FEDERAL COURT OF AUSTRALIA

Excel Coal Limited, In the matter of Excel Coal Limited

[2006] FCA 1240

EXCEL COAL LIMITED ACN 002 818 699, IN THE MATTER OF EXCEL COAL LIMITED ACN 002 818 699

NSD 1534 OF 2006

LINDGREN J

15 SEPTEMBER 2006

SYDNEY

IN THE MATTER OF EXCEL COAL LIMITED ACN 002 818 699:

THE COURT NOTES THAT:

1. The plaintiff undertakes to the Court not to agree to a variation of the deed poll unless there is first obtained an indication from the Court that the amendment would not itself preclude approval of the scheme.

THE COURT ORDERS THAT:

2. Pursuant to subsection 411(1) of the Corporations Act 2001:

(a) The Plaintiff, Excel Coal Limited (‘Excel’), convene a meeting (‘Scheme Meeting’) of its shareholders (‘Excel Shareholders’) for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed to be made between Excel and the Excel Shareholders (‘Share Scheme’), being the scheme substantially in the form of the draft contained in Annexure C of the booklet containing the explanatory memorandum in relation to the Share Scheme, being Exhibit “A” (‘Scheme booklet’).

(b) The Scheme Meeting be held at 3.00 pm (Sydney time) on 4 October 2006 at AGL Theatre at the Museum of Sydney, corner of Bridge and Phillip Streets, Sydney, New South Wales.

(c) The Chairperson of the Scheme Meeting be Roger Brian Massy-Greene and, in his absence, John Craig Conde.

(d) The Chairperson appointed to the Scheme Meeting has the power to adjourn the meeting in his or her absolute discretion.

(e) All voting at the Scheme Meeting be by poll as declared by the Chairperson.

(f) The explanatory memorandum in the Scheme Booklet be approved for distribution to Excel Shareholders.

(g) Excel publish a notice of hearing of any application to approve the Scheme on Thursday, 5 October 2006 and Excel shall otherwise be exempted from compliance with the requirement to publish such notices at least five days before the date fixed for hearing of the application pursuant to Rule 3.4(3)(b) of the Federal Court (Corporation) Rules 2000 (Cth).

3. Regulations 5.6.12 and 5.6.14 to 5.6.36A of the Corporations Regulations 2001 (Cth) shall not apply to the Scheme Meeting

4. The proceeding be stood over to 10.15am on Tuesday, 10 October 2006 before Lindgren J for the hearing of any application to approve the Scheme.

5. Liberty to restore on two days’ notice

6. These Orders be entered forthwith.

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

IN THE MATTER OF EXCEL COAL LIMITED ACN 002 818 699:

REASONS FOR JUDGMENT

(First court hearing)

1                     On 30 August 2006, I made an order under s 411(1) of the Corporations Act 2001 (Cth) (‘the Act’), that the plaintiff, Excel Coal Limited (‘Excel’), convene a meeting of its members to consider a scheme of arrangement (‘the Scheme’), and associated orders. The following are the reasons why I made those orders.

2                     The Scheme is a perfectly straightforward ‘acquisition’ or ‘transfer’ scheme under Pt 5.1 of the Act. Under the Scheme, if implemented, all of the members of Excel will receive $8.50 cash per share, leaving Peabody Pacific Pty Limited, a subsidiary of Peabody Energy Corporation (‘Peabody Energy’), as the holder of their shares. The total Scheme consideration is approximately $1.8 billion.

3                     The principal affidavit in support of the application was that of Anthony James Haggarty, the Managing Director of Excel. Mr Haggarty has been a director of Excel since 11 November 2002. Excel is a coal mining company with various coal mine assets, including mines in New South Wales, Queensland and Venezuela. Excel was incorporated in New South Wales in 1984, and was listed on the Australian Stock Exchange in May 2004. Excel has 214,977,360 fully paid ordinary shares on issue.

4                     On 6 July 2006, Excel and Peabody Energy entered into a ‘Merger Implementation Agreement’ under which they agreed to implement the Scheme.

5                     It is proposed that the meeting of the shareholders in Excel take place on Wednesday, 4 October 2006. I read the Scheme Booklet that is to be sent to shareholders. Excel intended, on or about Tuesday 5 September 2006, to dispatch the Scheme Booklet by prepaid ordinary post to, or to serve the Scheme Booklet personally on, each member appearing on the register at the date of dispatch, and whose address for notices is within Australia. Excel intended to airmail the Scheme Booklet to those members whose address for notices is outside Australia. As well, by ordinary prepaid post, members were to be sent proxy forms for the Scheme meeting, and reply-paid pre-addressed envelopes.

6                     Excel established a ‘Due Diligence Committee’ for the purposes of ensuring that the Scheme Booklet complied with all applicable legal requirements, assisting with the drafting of the Scheme Booklet, and conducting an appropriate ‘due diligenceand verification process’ in relation to the Scheme Booklet.

7                     There was evidence of the due diligence process that was followed, in the form of certificates by Mr Haggarty and by the other three Executive Directors of Excel, Mr Andrew Plummer, Mr Allan Davies and Mr Chris Ellis.

8                     An affidavit of Mark John Pittorino of Deloitte Corporate Finance sworn on 29 August 2006 attached his report which was to the effect that the Scheme was in the best interests of shareholders in Excel. I need not summarise that report, although it is noteworthy that the sum Scheme consideration of $8.50 per share offered to members of Excel under the Scheme, may be compared with the estimated fair market value of an Excel share that ranges between $7 and $7.60.

9                     In his written submissions, Mr M B Oakes, senior counsel for Excel, referred to the ‘performance risk issue’ which has been raised in some cases, and pointed out that by virtue of clauses 4.2(a) and 5.3 of the Scheme, the amount of $8.50 per share is to be paid by or on behalf of Peabody Pacific, prior to the share transfer taking place. In addition, Excel is to set up a separate trust account into which the Scheme consideration will be paid, the monies in that separate trust account being held for the benefit of Excel’s shareholders prior to payment to them.

10                  In my view the proposed Scheme is a straightforward one which Excel shareholders should have the opportunity of considering.

11                  Orders were made as sought.

Associate:

Dated: 15 September 2006