FEDERAL COURT OF AUSTRALIA

The Australian Gas Light Company, in the matter of The Australian Gas Light Company [2006] FCA 1160

THE AUSTRALIAN GAS LIGHT COMPANY (ABN 95 052 167 405), IN THE MATTER OF THE AUSTRALIAN GAS LIGHT COMPANY

NSD 1568 OF 2006

ALINTA LIMITED (ACN 087 857 001), IN THE MATTER OF ALINTA LIMITED

NSD 1580 OF 2006

EMMETT J

28 AUGUST 2006

SYDNEY

NSD 1568 OF 2006

IN THE MATTER OF:

THE COURT:

1. Notes the undertaking given by Senior Counsel for Alinta Ltd marked as Exhibit 2.

THE COURT ORDERS THAT:

1.                  Pursuant to section 411(1) of the Corporations Act 2001 (Cth), the Plaintiff (AGL) convene a meeting (the AGL Scheme Meeting) of the holders of shares in AGL (AGL Shares), other than Alinta Group Holdings Pty Ltd (ABN 34 117 660 081) (Excluded AGL Shareholder) in respect of 78,904,997 AGL Shares which as at 22 June 2006 were registered in the name of and beneficially owned by the Excluded AGL Shareholder, for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement being the scheme substantially in the form and to the effect of the draft, a copy of which is at Annexure A of Part 2 of “Exhibit-1” (the AGL Scheme).

2.                  Pursuant to section 411(1) of the Corporations Act, AGL convene a meeting of the Excluded AGL Shareholder for the purpose of considering and, if thought fit, agreeing (with or without modification) to the AGL Scheme (Excluded AGL Shareholder Meeting).

3.                  The AGL Scheme Meeting be held at 10:30am, on 6 October 2006 at City Recital Hall, Angel Place, Sydney.

4.                  The Excluded AGL Shareholder Meeting be held at 11:30am, on 6 October 2006 at City Recital Hall, Angel Place, Sydney, or as soon thereafter as the AGL Scheme Meeting concludes or is adjourned.

5.                  On or before 4 September 2006, there be despatched by prepaid ordinary post (or in the case of overseas members, by airmail), to each AGL Shareholder appearing in the register of AGL Shareholders, a document substantially in the form and to the effect of “Exhibit 1” including the proxy form which forms part of “Exhibit 1”.

6.                  The Chairman of the AGL Scheme Meeting and the Excluded AGL Shareholder Meeting be Mark Roderick Granger Johnson and in his absence Graham John Reaney.

7.                  The Chairman appointed to the AGL Scheme Meeting and the Excluded AGL Shareholder Meeting has the power to adjourn the meeting in his absolute discretion.

8.                  All voting at the AGL Scheme Meeting and the Excluded AGL Shareholder Meeting be by poll as declared by the Chairman.

9.                  Pursuant to section 411(1) of the Corporations Act, the explanatory statement of the AGL Scheme, a copy of which forms part of the documents comprising “Exhibit 1”, be approved.

10.              AGL publish in The Australian newspaper a notice substantially in the form of:

(a) Annexure 1 of this Order no later than 4 October 2006; and

(b) Annexure 2 of this Order no later than 7 October 2006,

and AGL shall otherwise be exempted from compliance with the requirement to publish a notice at least 5 days before the date fixed for the hearing of the application pursuant to rule 3.4 of the Federal Court (Corporations) Rules 2000.

11.              The proceeding be stood over to 9 October 2006 at 9:15am before Justice Emmett for the hearing of any application to approve the AGL Scheme.

12.              These Orders to be entered forthwith.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ANNEXURE 1

Form 6

Rule 3.4

NOTICE OF HEARING

To approve a compromise or ARRANGEMENT

TO all the creditors and members of The Australian Gas Light Company (ABN 95 052 167 405) (AGL).

TAKE NOTICE that at 9:15 am on 9 October 2006, the Federal Court of Australia at Law Courts Building, Queens Square, Sydney, New South Wales 2000 will hear an application by AGL seeking the approval of a compromise or arrangement between AGL and its members provided that a resolution to that effect is passed by meetings of the members of AGL to be held on 6 October 2006.

If you wish to oppose the approval of the compromise or arrangement, you must file and serve on AGL a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on AGL at its address for service at least 1 day before the date fixed for the hearing of the application.

AGL’s address for service is Gilbert + Tobin Lawyers, Level 37, 2 Park Street, Sydney, NSW, 2000 (Attention Gary Lawler/Philip Breden).

Gilbert + Tobin Lawyers
Level 37, 2 Park Street
Sydney NSW 2000

ANNEXURE 2

Form 6

Rule 3.4

NOTICE OF HEARING

To approve a compromise or ARRANGEMENT

TO all the creditors and members of The Australian Gas Light Company (ABN 95 052 167 405) (AGL).

TAKE NOTICE that at 9:15 am on 9 October 2006, the Federal Court of Australia at Law Courts Building, Queens Square, Sydney, New South Wales 2000 will hear an application by AGL seeking the approval of a compromise or arrangement between AGL and its members as proposed by a resolution passed by meetings of the members of AGL held on 6 October 2006.

If you wish to oppose the approval of the compromise or arrangement, you must file and serve on AGL a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on AGL at its address for service at least 1 day before the date fixed for the hearing of the application.

AGL’s address for service is Gilbert + Tobin Lawyers, Level 37, 2 Park Street, Sydney, NSW, 2000 (Attention Gary Lawler/Philip Breden).

Gilbert + Tobin Lawyers
Level 37, 2 Park Street
Sydney NSW 2000

NSD 1580 OF 2006

IN THE MATTER OF:

THE COURT ORDERS THAT:

1.                  Pursuant to section 411(1) of the Corporations Act 2001 (Cth) (Corporations Act), the Plaintiff (Alinta) convene a meeting (the Alinta Scheme Meeting) of the holders of ordinary shares in Alinta (Alinta Shareholders) for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement (Alinta Scheme) being the scheme substantially in the form of the draft, a copy of which is at Exhibit MEM 3 to the affidavit of Marie Elizabeth McDonald sworn on 25 August 2006 and filed in this proceeding (McDonald Affidavit).

2.                  The Alinta Scheme Meeting be held at 10:30am (Perth time), on 6 October 2006 at the Perth Convention Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia.

3.                  On or before 5 September 2006 there be despatched by prepaid ordinary post (or in the case of overseas members, by airmail), to each Alinta Shareholder appearing in the register of Alinta Shareholders, a document, substantially in the form or to the effect of Exhibit MJK 12 to the affidavit of Murray John King affirmed on 24 August 2006 and filed in this proceeding (Supporting Affidavit) incorporating the changes set out at Exhibit MEM 1 and MEM 2 of the McDonald Affidavit, together with the proxy form substantially in the form or to the effect of Annexure E of Exhibit MJK 12 to the Supporting Affidavit.

4.                  The Chairman of the Alinta Scheme Meeting be John Hartley Poynton, and in his absence Fiona Elizabeth Harris.

5.                  The Chairman appointed to the Alinta Scheme Meeting have the power to adjourn the meeting in his absolute discretion.

6.                  All voting at the Alinta Scheme Meeting be by poll as declared by the Chairman.

7.                  Pursuant to section 411(1) of the Corporations Act, the explanatory statement for the Alinta Scheme, a copy of which forms part of the documents comprising Exhibit MJK 12 to the Supporting Affidavit, incorporating the changes set out at Exhibit MEM 1 of the McDonald Affidavit, be approved.

8.                  Alinta advertise the Alinta Scheme Meeting substantially in the form of Annexure 1 of this Order in The Australian newspaper no later than 18 September 2006.

9.                  Alinta publish in The Australian newspaper a notice substantially in the form of:

(a)                Annexure 2 of this Order no later than 4 October 2006; and

(b)               (in the event the Alinta Shareholders approve the Alinta Scheme in accordance with the provisions of section 411(4) of the Corporations Act) Annexure 3 of this Order no later than 7 October 2006,

and Alinta shall otherwise be exempted from compliance with the requirement to publish a notice at least 5 days before the date fixed for the hearing of the application pursuant to rule 3.4 of the Federal Court (Corporations) Rules 2000.

10.              Pursuant to section 1319 of the Corporations Act, Alinta be exempted from compliance with the requirements of rule 2.15 of the Federal Court (Corporations) Rules 2000.

11.              The proceeding be stood over to 9 October 2006 at 9:15 am before Justice Emmett for the hearing of any application to approve the Scheme.

12.              These Orders to be entered forthwith.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

NSD 1568 OF 2006

IN THE MATTER OF:

NSD 1580 OF 2006

IN THE MATTER OF:

REASONS FOR JUDGMENT

1                     I have before me two applications, pursuant to s 411 of the Corporations Act 2001 (Cth) (‘the Act’), for orders convening meetings of members of two companies, being the Australian Gaslight Company (‘AGL’) and Alinta Limited (‘Alinta’).

2                     In October 2005, AGL announced a proposal to separate its retail and wholesale energy business and its infrastructure and asset management business into separately listed companies. The proposed documentation for the so-called demerger was released in February 2006. On 10 February 2006, the Court made orders pursuant to s 411 of the Act that AGL convene a meeting of the holders of shares in AGL for the purpose of considering and, if thought fit, agreeing to, a proposed scheme.

3                     However, later in February 2006, Alinta, an integrated energy company operating throughout Australia, announced that it had acquired 10 per cent of AGL from institutional and professional investors and requested that AGL enter into merger discussions based on suggested financial terms. AGL rejected Alinta’s proposal and announced its own proposal to merge with Alinta through an off-market script takeover offer. AGL also withdrew its demerger proposal and, on 14 March 2006, the Court ordered that the proposed meeting of members of AGL to consider the scheme not be held. Alinta rejected the AGL proposal and announced its own off-market script takeover offer for AGL, which was also rejected by AGL.

4                     There then followed discussion and negotiation between the boards of AGL and Alinta, as a result of which the two companies now propose a series of transactions involving the restructuring and merger of their respective businesses and the creation of two listed companies.

5                     Several steps will be taken in order to prepare the two groups for the proposed series of transactions. There will be an internal reorganisation by AGL to separate its energy assets from its infrastructure business, resulting in the energy assets being held by AGL Energy Limited (‘AGL Energy’), which is presently a wholly owned subsidiary of AGL.

6                     An internal reorganisation will also be undertaken by Alinta to establish Alinta Co‑generation Pty Limited (‘Alinta AGL’). It is intended that Alinta AGL will conduct Alinta’s energy retail and co-generation business in Western Australia. Another company, Alinta Mergeco Limited (‘New Alinta’), has also been established, which is intended to hold the merged infrastructure businesses of Alinta and AGL.

7                     While the reorganisation necessary to prepare for the demerger is very complex, the two proposed schemes are, in essence, reasonably straightforward. A Merger Implementation Agreement was entered into on 22 June 2006. The parties are New Alinta, AGL, Alinta, and AGL Energy. There are mutual promises whereby AGL and Alinta agree to propose the respective schemes involving their members. New Alinta and AGL Energy also agree to undertake certain steps to effectuate the proposed arrangements. On the same day, a Transaction Implementation Deed was entered into. The parties are the same as those to the Merger Implementation Agreement, except for the addition of Numar Pty Limited, a subsidiary of New Alinta (‘New Alinta Sub’).

8                     Under the proposed AGL scheme, AGL shareholders, other than Alinta in respect of 78 million shares in AGL held by Alinta, will transfer their shares in AGL to New Alinta Sub, in consideration for the issue of ordinary shares and converting shares in New Alinta. For each AGL share, AGL shareholders, other than Alinta, will receive approximately 0.61 ordinary shares in New Alinta and one converting share in New Alinta.

9                     Under the proposed Alinta scheme, Alinta shareholders will transfer their shares to New Alinta Sub in consideration for the issue of ordinary shares in New Alinta. For each Alinta share, Alinta shareholders will receive one share in New Alinta. Immediately following the issue of the New Alinta converting shares, New Alinta will buy back each converting share in consideration of New Alinta procuring AGL Energy to issue, to the holders of the converting shares, one AGL Energy share for each converting share bought back. At the point where that step is to be taken, AGL Energy will be a wholly owned subsidiary of New Alinta. Appropriate instruments have been executed in order to bind AGL Energy to that arrangement. In addition, AGL Energy will obtain a 33 per cent interest in Alinta AGL, with the option to acquire the remaining 67 per cent over the next five years.

10                  It is intended that AGL Energy and New Alinta will apply to Australian Stock Exchange Limited (‘ASX’) for admission to quotation on that exchange of their issued shares. If the proposal is consummated, the effect will be, first, that New Alinta will own the infrastructure businesses presently owned by AGL and Alinta. It will be a listed company, 54 per cent of which is owned by Alinta’s current shareholders and 46 per cent of which is owned by AGL’s current shareholders. Secondly, AGL Energy will own AGL’s current energy assets together with its interest in Alinta AGL. AGL Energy will also be a listed company, wholly owned by the existing shareholders of AGL.

11                  Provision is made in the schemes for those shareholders of AGL and Alinta who reside in jurisdictions other than Australia, New Zealand, the United States of America, Hong Kong, Japan, Singapore and the United Kingdom. In those other jurisdictions, the consideration that would otherwise be allotted under the schemes will be issued to a nominee who will sell the relevant shares and pay the proceeds to the shareholders. My attention has been drawn to the requirements of authorities in the United States concerning disclosure of the way in which shares held by United States residents may be treated.

12                  As I have indicated, a member of the Alinta Group is currently the registered holder and beneficial owner of some substantial number of shares in AGL, in excess of 90 million, in fact. Approximately twelve million of those shares are subject to option arrangements with third parties, which give the third parties a right to acquire the shares during a five business-day period commencing on the first business day after the Court convenes the AGL scheme meeting.

13                  The shares that are the subject of option agreements will participate in the AGL scheme, regardless of whether or not the options are exercised. The remaining 78 million-odd shares in AGL held by the Alinta Group will not participate in the AGL scheme. Alinta will continue to hold those shares if the proposal is consummated. Because of the different interests that the holders of those shares have in comparison to the interests that other shareholders in AGL have, it is proposed that there be a separate meeting of the holders of those shares to consider the AGL scheme. Provision is made for the way in which the rights will be dealt with in respect of the 12 million shares that are the subject of the options.

14                  The buyback of converting shares issued by New Alinta will be governed by a buyback agreement that forms part of the Constitution of New Alinta. The buyback is effectively a selective buyback within the meaning of s 257D of the Act. There are only two shareholders of New Alinta at present and their approval is all that would be required for the buyback.

15                  AGL is currently the largest single unit holder in Australian Pipeline Trust (‘APT’), an ASX listed entity that owns, or has an interest in, more than 8000 kilometres of high pressure gas transmission pipelines across most Australian states and territories. Alinta has given Court enforceable undertakings to the Australian Competition and Consumer Commission (‘the Commission’), under s 87B of the Trade Practices Act 1974 (Cth), that it will divest all of the units it holds in APT following completion of the AGL Scheme.

16                  Between 16 and 22 August 2006, Alinta acquired some 10.25 per cent of APT, and APT has made an application to the Takeovers Panel in relation to that acquisition, that the units be vested in the Commission and be sold. No decision has yet been made by the Takeovers Panel on APT’s application. The Takeovers Panel has made interim orders that Alinta not dispose of, or exercise any rights in relation to, the units it currently holds and that it not acquire any further units pending the conclusion of that proceeding. By reason of that acquisition, Alinta may seek to renegotiate a variation of the undertakings it has given to the Commission.

17                  Each company has provided draft statements as required by s 411 of the Act. The documents are voluminous and contain highly informative and detailed information concerning the two groups and the effect of the proposal. It is not the function of the court to analyse that material in detail and I have not done so. However, I note that qualified accountants have reported on the financial material contained in the proposed scheme booklets to be sent to members of the companies. I also have before me evidence in each matter of satisfactory steps having been taken by appropriately qualified persons to verify information in relation to the other company. That information is contained in the proposed explanatory booklet for that company’s scheme.

18                  Both companies have retained Grant Samuel and Associates Pty Limited (‘Grant Samuel’) to prepare an independent expert’s report on the proposal. Grant Samuel have reported to the directors of each company. In substance, Grant Samuel believe that Alinta shareholders will be better off if the proposal is implemented than if it is not. Accordingly, in Grant Samuel’s opinion, the proposal is in the best interests of Alinta shareholders. Grant Samuel also believes that AGL shareholders will be better off if the proposed transaction is implemented than if it is not and in Grant Samuel’s opinion the proposed transaction is in the best interests of AGL shareholders.

19                  I have examined the provisions of the proposed schemes and the terms of the Merger Implementation Agreement and the Transaction Implementation Deed, together with deeds proposed to be entered into by various parties undertaking to perform their obligations to give effect to the arrangements. I consider that both schemes are schemes to which properly informed members of the companies could agree. In the circumstances, I consider that it is appropriate to accede to the applications made on behalf of each company to convene meetings pursuant to s 411 of the Act for the purpose of considering the proposed schemes of arrangement.

Associate:

Dated: 29 August 2006

In matter NSD1568 of 2006

In matter NSD1580 of 2006