FEDERAL COURT OF AUSTRALIA

Sinclair Knight Merz Pty Limited, in the matter of Sinclair Knight Merz Pty Limited (No 2) [2013] FCA 32

IN THE MATTER OF SINCLAIR KNIGHT MERZ PTY LIMITED (ACN 001 024 095)

THE COURT ORDERS THAT:

1.    Pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (the Act) the scheme of arrangement made between the Plaintiff and its Scheme Creditors (Scheme), a copy of which is annexed hereto and marked ‘A’, is approved.

2.    Pursuant to s 411(12) of the Act, the Plaintiff is exempted from compliance with s 411(11) of the Act, in relation to the Scheme.

3.    Publication in The Australian newspaper on 22 January 2013 of the notice of today’s hearing, as deposed to in the affidavit of Weyinmi Popo sworn on 29 January 2013, be taken to be publication for the purposes of r 3.4 of the Federal Court (Corporations) Rules 2000 (Cth).

4.    These orders to be entered forthwith.

Note:    Settlement and entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF SINCLAIR KNIGHT MERZ PTY LIMITED (ACN 001 024 095)

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

1    The plaintiff, Sinclair Knight Merz Pty Limited, seeks an order pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) that a scheme of arrangement between itself and its scheme creditors be approved. On 29 November 2012, I made orders pursuant to ss 411(1) and 1319 of the Act providing for the convening of separate meetings of certain creditors for the purpose of considering and, if thought fit, agreeing (with or without modification) to the then proposed scheme of arrangement. My reasons for making those orders are to be found in Sinclair Knight Merz Pty Limited, in the matter of Sinclair Knight Merz Pty Limited [2012] FCA 1391. In these reasons I will adopt, where appropriate, the same terms and expressions used in my earlier reasons.

2    In support of the orders it seeks, SKM relies upon the following evidence:

(a)    The affidavit of Kevin Leighton sworn on 22 January 2013. This affidavit deals with the holding of the scheme meetings. Mr Leighton is a partner of KPMG. KPMG was engaged by SKM to act as scrutineer at the scheme meetings. Mr Leighton prepared a report which is annexed to his affidavit. The report deals with procedures performed at the meetings. The report records no errors or exceptions in respect of the procedures with which it deals.

(b)    The affidavit of Paul Joseph Casamento sworn on 24 January 2013. Mr Casamento was the chairman of the scheme meetings. His affidavit annexes a copy of the minutes of the meetings. It is sufficient for me to note that, in respect of the meeting of employee scheme creditors, the meeting was held at the appointed time and in the manner contemplated by the orders that were made on 29 November 2012. A quorum was present. Voting was conducted by way of a poll and 100% of the employee scheme creditors, voting in person or by proxy, voted in favour of the scheme resolution with the aggregate amount referrable to their votes being $13,330,221. The evidence shows that 18 out of 18 eligible employee scheme creditors attended in person or by proxy at the meeting and voted. In respect of former employee scheme creditors, it is sufficient for me to note that the meeting was held at the appointed time and in the manner contemplated by the orders that were made on 29 November 2012. A quorum was present. Voting was conducted by way of a poll and 100% of the former employee scheme creditors, voting in person or by proxy, voted in favour of the scheme resolution with the aggregate amount referrable to their votes being $16,447,152. The evidence shows that 15 out of 17 former employee scheme creditors attended in person or by proxy and voted. In my earlier reasons I noted (at [28]) that, for the purposes of voting, each scheme creditor’s claim rights were to be valued by reference to the cash component of the scheme consideration which had been calculated by the external actuary, Professional Financial Solutions Pty Ltd. At [9(a)] of my earlier reasons, I noted that the total cash component of the scheme consideration was $29,783,652.

(c)     The affidavit of Paul Joseph Casamento sworn on 29 January 2013. This affidavit annexes a copy of the trust deed entered into by SKMH and Australian Executor Trustees Limited on 29 January 2013 in relation to the issue of the CVR Notes. The trust deed is in the form that was included in the scheme documents sent to scheme creditors.

(d)    The affidavit of Benita Elliott sworn on 24 January 2013. Ms Elliott is the Shareholder Registrar for SKMH and its related bodies corporate. This affidavit deals with the identification of scheme creditors, the dispatch of the scheme documents by email and by post to scheme creditors, the receipt of proxy forms, the registration of attendees at the scheme meetings and aspects of the holding of the scheme meetings, including the poll procedures that were undertaken.

(e)    The affidavit of Weyinmi Popo sworn on 29 January 2013. This affidavit deals with the production and printing of the scheme documents, the publication of notice of the scheme meetings in accordance with the orders made on 29 November 2012, the publication of notice of today’s application, and certain correspondence with ASIC. I note that publication of notice of today’s application was by advertisement in The Australian newspaper in circulation on 22 January 2013.

(f)    The further affidavit of Weyinmi Popo sworn on 29 January 2013. This affidavit also deals with notice of today’s application and further correspondence with ASIC. It records that no notice from any creditor or member of SKM wishing to appear to oppose the approval of the scheme of arrangement has been served. The affidavit also annexes a letter from ASIC dated 29 January 2013 in which ASIC confirms that it does not intend to appear or make submissions to the Court at the application today.

3    I am satisfied on the evidence before me that the scheme meetings were advertised, convened and held as ordered, and that they were properly conducted. I am satisfied that agreement to the scheme of arrangement was obtained from the requisite majority for the purposes of s 411(4)(a)(i) of the Act.

4    I note, as recorded in my earlier reasons (see at [19] to [22]), that the independent expert, Deloitte Corporate Finance Pty Limited, has expressed the opinion that the methodology and assumptions adopted by the external actuary in calculating the Rectification Amounts represent a fair and reasonable basis on which that liability should be calculated and have drawn upon source data which appears to be appropriate in the circumstances. The independent expert has also expressed the opinion that the scheme of arrangement is in the best interests of former employee scheme creditors, as a whole, and in the best interests of employee scheme creditors, as a whole.

5     In my earlier reasons, I recorded (at [23]) that the independent directors of SKM had unanimously recommended the scheme of arrangement and had expressed the view that it would not materially prejudice SKM’s ability to pay its creditors. No matter has been drawn to my attention that would suggest that the recommendation has changed or that SKM’s financial circumstances have materially changed in any way that would adversely affect its ability to pay its creditors should the Court now give its approval to the scheme of arrangement.

6    No person has come forward to oppose the scheme of arrangement or its approval by the Court.

7    In all the circumstances, I am satisfied that approval should be given. SKM also seeks an order exempting it from compliance with s 411(11) of the Act. I am satisfied that it is appropriate to grant that exemption.

8     I have been assisted in my consideration of the matter by the preparation of written submissions by senior counsel appearing for SKM on this application. A copy of the written submissions has been marked for identification: MFI 2.

Associate:

Dated:    30 January 2013