FEDERAL COURT OF AUSTRALIA

Aurox Resources Ltd, in the matter of Aurox Resources Ltd (No 2) [2010] FCA 1023

IN THE MATTER OF AUROX RESOURCES LTD (ABN 32 106 793 560)

THE COURT ORDERS THAT:

1.                  Pursuant to sections 411(4)(b) and 411(6) of the Corporations Act, the scheme of arrangement in this proceeding (Scheme), a copy of which is contained in the annexure marked CJF 1 to the affidavit of Craig John Ferrier sworn on 9 August 2010, be approved.

2.                  Pursuant to section 411(12) of the Corporations Act, that the Plaintiff be exempted from compliance with the requirements of section 411(11) of the Corporations Act in relation to the Scheme.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE MATTER OF AUROX RESOURCES LTD (ABN 32 106 793 560)

REASONS FOR JUDGMENT

1                     This is the second hearing of an application by the plaintiff for the approval of a scheme of arrangement whereby the plaintiff, a publicly listed company, Aurox Resources Ltd (Aurox), will, in effect, merge with another publicly listed company, Atlas Iron Ltd (Atlas).

2                     On 2 July 2010, I made orders for the convening of a meeting of the members of Aurox in order to consider and, if thought fit, approve the scheme of arrangement (Aurox Resources Ltd (ABN 32 106 793 560), in the matter of Aurox Resources Ltd (ABN 32 106 793 560) [2010] FCA 853) (Aurox Resources).

3                     The principles which should be applied in determining whether to approve a scheme of arrangement at the second hearing are well known and referred to by Santow J in the case of Re NRMA Ltd (2000) 33 ACSR 595 at 607, at [41] (NRMA).

4                     First, the Court must be concerned that the conditions provided for by s 411 of the Corporations Act 2001 (Cth) (the Act) have been met.  The affidavit material which has been filed and read today by Aurox shows that the scheme booklet in the form approved was duly despatched and that the meeting of members was held.  In fact, the meeting was held in the room next door to the one which was originally nominated, but I see no difficulty in that.  The evidence also shows that the resolution proposing the approval of the scheme of arrangement was passed by 99.97% of the votes which were cast, and that the requisite majorities referred to in s 411(4) of the Act were obtained.  I am satisfied that the conditions required by s 411 have been met.

5                     I also have before me certificates certifying that the conditions precedent in the scheme implementation agreement have been met.  These certificates have been signed by the managing director of each of Aurox and Atlas.

6                     The second issue which is raised in the NRMA criteria is whether the majority of the Aurox members have acted in good faith and not for an illegitimate purpose.  There is no basis on which I could conclude that the members have acted other than in good faith and for a legitimate purpose.

7                     The next question is whether the proposal is at least so fair and reasonable that an intelligent and honest person, who is a member and acting alone in respect of his or her interest as a member, might approve it.  I referred in my reasons in Aurox Resources to the expert’s report which, after a detailed analysis, opined the proposal was fair and reasonable.  I conclude that this condition is also met.

8                     There is also a question which I raised at the preliminary hearing in relation to the question of how the break fee was derived.  I have received evidence from Mr Mark David Hancock by an affidavit sworn on 11 August 2010, which describes at some length the basis on which the sum was derived.  I am satisfied that the break fee was a genuine pre‑estimate of the damages which Atlas may have suffered in the event that the scheme of arrangement did not proceed.

9                     There is also the question of s 411(17) of the Act which I have to consider.  In that regard, the affidavit of Mr Paul Anthony Sartori sworn on 11 August 2010, has annexed a letter from the Australian Securities and Investments Commission stating:

I advise that, under section 411(17)(b) of the Corporations Act, ASIC has no objection to the Scheme of Arrangement.  This advice is given having regard to ASIC’s criteria for providing a statement in writing that it had no objection, as set out in ASIC Regulatory Guide 60 – Schemes of Arrangement.  ASIC does not propose to appear at the hearing for approval of the Scheme of Arrangement which we understand is currently scheduled for 12 August 2010.

10                  In addition, there is no other consideration which would cause me to exercise my discretion under s 411(17) not to approve the scheme.

11                  I would also observe that there has been no party today who has appeared to ventilate any opposition to the orders which I have been asked to make.

12                  As to the exemption from compliance with s 411(11) of the Act sought by Aurox, in light of the fact that Aurox will now become a wholly owned subsidiary of Atlas, I will make an order exempting compliance with s 411(11) as requested.

13                  I will, accordingly, make the orders in terms of the minute of orders which has been handed up to me.

Associate:

Dated:         16 September 2010