Re Tilt Renewables Ltd - [2020] NZHC 1398

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-608

[2020] NZHC 1398

UNDER Part 15 of the Companies Act 1993

IN THE MATTER OF

TILT RENEWABLES LIMITED

Applicant

Hearing: On the papers

Counsel:

M Eastwick-Field and H M Bain for the Applicant

Judgment:

19 June 2020

JUDGMENT OF MUIR J

This judgment was delivered by me on Friday 19 June 2020 at 4 pm Pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:…………………………

Solicitors:
Russell McVeagh, Auckland

Application by Tilt Renewables Ltd [2020] NZHC 1398 [19 June 2020]

Introduction

[1] Tilt Renewables Limited (TLT) seeks orders sanctioning a pro-rata return of surplus capital by way of Scheme of Arrangement (the Scheme) under Part 15 of the Companies Act 1993 (the Act).

[2]I am satisfied that such orders are appropriate. My reasons follow.

Background

[3] TLT is a developer, owner and manager of renewable energy generation assets in Australia and New Zealand. It is listed on the NZX and ASX and has approximately 8,100 shareholders (predominantly in New Zealand) and net assets as at 30 September 2019 of approximately $642,000,000. It has two substantial shareholders, Infratil Limited (via a subsidiary) (Infratil) and Mercury New Zealand Limited, who together hold approximately 86 per cent of the shares on issue.

[4] The Scheme provides for the return of approximately $260,000,000 to its shareholders which is surplus to any of TLT’s current and reasonably foreseeable requirements. The proposed mechanism is cancellation of one share for every five shares in the company with a cash payment of NZD2.91 for each cancelled share. The scheme has the support of the full Board (including independent directors). Prior consideration was given to other acquisition opportunities which might be explored with the surplus capital. Such assessment was made having regard to TLT’s core competencies. The conclusion was that the potential acquisitions were not likely to add shareholder value – “value” rather than “scale” being the Board’s animating concern.

[5] On 5 May 2020 I made Initial Orders under s 236(2) of the Act relating to notification of the Scheme, conduct of the shareholders’ meeting, exercise of rights of opposition and related matters. The shareholders’ meeting has now taken place. The Scheme has received overwhelming support, including by the minority shareholders.

The relevant test

[6] Section 236(1) of the Act provides that the approval of any scheme of arrangement by the Court is discretionary. The four-part test which the Court applies has long historical roots dating back to the 1944 decision in Re CM Banks Ltd.1 In the recent decision of Re PGG Wrightston Ltd,2 Lester AJ summarised the test as follows:

(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;

(ii)whether the Scheme has been fairly put to the class or…

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 Tilt Renewables Ltd

Details

AGLC: Re Tilt Renewables Ltd [2020] NZHC 1398
Case: [2020] NZHC 1398
Decision Date: 19 June 2020

CaseChat Overview and Summary

Tilt Renewables Limited (TLT), an energy company listed on the NZX and ASX, sought court approval to return surplus capital to its shareholders via a Scheme of Arrangement under the Companies Act 1993. The primary legal issues involved whether TLT had complied with statutory requirements, whether the Scheme was fairly presented to shareholders, whether shareholder classes were adequately represented, and whether an intelligent and honest person of business might reasonably approve the Scheme as fair and equitable. The Court found that TLT had adhered to all statutory requirements, including providing comprehensive information to shareholders and holding a virtual meeting. The Scheme, which involved cancelling one share for every five and paying NZD2.91 for each cancelled share, received overwhelming support from shareholders, including the minority shareholders. The Court also noted the unanimous support from TLT's Board, which included independent directors, and the lack of any material prejudice to third parties. The Scheme was deemed reasonable given TLT's current financial position and the Board's conclusion that no efficient use was available for the surplus capital. Consequently, the Court granted the orders sanctioning the Scheme.

Orders