FEDERAL COURT OF AUSTRALIA

Sylvastate Limited, in the matter of Sylvastate Limited (No 2) [2011] FCA 441

IN THE MATTER OF SYLVASTATE LIMITED (ACN 000 014 782)

THE COURT ORDERS THAT:

1.    Pursuant to section 411(4)(b) of the Corporations Act 2001 (Cth), the Scheme of Arrangement between the Plaintiff and its members (other than Whitefield Limited), a copy of which is annexed hereto and marked 'A', be approved.

2.    Pursuant to section 411(12) of the Act, the Plaintiff be exempted from compliance with sections 411(11) of the Act, in relation to the Scheme of Arrangement referred to in Order 1.

3.    These orders be entered forthwith.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

IN THE MATTER OF SYLVASTATE LIMITED (ACN 000 014 782)

REASONS FOR JUDGMENT

1    On 10 March 2011, pursuant to an application by the plaintiff, Sylvastate Limited (Sylvastate), I made orders under s 411(1) of the Corporations Act 2001 (Cth) for the convening of a meeting of the plaintiff’s shareholders other than Whitefield Limited (Whitefield). I also made orders for the conduct of the meeting (Scheme Meeting) and for the notice of the second scheme meeting hearing on 28 April 2011 to be advertised.

2    The purpose of the Scheme Meeting was for the Scheme Shareholders to consider and, if thought fit, approve the Scheme pursuant to which the shares in Sylvastate, other than those held by Whitefield (Scheme Shares), will be transferred to Whitefield and in consideration the shareholders, other than Whitefield (Scheme Shareholders) will receive Whitefield shares (Consideration Shares). The effect of the Scheme will be that Sylvastate will become a subsidiary of Whitefield. The details of the Scheme and my reasons for making those orders (earlier reasons) are to be found at [2011] FCA 211.

3    On 28 April 2011 at the second court hearing the plaintiff sought approval of the Scheme on the basis that the statutory preconditions had all been met including that the required percentage of votes in favour of the Scheme were cast at the meeting on 15 April 2011. I made orders pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) approving the Scheme. These are my reasons for those orders. These reasons should be read in conjunction with my earlier reasons. Acronyms and abbreviations in the earlier reasons have the same meaning in these reasons.

Evidence

4    Evidence in support of the application for approval includes evidence adduced at the first hearing as well as the following additional affidavits which were read in support of the application:

    second affidavit of Angus John Gluskie, affirmed on 15 April 2011;

    affidavit of Alan Weinberg affirmed on 21 April 2011. Mr Weinberg is a Relationship Manager employed by Computershare Investor Services which maintains the register of members on behalf of Sylvastate;

    second affidavit of Scott Anthony McDonald sworn on 28 April 2011;

    second affidavit of David John Iliffe affirmed 20 April 2011; and

    second affidavit of Catherine Louise Merity sworn on 28 April 2011.

5    On the basis of the above evidence I am satisfied that the necessary steps in obtaining approval of the Scheme have all been taken. Following the first court hearing the Explanatory Memorandum in the form of the Scheme Booklet tendered at the first court hearing was registered with ASIC.

6    Mr Gluskie supervised the printing and dispatch of the Scheme Booklet to Sylvastate members. He deposed that the Booklet as posted corresponded with that tendered at the first court hearing. Exhibited to Mr Gluskie’s second affidavit is a copy of “Form 530 – Statement in Writing of Posting of Notice of Meeting” signed by Mr Gluskie as well as copies of the attachments to that notice. Mr Gluskie also exhibited a copy of a report prepared by Computershare confirming that copies of the Scheme Booklet were lodged with Australia Post on 16 March 2011.

7    Mr Weinberg gave evidence as to the receipt of the proxy forms and the collation of the proxies as well as the registration of members at the Scheme Meeting. The Meeting was chaired by Mr Iliffe who put the resolution that the Scheme be approved to the members present. Exhibited to Mr Iliffe’s affidavit were the minutes of the Meeting, the poll report and a copy of the announcement made on the AXS website concerning the outcome of the Meeting. Mr Weinberg also described the conduct of the poll at the meeting and the production of the poll report. That report shows that 99.83% of votes cast at the meeting were in favour of the Scheme and that 98.14% of Shareholders at the meeting voted in favour. The Scheme was therefore passed by the required statutory majorities; Corporations Act s 411(4)(a)(ii).

8    In addition Mr Weinberg provided a breakdown of the voting results which excluded the votes of Mr Gluskie and his associated companies (Gluskie votes). The significance of this analysis lies in the interests that Mr Gluskie and his associated companies have in Sylvastate. This issue was discussed at [19]-[22] of my earlier reasons in the context of whether these interests should form a separate class in voting on the proposed Scheme. I decided that there was no basis for concluding that there was more than one class of Scheme Shareholders. The breakdown showed that even if that conclusion was wrong, excluding the Gluskie votes would not have led to a different result as, with that exclusion there was still a majority (99.78%) in favour of the Scheme.

9    On 20 April 2011, in accordance with the orders made on 16 March, an advertisement giving details of the second court hearing was published in The Australian newspaper. Mr McDonald was named in that advertisement as the person responsible for the notice. Mr McDonald deposed that he had not received any notice of appearance from anyone intending to appear at the second court hearing. There was no appearance of any objector at the second court hearing. As usual the matter was formally called.

10    By letter dated 28 April 2011 exhibited to the second affidavit of Ms Merity, ASIC confirmed, pursuant to s 411(17)(b) that it has no objection to the scheme of arrangement. There was no appearance by ASIC at the second court hearing. Ms Merity also exhibited two certificates executed respectively by Sylvastate and Whitefield, which together confirmed that all conditions precedent to the Scheme, other than the requirement for Court approval, had been satisfied or waived. Finally, Ms Merity also exhibited a letter from the ASX dated 15 March 2011 confirming that the ASX will grant official quotation of the Whitefield consideration shares to be issued under the Scheme.

Conclusion

11    The evidence referred to above, together with the evidence adduced at the first court hearing satisfied me that all necessary preliminaries for the approval of the Scheme pursuant to s 411(4)(b) of the Corporations Act have been addressed. The Scheme has been properly notified to the Sylvastate shareholders and approved by the statutory majorities. Ample opportunity has been afforded to any member who wished to oppose the Scheme and none has done so. I am satisfied that all elements necessary for procedural fairness have been addressed.

12    While it is not necessary for the Court to form an opinion as to the commerciality of the Scheme I am satisfied that substantive fairness has also been addressed in the evidence adduced at the first court hearing, especially in the reports of the Independent Expert and the Investigating Accountant. The members were therefore in a position to make an informed decision as to whether they should approve or reject the Scheme.

13    At the hearings in this matter senior counsel for the plaintiff has drawn the Court’s attention to the matters necessary to be proved and to those aspects of the Scheme relevant to the Court’s discretion.

14    For these reasons I am satisfied that the Court should approve the Scheme and therefore made the orders sought by the plaintiff.

Associate:

Dated:    5 May 2011