Michael Hill International Limited - [2016] NZHC 1393

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-000978 [2016] NZHC 1393

IN THE MATTER
of an application for approval of an

arrangement under Part 15 of the
Companies Act 1993

BETWEEN

MICHAEL HILL INTERNATIONAL LIMITED

First Applicant

ACN 610 937 598 LTD Second Applicant

Hearing: 23 June 2016

Counsel:

GF Fitzgerald and AF Kissling for Applicants

Judgment:

23 June 2016

JUDGMENT OF ASHER J

Solicitors:
Kensington Swan, Wellington.

MICHAEL HILL INTERNATIONAL LTD [2016] NZHC 1393 [23 June 2016]

[1] Michael Hill International Ltd (the company) is seeking orders approving a scheme of arrangement, proposed by that company and ACN 610 937 598 Ltd (MHI Australia) under Part 15 of the Companies Act 1993. The scheme is part of a proposed restructure of the Michael Hill group of companies. The result of the restructure will be that MHI Australia will replace the company as the parent company of the group. MHI Australia will be an Australian incorporated company listed on the Australian Securities Exchange. It will also be listed on the NZX main board as a dual listed issuer.

[2] The details of the scheme were set out in a scheme booklet. In summary it was proposed under the scheme:

aMHI Australia acquires from each shareholder in the Company (Shareholder) other than Durante Holdings Pty Limited (Hill HoldCo) all their shares in the Company in consideration for the issue by MHI Australia of MHI Australia shares to each such Shareholder on a one-for-one basis subject to and on the terms set out in the Scheme Booklet;

b the Company changes its name to ‘Michael Hill New Zealand
Limited’;

cMHI Australia will change its name to ‘Michael Hill International Limited’ when, and provided that, it is available under Australian law; and

dall employee options are novated from the Company to MHI Australia on substantially the same terms except that the options will relate to MHI Australia shares in the place of shares in the Company.

[3] Together with a separate transaction involving MHI Australia acquiring the shares in Durante Holdings Pty Ltd (Hill HoldCo), the scheme will enable the restructure to occur.

[4] A without notice interlocutory application for orders dispensing with service and representation was filed, and for initial orders as to the procedure to be adopted for the Part 15 application. Following a hearing before me on 24 May 2016, after having discussed some changes and additions to the scheme booklet, which were made, I made initial orders under Part 15 of the Companies Act, orders dispensing

with service and representation, and following some amendments I made the interlocutory orders sought.1

[5] In my assessment the material presented to the shareholders was in sufficient detail for the shareholders of all groups to form a reasoned judgment as to the proposal.2

[6] To grant an order under s 236 of the Companies Act the Court must be satisfied that:3

(a) There has been compliance with the statutory provisions as to meetings, resolutions, the Court orders and similar procedural requirements.

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 Michael Hill International Limited

Details

AGLC: Michael Hill International Limited [2016] NZHC 1393
Case: [2016] NZHC 1393
Decision Date: 23 June 2016

CaseChat Overview and Summary

The applicants, Michael Hill International Ltd and ACN 610 937 598 Ltd, sought approval for a scheme of arrangement under Part 15 of the Companies Act 1993. The scheme was proposed to restructure the Michael Hill group of companies, resulting in ACN 610 937 598 Ltd replacing Michael Hill International Ltd as the parent company. The scheme involved the acquisition of shares from shareholders, changes in company names, and the novation of employee options. The court was required to determine whether the scheme complied with statutory provisions and was fair and equitable to all shareholders.

The court considered several legal issues, including compliance with statutory requirements, fairness to shareholders, representation of shareholder classes, and the overall fairness and equity of the arrangement. The court found that the scheme complied with procedural requirements, provided shareholders with necessary information, ensured fair representation, and was fair and equitable overall. The court also noted that the Takeovers Panel had no objections to the scheme.

The court reasoned that the scheme aligned with the evolution of the Michael Hill group into an international entity with a significant presence in Australia. The restructuring aimed to reduce administrative complexity and open the company to a wider investor base. The court concluded that the scheme did not prejudice any particular group of shareholders, employees, or creditors and was fair and equitable in the circumstances.

The court approved the scheme of arrangement, making specific orders under Part 15 of the Companies Act 1993. The scheme was declared binding upon the company, its shareholders, ACN 610 937 598 Ltd, and other necessary persons. The orders included the acquisition of shares, changes in company names, and the novation of employee options. Formal service and representation in the proceeding were dispensed with.

Orders