or cash equivalents. Ms Del Sante-Bland says that it is intended that the Board will remain in place, with limited executive support, while options are explored for the winding up of Kirkcaldie and the distribution of any remaining value to shareholders.
[9] As at 17 November 2015, Kirkcaldie had approximately 1,101 shareholders, with a total of 10,250,000 shares on issue. Two major shareholders each hold approximately 19.5 per cent of the total shareholding, and the remaining shares are held by a range of companies and individual investors. Kirkcaldie’s current available subscribed capital is $19.354 million (being the sum representing the residual capital originally subscribed by Kirkcaldie’s shareholders). It is this sum which Kirkcaldie wishes to return on a pro rata basis to its shareholders under the arrangement.
[10] Following the sale of a property known as the Harbour City Centre in 2014, there is ample cash in the company to make that distribution. As at 20 November
2015, Kirkcaldie’s cash or cash equivalents were approximately $27.198 million, excluding stock. There is very little debt, as the sale of the Harbour City Centre enabled all bank debt to be repaid at that time. If the arrangement is approved and the distribution is made, Kirkcaldie’s Board expects that there will be approximately
$5.742 million available as at 29 February 2016 to meet any residual creditor claims.
[11] Kirkcaldie’s bank, Westpac New Zealand Ltd (Westpac), has provided a letter advising that it has no objection to the proposed arrangement. Similarly Robert Jones Holdings Ltd, the lessor of the Lambton Quay premises, has no objection to the arrangement. However Kirkcaldie will remain subject to contingent liabilities on that lease (and on three other leases it holds in the Wellington area), for the remainder of the terms of the leases.
[12] Ms Del Sante-Bland’s evidence is that Kirkcaldie has been in discussion with a number of third parties with a view to assigning the three other leases, and that good progress has been made in those discussions. On a worst case basis, in which Kirkcaldie remained responsible for rent on all three leases until the end of their respective terms, Ms Del Sante-Bland says that the maximum liability would be approximately $1.910 million. Notwithstanding the remoteness of that scenario ever eventuating, Kirkcaldie’s $5.742 million net asset projection figure as at
29 February 2016 includes a provision of $1.423 million for possible losses on these leases.
[13] The lessors of all four premises were advised of the proposed share cancellation and return of capital to shareholders, in September 2015. Two of the lessors raised questions or sought assurances from Kirkcaldie, and later advised that their concerns had been satisfied. No objection has been raised by the other two lessors.
[14] Ms Del Sante-Bland says that the $19.354 million which Kirkcaldie wishes to distribute is the maximum amount which can be distributed without any withholding on account of taxes. The proposed distribution of $2.3602 per cancelled share is derived by dividing $19.354 million by 8,200,000 (being 80 per cent of the shares on issue – the four out of every five shares cancelled). The proposed distribution will be pro rata, so that no assessment is required of the merits of the actual price per share cancelled. All shareholders will participate pro rata in the distribution, and all will retain the same pro rata residual interest in the remaining value of Kirkcaldie.
[15] The arrangement is unanimously proposed by Kirkcaldie’s directors as being the most equitable way to effect the return of capital, both for Kirkcaldie and its shareholders.
The trustee company
[16] As stated above, the trustee company has operated as the trustee of the Scheme. The Scheme was established in April 1998 to provide a means by which Kirkcaldie employees could acquire shares in the company.
[17] The trustee company acquired shares in Kirkcaldie by way of loan from Kirkcaldie to the trustee company, and Kirkcaldie lent money to eligible employees for the purchase of shares. The scheme allowed the employees to pay for their shares over time. A number of employees participated in the Scheme between 1998 and 2004. However, no shares have been offered to employees for purchase or subscription since December 2004. All money lent to employees has now been repaid to Kirkcaldie, and all shares held beneficially for employees have been transferred to those employees. The Scheme is and will remain suspended.
[18] The 35,850 shares still held by the trustee company are held on an unallocated basis. None are being held on trust for the benefit of specific employees. In those circumstances, Kirkcaldie and the trustee company say that the shares still held by the trustee company are held by it on a resulting trust for Kirkcaldie, or are subject to an obligation on the trustee company to transfer the shares to Kirkcaldie. The applicants submit that in those circumstances the trustee company’s shares qualify as “treasury stock” (briefly, shares held by Kirkcaldie in itself) under s 67B of the Act.
[19] If the 35,850 shares registered to the trustee company are treasury stock, they could not normally participate in a distribution.2 The applicants submit that an exception should be made in this case, as otherwise 80 per cent of the available subscribed capital attributed to those shares will effectively be “streamed” to the other shareholders. Another benefit of the trustee company participating in the distribution would be that the outstanding loan owed by the trustee company to
Kirkcaldie from the original share acquisition in 1998 could be reduced by the amount of that distribution.
[20] The second aspect of the arrangement which affects the trustee company relates to the residual shareholding it would hold (7,170 shares) following the implementation of the arrangement. Those shares would simply be cancelled if the arrangement is sanctioned by the Court. Kirkcaldie does not intend to offer any more shares for employee subscription under the Scheme, and the cancellation of the
shares would enable Kirkcaldie and the trustee company to terminate the Scheme
2 That is the effect of s 67B(2) of the Act.
trust deed and amalgamate the trustee company into Kirkcaldie. For those reasons, Kirkcaldie says that cancelling the residual shares held by the trustee company would have no adverse impact on employees, and would ensure an efficient winding up of Kirkcaldie (or facilitate some other form of corporate action to realise value for the shareholders).
[21] Once the Scheme has been wound up, Ms Del Sante-Bland says there will be a residual debt of $347,000 owed to Kirkcaldie by the trustee company. The board’s intention is that that residual debt would be extinguished on an amalgamation of the trustee company with Kirkcaldie.
Shareholder approval of the arrangement
[22] At the special shareholders’ meeting held on 31 July 2015, Kirkcaldie’s
shareholders approved the following special resolution:
That the shareholders approve, for the purposes of and to the extent required by Listing Rules 7.6.5 and 9.1.1(b) and section 129 of [the Act], one or more distributions from the cash reserves of [Kirkcaldie] the aggregate of which does not exceed the Available Subscribed Capital of [Kirkcaldie]. Such distribution may be effected (as the Board of [Kirkcaldie] sees fit) either by way of pro rata share buyback offer made to all shareholders or by way of a Court approved scheme of arrangement pursuant to [the Act] under which shares of shareholders (in an amount and for a consideration determined by the Board) are redeemed and cancelled on a pro rata basis as amongst all shareholders.
[23] Ms Del Sante-Bland’s evidence is that this resolution was passed with strong support. She says that approximately 71 per cent of all votes entitled to be cast on the resolution were cast, and that the votes in favour represented 99.55 per cent of the votes cast. Ms Del Sante-Bland says that since the shareholders’ meeting, no shareholder has raised with the board any objection to making the distribution, or expressed any wish that it be implemented by way of a share buyback rather than a scheme of arrangement.
[24] Ms Del Sante-Bland says that the Notice of Special Meeting recorded that the
35,850 shares held by the trustee company, as treasury stock, would not be entitled to participate in the distribution. However the directors obtained further legal advice
after the meeting, and concluded that it would be desirable for the trustee company to participate in the distribution.
[25] Ms Del Sante-Bland expresses the view that, although the arrangement is in this respect different from that which was put to the shareholders at the 31 July 2015 meeting, the participation by the trustee company would not be of any concern to the shareholders. If the arrangement is approved, the trustee company will participate on a pro rata basis, receiving a distribution of $67,690.54. The applicants submit that that is an immaterial amount in the context of the proposed arrangement, representing only approximately 0.35 per cent of the total capital being returned to shareholders. They submit that Kirkcaldie should not be required to convene another special meeting of shareholders to deal with this matter. Ms Del Sante-Bland says that the costs (legal, printing, and venue hire) of convening another meeting could total $50,000. The expense of that order, and the further delay which would occur if another meeting were required, would not be justified given what Ms Del Sante- Bland describes as overwhelming shareholder support for the proposed share cancellation and return of capital.
The relevant provisions of the Act
[26] Section 236 of the Act materially provides:
236 Approval of arrangements, amalgamations, and compromises
(1) Notwithstanding the provisions of this Act or the constitution of a company, the court may, on the application of a company or any shareholder or creditor of a company, order that an arrangement or amalgamation or compromise shall be binding on the company and on such other persons or classes of persons as the court may specify and any such order may be made on such terms and conditions as the court thinks fit.
(2) Before making an order under subsection (1), the court may, on the application of the company or any shareholder or creditor or other person who appears to the court to be interested, or of its own motion, make any 1 or more of the following orders:
(a) an order that notice of the application, together with such information relating to it as the court thinks fit, be given in such form and in such manner and to
such persons or classes of persons as the court may specify:
(b) an order directing the holding of a meeting or meetings of shareholders or any class of shareholders or creditors or any class of creditors of a company to consider and, if thought fit, to approve, in such manner as the court may specify, the proposed arrangement or amalgamation or compromise and, for that purpose, may determine the shareholders or creditors that constitute a class of shareholders or creditors of a company:
(c) an order requiring that a report on the proposed arrangement or amalgamation or compromise be prepared for the court by a person specified by the court and, if the court thinks fit, be supplied to the shareholders or any class of shareholders or creditors or any class of creditors of a company or to any other person who appears to the court to be interested:
(d) an order as to the payment of the costs incurred in the preparation of any such report:
(e) an order specifying the persons who shall be entitled to appear and be heard on the application to approve the arrangement or amalgamation or compromise.
(2A) If the arrangement or amalgamation or compromise involves a transfer or amalgamation that requires the written approval of the Reserve Bank of New Zealand under section 44 of the Insurance (Prudential Supervision) Act 2010, the court may not make an order under this section unless that approval has been given.
(3) An order made under this section has effect on and from the date specified in the order.
(4) Within 10 working days of an order being made by the court, the board of the company must ensure that a copy of the order is delivered to the Registrar for registration.
…
[27] It is clear from the authorities that the expression “arrangement” in s 236 is to be given a broad construction. Any risk is sufficiently guarded against by the fact
that the sanction of the Court must be obtained. 3 A share cancellation and pro rata
3 See for example the decision of the Court of Appeal in Suspended Ceilings (Wellington) Ltd v
Commissioner of Inland Revenue [1995] 3 NZLR 143 (CA) at 148.
return of capital to shareholders of the kind now proposed has been held on other occasions to qualify as an “arrangement” for the purposes of pt 15 of the Act. For example, in Re Auckland International Airport Ltd, Winkelmann J approved an arrangement under pt 15 of the Act which involved a pro rata cancellation of shares in Auckland International Airport Ltd and the payment to shareholders of a specific
sum for each share cancelled.4
[28] Before the Court can approve an application under s 236, it must ensure that the parties’ procedural rights have been adequately protected. In particular the Court must be satisfied that:5
(a) there has been compliance with the statutory provisions as to meetings, resolutions, the application to the Court, and the like;
(b)the arrangement has been fairly put before the class or classes concerned; and that if a circular or circulars have been sent out, the circular gave all the information reasonably necessary to allow the recipients to judge and vote upon the proposals;
(c) the class was fairly represented by those who attended the meeting, and the statutory majority are acting bona fide, and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent;
(d)the arrangement is such that an intelligent and honest person of business, a member of the class concerned and acting in respect of his or her interest, might reasonably approve.
[29] In addition to those tests, the Court should also consider whether the arrangement is fair and equitable.6
4 Re Auckland International Airport Ltd [2014] NZHC 405.
5 Re CM Banks Ltd [1944] NZLR 248, as applied in Re Auckland International Airport Ltd, above n 4 at [8].
6 Weatherston v Waltus Property Investments Ltd [2001] 2 NZLR 103 (CA), and Re Auckland
International Airport Ltd, above n 4 at [15].
[30] Section 237 of the Act sets out various powers the Court may exercise for the purpose of giving effect to any arrangement approved under s 236. Section 237(1) provides:
237 Court may make additional orders
(1) Without limiting section 236, the court may, for the purpose of giving effect to any arrangement or amalgamation or compromise approved under that section, either by the order approving the arrangement or amalgamation or compromise, or by any subsequent order, provide for, and prescribe terms and conditions relating to,—
(a) the transfer or vesting of real or personal property, assets, rights, powers, interests, liabilities, contracts, and engagements:
(b) the issue of shares, financial products, or policies of any kind:
(c) the continuation of legal proceedings: (d) the liquidation of any company:
(e) the provisions to be made for persons who voted against the arrangement or amalgamation or compromise at any meeting called in accordance with any order made under subsection (2)(b) of that section or who appeared before the court in opposition to the application to approve the arrangement or amalgamation or compromise:
(f) such other matters that are necessary or desirable to give effect to the arrangement or amalgamation or compromise.
[31] In this case, the applicants rely in particular on s 237(1)(f), submitting that it is both necessary and desirable for the residual shares held by the trustee company to be cancelled, and for the Scheme to be wound up, as part of the arrangement.
Supplementary submissions by the applicants
[32] By supplementary memorandum dated 15 January 2016, the applicants made further submissions in response to a minute issued by the Court on
23 December 2015. The supplementary submissions primarily addressed the status of the 35,850 shares held by the trustee company, and whether they qualify as treasury stock.
[33] In my view it is unnecessary to determine that issue. Whether or not the trustee company’s shares are treasury stock will have no effect on Kirkcaldie’s creditors and an insignificant effect (if any) on its shareholders.
[34] Counsel did propose in their supplementary submissions that a condition be imposed as part of an order sanctioning the arrangement, relating to the completion of the sale to David Jones. Settlement of that transaction was scheduled for 1
February 2016, and shareholders and creditors had been advised that the proposed arrangement would be conditional on the David Jones sale going ahead.
Discussion and conclusions
[35] I am satisfied that in this case there is no need to call for any further meeting of shareholders, or a meeting of creditors, or to call for any report under s 236(2) of the Act. Nor do I see any need for service on any class of shareholders, or on any creditor, or to appoint anyone to represent any class of shareholders. The proposed capital is to be distributed pro rata among all shareholders, and at this stage only
80 per cent of the shares are being cancelled. As a result, the precise value allocated to each cancelled share does not matter: all shareholders are being treated equally in the implementation of what is in effect a wind-down of the operations of Kirkcaldie to which an overwhelming majority of the shareholders have agreed.
[36] No shareholders’ meeting is expressly required under pt 15 (unless the Court orders one), and in this case there was a shareholders’ meeting at which the arrangement (in substantially the form now proposed) was put to the shareholders. A substantial majority of the shareholders entitled to vote on the relevant special resolution did vote, and of those who voted there was a very substantial majority in favour of the arrangement. As in Re Auckland International Ltd, the 75 per cent threshold required for a special resolution was satisfied by a comfortable margin.
[37] In circumstances where the arrangement involves a return of 80 per cent of a company’s capital to shareholders, the Court must be particularly concerned for the position of Kirkcaldie’s creditors. In this case, it appears that approximately
$5.742 million will be available following the distribution, and that sum will be more than sufficient to provide for remaining liabilities, including any employee
redundancies, sundry creditors, and any liabilities under the leases (other than the contingent liability that will remain on the Lambton Quay lease). There is nothing owing to Westpac, and Ms Del Sante-Bland says that Kirkcaldie is unlikely to utilise the Westpac facilities (totalling approximately $400,000) which remain available to it, with the exception of a $50,000 Mastercard facility. Westpac has no opposition to the arrangement. Similarly, the lessor Robert Jones Holdings Ltd, has advised that it does not object to the arrangement.
[38] The assignment of the lease to David Jones will not absolve Kirkcaldie from its ongoing contingent liability under the lease, but David Jones is a very substantial commercial entity with a strong reputation in the operation of department stores, and the risk of default by it appears to be minimal. Further, Robert Jones Holdings Ltd, the party who would be most likely to suffer loss in the unlikely event of any such default occurring, has no objection to the arrangement.
[39] In respect of the three other leases, the rent and remaining terms are such that any liability for Kirkcaldie which may arise if it is unable to achieve early assignments (or if the assignees were to default) could be satisfied from the cash which Kirkcaldie will retain following the distribution.
[40] Ms Del Sante-Bland’s evidence is that any liability Kirkcaldie may have to David Jones under the sale agreement is capped at $2 million, and that sum (which is included as an asset in the projected net asset figure of $5.74 million as at 29
February 2016) will be held for a one year “claims period”, in an escrow account established for that purpose.
[41] Overall, I accept that the evidence establishes that creditors will not be adversely affected if the arrangement is approved.
[42] I am also satisfied the applicants have sufficiently complied with the Act, and with the provisions of the High Court Rules which apply to applications under pt 15 of the Act.
[43] In my view the arrangement has been fairly put before the shareholders, of whom there is only one class. The Notice sent to shareholders for the special meeting convened on 31 July 2015 explained in detail the proposed sale to David Jones and the proposed subsequent distribution of capital to shareholders (whether by share buyback or by an arrangement sanctioned by the Court under the Act). The only respect in which it appears that the arrangement may not have been fully put before the shareholders, arises out of Ms Del Sante-Bland’s evidence that the Notice of Special Meeting recorded that the trustee company would not participate in the proposed distribution. I do not think that omission was significant. The shares held by the trustee company which are to be cancelled represent a very small proportion of the total share capital (less than 1 per cent), and it is clear that the amount to be paid to the trustee company on the sanctioning of the arrangement will be a payment which will remain of benefit to all shareholders. The distribution is intended to be used by the trustee company to partially repay a debt owing by it to Kirkcaldie, and the trustee company is in any event a wholly-owned subsidiary of Kirkcaldie.
[44] The third area of enquiry under the CM Banks test is whether the relevant class was clearly represented by those who attended the meeting, and whether the statutory majority is acting bona fide and not coercing the minority in order to promote interests adverse to those of the class it purports to represent. There is no issue under this head. There is only one class of creditors, and the arrangement treats them equally. There is no suggestion of any lack of bona fides on the part of the (overwhelming) majority of shareholders who voted in favour of the proposed distribution, and nothing has been raised by any dissenting shareholder which might suggest that the arrangement is not in his or her interests, or does not treat him or her fairly. The third CM Banks consideration is therefore satisfied.
[45] The fourth CM Banks consideration is whether the arrangement is such that an intelligent and honest business person, a member of the class concerned and acting in respect of that interest, might reasonably approve the arrangement. Again, I think this consideration is clearly met. It is clear from Ms Del Sante-Bland’s evidence that Kirkcaldie’s board went through an exhaustive process examining the viability of Kirkcaldie’s trading operations at its Lambton Quay store, and the board
concluded that it was in the best interests of shareholders to sell the business and return the capital to shareholders. The company had been unable to adequately address trading losses which had been incurred over the last few years, and of course the company was in a “cashed up” position following the sale of the Harbour City Centre in 2014. It was an obvious option for the board to wind the company down and return its capital to its shareholders when the business in its current form was considered no longer viable. Further, the board’s recommendation in that respect has received overwhelming support from the shareholders. As I have found, adequate provisions have been made to protect the interests of creditors. In light of these circumstances, I have no doubt that an honest business person, being a Kirkcaldie’s shareholder at the time of the approval and acting in respect of that interest, would reasonably have approved the arrangement.
[46] For the same reasons, I am satisfied that the arrangement is fair and equitable.
[47] I have considered the question of the effect of s 67B(2) of the Act if the trustee company’s shares are treasury stock, which could not normally participate in the distribution. Section 236(1) of the Act allows the Court to sanction an arrangement under pt 15 notwithstanding the provisions of the Act, and in my view the participation of the trustee company in the distribution will cause no significant prejudice to any shareholder or creditor, particularly in circumstances where the arrangement is designed as the first step in an orderly winding down of Kirkcaldie’s operations. If the trustee company’s shares are treasury stock (a point which I do not consider I need to decide), I am satisfied that this is a proper case for the application of that part of s 236(1) which allows the Court to sanction a proposal notwithstanding other provisions of the Act (in this case, s 67B(2)).
[48] I note for completeness that Kirkcaldie is a “Code company”, to which s 236A of the Act would apply if the arrangement affected the voting rights in Kirkcaldie. However, that will not occur under the proposed arrangement because the percentage of voting rights held or controlled by one or more shareholders will remain the same.
[49] I agree that it is appropriate in this case to make the orders sought under s 237 of the Act providing for the cancellation of the Scheme and the cancellation of the residual Kirkcaldie shares held by the trustee company. The Scheme has not been used since 2004, and all employees who acquired shares in Kirkcaldie under the Scheme have paid off the amounts owing on their shares. The board’s intention is that the remaining net assets of Kirkcaldie following the distribution will be distributed to shareholders in the most efficient fashion, and that all of the company’s operations will come to an end in April 2016 or very soon thereafter. In those circumstances, I accept that it is desirable to give effect to those parts of the arrangement which concern the Scheme and the trustee company’s residual shareholding in terms of s 237(1)(f) of the Act.
Orders
[50] I make the followings orders:
(a) Dispensing with service of the application for approval of the arrangement, and directing that no representation order is required.
(b)Sanctioning the arrangement set out in the arrangement document annexed to this judgment.
(c) Declaring the arrangement to be binding upon Kirkcaldie, all its shareholders, the trustee company and all such other persons necessary with, inter alia the effect that:
(i)Four out of every five shares in Kirkcaldie registered in the name of each shareholder at 5pm on the Record Date referred to in the arrangement document will be cancelled, together with all rights attaching to those shares. For this purpose, fractions of shares will be rounded down to the nearest whole share.
(ii)Within 10 business days of the Record Date, Kirkcaldie will pay to each shareholder $2.3602 for each share registered in
the name of that shareholder which has been cancelled in accordance with subpara (c)(i) above.
(d)The trustee company will participate in the arrangement in accordance with subparas (b) and (c) above.
(e) Following completion of the payment to each shareholder in accordance with subpara (c)(ii) above:
(i)The residual 7,170 shares in Kirkcaldie held by the trustee company will be cancelled; and
(ii) The Scheme will be wound up.
(f) Orders (b)-(e) above are conditional on, and shall only take effect following, completion of the Agreement between Kirkcaldie and David Jones dated 4 June 2015.
Associate Judge Smith
Solicitors:
Kensington Swan, Wellington for the applicants
ARRANGEMENT DOCUMENT
Arrangement pursuant to pt 15 of the Companies Act 1993
Between: Kirkcaldie & Stains Limited, The Kirkcaldie & Stains Trustee Company Limited, and the shareholders of Kirkcaldie & Stains Limited.
1. Interpretation
1.1 unless the context otherwise requires:
‘The Company’ means Kirkcaldie & Stains Limited.
‘Business Day’ means a day on which the stock exchange operated by NZX is open for
trading.
‘Record Date’ means 18 February 2016 or the 12th Business Day after the date on which the final order from the High Court made pursuant to section 236(1) of the Companies Act 1993 approving the arrangement takes effect, whichever is latest.
‘Scheme’ means the Company’s employee share scheme established by deed dated
9 April 1998.
‘Share’ means an ordinary share in the Company.
‘Shareholder’ means each person who is registered in the share register of the Company as
the holder of a Share at 5.00pm on the Record Date.
‘Trustee Company’ means The Kirkcaldie & Stains Trustee Company Limited.
2. Arrangement
2.1 Four out of every five Shares in the Company registered in the name of each Shareholder at
5pm on the Record Date will be cancelled (together with all rights attaching to those Shares). For this purpose, fractions of Shares will be rounded down to the nearest whole Share.
2.2 Within 10 Business Days of the Record Date, the Company will pay to each Shareholder
$2.3602 for each Share registered in the name of that Shareholder which has been cancelled in accordance with clause 2.1.
2.3 The Trustee Company will participate in the Arrangement in accordance with clauses 2.1 and
2.2.
2.4 Following completion of the payment to each Shareholder in accordance with clause 2.2:
ithe residual 7,170 Shares in the Company held by the Trustee Company will be cancelled; and
ii the Scheme will be wound up.
2