Re PGG Wrightson Ltd

[2019] NZHC 1780

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-323

[2019] NZHC 1780

IN THE MATTER OF

a Scheme of arrangement under Part 15 of the Companies Act 1993

BETWEEN

PGG WRIGHTSON LIMITED

Applicant

Hearing:	(Determined on the Papers)
Counsel:	L L Fraser and W J Strowger for the Applicant
Judgment:	26 July 2019

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 26 July 2019 at 3.30pm Pursuant to rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 26 July 2019

Re PGG WRIGHTSON LTD [2019] NZHC 1780 [26 July 2019].

[1]                   PGG Wrightson Ltd (“the applicant”) seeks final orders to complete a return of capital to its shareholders  by way of a scheme under  Pt 15 of the Companies   Act 1993 (“the Act”).

Background

[2]                   The background to the Scheme is summarised briefly in my judgment of     27 June 2019,1 which gave preliminary directions in respect of service and in relation to the holding of the Special Meeting of shareholders required under the proposed Scheme.

[3]                   In that judgment, a hearing date for the application that this Court sanction the Scheme of arrangement under s 236(1) of the Act was scheduled for 10am on Monday 5 August 2019.

[4]                   The applicant has sought, given the overwhelming support for the Scheme at the Special Meeting which was held on 23 July 2019 and in the absence of any opposition, that I deal with the application on the papers. I consider that appropriate and the hearing on 5 August 2019 is vacated.

Compliance with preliminary orders

[5]                   Without reciting all of the evidence put forward as to how the preliminary orders concerning the giving of notice of the Special Meeting and in relation to service of the Shareholder Materials were complied with, I am satisfied that the directions previously made have been complied with.

[6]                   The means by which the Shareholder Materials were to be provided to shareholders both electronically and by post, together with advertising in the Public Notices of specified newspapers, were set out in the directions and the evidence established those directions were complied with.

1      Re PGG Wrightson Limited [2019] NZHC 1477.

[7]                   The Shareholder Materials were also to be made available electronically on the applicant’s website and directions were made in respect of a very small number of shareholders for whom the applicant no longer had contact details.

[8]                   The evidence demonstrates that the Special Meeting that was directed to be held, was duly held. The Resolution to be passed required a majority of 75 per cent. The evidence discloses that the votes cast at the Special Meeting, along with proxy votes, were 99.95 per cent of the votes in favour of the Resolution.

[9]                   The directions given specified how the outcome of the vote was to be notified and again the evidence shows these requirements were satisfied.

[10]               Specific directions were given in respect of how any shareholder opposing the Scheme was to give notice of that opposition. Given the relatively short timeframes under which the applicant wished to operate, the direction was that any shareholder who wished to oppose need in the first instance only give a notice of intention to appear in this proceeding advising that they opposed the application. They were then to have a further period of time within which to provide a notice of opposition and affidavit(s) in support in the usual way.

[11]               No notice of intention to oppose has been filed and the memorandum in support of the request that the orders be made on the papers does not refer to any opposition being notified to the applicant or to counsel.

[12]               The present application involves a return of capital to one class of shareholders and is very similar to the application dealt with by Winkleman J (as she then was) in Re Auckland International Airport.2 Her Honour set out the test which is in similar terms to counsels’ summary of the principles to be applied in this case with the leading decisions now being Re Nuplex3 and Re Fliway4 which both postdate Her Honour’s decision. The principles stated in those recent cases are based on the same line of authority applied by Her Honour in the Re Auckland International Airport decision. The test is as follows:

2      Re Auckland International Airport [2014] NZHC 405.

3      Re Nuplex [2016] NZHC 1677.

4      Re Fliway Group Limited [2017] NZHC 3216.

(i)whether there has been, and there will be, compliance with the relevant statutory provisions, including as to the conduct of the Special Meeting and the opportunity given to interested parties to be informed of the Scheme and take steps to oppose it;5

(ii)whether the Scheme has been fairly put to the class or classes concerned, including whether the information provided to shareholders fully and fairly explained what was proposed, its intended effect, the reason why it was proposed and the reasons why independent directors recommended it;6

(iii)whether the classes were fairly represented by those who attended the meeting, and acted bona fide and without coercion;7

(iv)whether the arrangement is such that an intelligent and honest person of business might reasonably approve it, including whether the proposal is “fair and equitable”.8

[13]Counsels’ submissions satisfy me that those tests are met.

Compliance with statutory provisions

[14]               The evidence satisfies me that the relevant statutory requirements have been complied with. The voting procedure adopted at the Special Meeting complied with the Act and the applicant’s constitution. The evidence shows that the New Zealand Stock Exchange has issued a ‘no objection’ letter to the applicant’s notice of meeting, and that no other regulatory approvals were required.

Proposal put fairly to shareholders

[15]               In this case there was one voting class of shareholders. Shareholders were given details of the Scheme and the Special Meeting and they voted as a single class

5      Re Nuplex [2016] NZHC 1677 at [10] and [15].

6      Re Nuplex [2016] NZHC 1677 at [10] and [20].

7      Re Nuplex [2016] NZHC 1677 at [10].

8      Re Nuplex [2016] NZHC 1677 at [10]-[11].

of shareholders. Each shareholder possessed identical rights so there were no relevantly different interests that could be affected by the proposal, thus no issue of shareholder oppression arose.

[16]               The Scheme was relatively straightforward and again there is no suggestion of any particular shareholder interests being adversely affected.

[17]               I accept the submission that the process that was run was fair for the sole class of shareholders affected.

Scheme fairly put

[18]               Inherent in the comments I have already made, is that I consider the Scheme was fairly put to shareholders through the Shareholder Materials and the Special Meeting.

[19]               In that regard, my conclusion is reinforced by the fact that the Scheme arose from the sale of the Seeds Division of the applicant. The sale of the Seeds Division itself required a range of regulatory approvals and was approved by the applicant’s shareholders overwhelmingly at an earlier meeting. At the time that the Seeds Division sale was approved, the applicant’s shareholders were aware that the intention was to make a capital distribution from the proceeds of sale of the Seeds Division business.

[20]               In that sense, the Scheme now sought to be approved is the completion of     a process that commenced with the sale of the Seeds Division which again was overwhelmingly approved.

Intelligent and honest person of business would approve

[21]               The Scheme sees the return of $234 million in surplus capital to shareholders with all shareholders treated equally in that regard. The directors do not consider that the return of capital will adversely impact on any party or creditors. Shareholders were given the opportunity to express their concerns and there was no suggestion that any shareholder spoke out against the proposal at the Special Meeting.

[22]               The Scheme allows the return of capital to shareholders and the overwhelming approval is some confirmation that the proposal was objectively reasonable.

[23]               I also consider it to be fair and equitable in that all shareholders benefit from the return of capital proportionate to their shareholding.

[24]               The evidence of the applicant is that the Scheme does not impact on the applicant’s creditors or any other third party.

[25]               Accordingly, I consider that it is appropriate that there be an order that the Scheme of arrangement as approved by the shareholders of the applicant at the Special Meeting held on 23 July 2019 is approved and binding upon the applicant and all of its shareholders and all other persons as are necessary to give effect to the Scheme.

[26]               Counsel are to, by memorandum, tender the final form of order they seek incorporating such components of the Scheme as they consider need to be recorded in the final order.

Associate Judge Lester

Solicitors:
Chapman Tripp, Auckland