Federal Court of Australia

Onevue Holdings Limited, in the matter of Onevue Holdings Limited (No 3) [2020] FCA 1584

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth) (Act) the scheme of arrangement between the plaintiff and its shareholders in the form of Exhibit 4 be approved.

2.    The plaintiff lodge with the Australian Securities and Investments Commission a copy of the approved scheme of arrangement at the time of lodging a copy of these Orders.

3.    Pursuant to s 411(12) of the Act, the plaintiff be exempted from compliance with s 411(11) in relation Order 1 above.

THE COURT NOTES THAT:

4.    For the purposes of s 411(6) of the Act, Exhibit 4 includes an amendment to the definition of Scheme Consideration increasing the Scheme Consideration from $0.40 to $0.43.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    On 28 October 2020 I made orders including an order pursuant to s 411(4)(b) and s 411(6) of the Corporations Act 2001 (Cth) (Act) approving a scheme of arrangement (Scheme) between the plaintiff, OneVue Holdings Limited (OneVue), and its shareholders. These are my reasons for making those orders.

background

2    On 4 September 2020 I made orders, among others, including an order pursuant to s 411(1) and s 1319 of the Act for the convening and conduct of a meeting (Scheme Meeting) of the holders of fully paid ordinary shares (Scheme Shareholders) in OneVue to consider and vote on the Scheme between OneVue and its members and approving the dispatch of the explanatory statement in relation to the Scheme (Scheme Booklet): see OneVue Holdings Limited, in the matter of OneVue Holdings Limited [2020] FCA 1321 (OneVue (No 1)).

3    The details of the Scheme are described in OneVue (No 1) at [4]-[6].

4    After the September Orders were made and the Scheme Booklet was dispatched, the further events described below occurred.

5    On 28 September 2020 the bidder, Iress Limited (Iress), announced to the Australian Securities Exchange (ASX) that the consideration that the Scheme Shareholders would be entitled to receive for their shares under the terms of the Scheme would increase from $0.40 per share to $0.43 per share (Increased Scheme Consideration) and that Iress and OneVue had entered into an amendment to the scheme implementation agreement between them to give effect to the increase in consideration. Shortly thereafter, OneVue also issued a release to the same effect to the ASX.

6    OneVue then prepared a supplementary scheme booklet to address the Increased Scheme Consideration announced by Iress on 28 September 2020 (Supplementary Scheme Booklet).

7    By letter dated 29 September 2020 Grant Thornton Corporate Finance Pty Ltd (Grant Thornton), the independent expert appointed by the directors of OneVue, informed the directors that the Increased Scheme Consideration was “at the top-end of [their] assessed valuation range. In accordance with the requirements of the ASIC Regulatory Guide 111 Contents of Experts Report (“RG 111”) [they had] considered the Increased Scheme Consideration based on the financial performance of OneVue following the release of [their independent expert’s report] and considered changes to market conditions, including listed peers share prices, implied trading multiples and recent transactions”. Grant Thornton concluded that the Increased Scheme Consideration was in line with the upper end of its valuation range and thus continued “to conclude that the Scheme is FAIR AND REASONABLE and hence in the BEST INTERESTS of the OneVue shareholders in the absence of a superior alternative proposal emerging”.

8    On 1 October 2020 OneVue approached the Court for orders for the approval and dispatch of the Supplementary Scheme Booklet. On that date orders were made by Farrell J (October Orders) approving the Supplementary Scheme Booklet for distribution to OneVue shareholders and prescribing the method for its dispatch: see OneVue Holdings Limited, in the matter of OneVue Holdings Limited (No 2) [2020] FCA 1427. The Supplementary Scheme Booklet was dispatched in accordance with those orders.

9    On 27 October 2020, in light of the Increased Scheme Consideration, Iress executed an amended and restated deed poll in relation to the Scheme. In addition, the Scheme was amended to refer to the Increased Scheme Consideration.

legal principles

10    At the second court hearing the Court must be satisfied that it is appropriate to exercise its discretion to grant approval of a scheme after it has received the consideration and approval of a meeting of, relevantly, its members under s 411(4)(b) of the Act: see Diversa Limited, in the matter of the Diversa Limited (No 3) [2016] FCA 1284 at [6].

11    In Seven Network Limited (ACN 052 816 789), in the matter of Seven Network Limited (No 3) [2010] FCA 400; (2010) 267 ALR 583 at [31]-[40] Jacobson J summarised the principles relevant to the approach at the second court hearing as follows:

(1)    the Court has a discretion whether to approve a scheme and is not bound to approve it simply because it has previously made orders for the scheme meeting to be convened or because the statutory majorities have been achieved;

(2)    the Court will usually approach the task on the basis that the members are better judges of what is in their commercial interests than the Court;

(3)    the following considerations included by the Corporations and Markets Advisory Committee in its December 2009 report are relevant:

(a)    whether the shareholders have voted in good faith and not for an improper purpose;

(b)    whether the proposal is fair and reasonable so that an intelligent and honest person who is a member of the relevant class, properly informed and acting alone, might approve it;

(c)    whether the plaintiff has brought to the Court’s attention all matters that could be considered relevant to the exercise of its discretion;

(d)    whether there has been full and fair disclosure of all information material to the decision; and

(e)    whether minority shareholders would be oppressed by the scheme; and

(4)    a further consideration is whether the scheme offends against public policy.

Consideration

Formal and procedural matters for the Court’s satisfaction

12    The evidence relied on by OneVue established that all formal and procedural matters had been satisfied:

(1)    the September Orders were lodged with the Australian Securities and Investments Commission (ASIC) on 4 September 2020;

(2)    the Scheme Booklet, substantially in the form approved at the first court hearing, was dispatched to each OneVue shareholder in accordance with the September Orders;

(3)    the Supplementary Scheme Booklet was dispatched to each OneVue shareholder in accordance with the October Orders;

(4)    the Scheme Meeting was held in accordance with the September Orders and the October Orders. It was chaired by Garry Wayling and held at the time and place specified in the Supplementary Scheme Booklet;

(5)    the statutory majorities were obtained at the Scheme Meeting. The evidence before me established that 75.17% of all votes cast, representing 80.94% of OneVue shareholders present and voting, were in favour of the resolution to approve the Scheme while 24.83% of all votes cast, representing 19.06% of all OneVue shareholders present and voting, were against the resolution to approve the Scheme;

(6)    a notice of the second court hearing was published in The Australian newspaper on 20 October 2020 in accordance with the October Orders; and

(7)    as at 28 October 2020, the solicitors for OneVue had not received any notice of appearance from any person in response to the advertisement referred to in the preceding subparagraph nor any communication to the effect that any party intended to appear. Similarly, Iress had not received any such indication. Upon the matter being called three times outside the courtroom there was no appearance by any other party at the hearing nor was my associate contacted by any party indicating an intention to appear in response to the invitation published in the Court’s list of business for any such person to do so, given that the hearing took place by use of the technology known as Microsoft Teams and without the need for the parties to attend personally.

13    By letter dated 27 October 2020 from ASIC to the directors of OneVue, ASIC indicated that pursuant to s 411(17)(b) of the Act it has no objection to the Scheme.

Exercise of the Court’s discretion

14    For the following reasons I was satisfied that orders approving the Scheme should be made.

15    I was satisfied that the Scheme is both fair and reasonable.

16    In their report dated 28 August 2020 Grant Thornton concluded that, in the absence of a superior proposal, the Scheme is fair and reasonable and in the best interests of OneVue shareholders. In its subsequent letter dated 29 September 2020 Grant Thornton considered the impact of the Increased Scheme Consideration noting that it was at the top end of its assessed valuation range and that the Scheme continued to be fair and reasonable and in the best interests of OneVue shareholders.

17    At the first court hearing I was satisfied that the Scheme was reasonable and that it was of such a nature and cast in such terms that if it received the statutory majorities at the Scheme Meeting, the Court would be likely to approve it on the hearing of an unopposed application: see OneVue (No 1) at [40]. There is nothing in the evidence before me to suggest that there was any deficiency in the disclosure made by OneVue in the Scheme Booklet and Supplementary Scheme Booklet, that members voted other than in good faith or cast their votes for an improper purpose, that any member has been treated in a way that might be characterised as oppressive or that would otherwise cast doubt on the procedural integrity of the meeting process. Further, as set out at [12(5)] above, the statutory majorities were achieved at the Scheme Meeting.

18    I was also satisfied that OneVue had brought to the Court’s attention all matters that could be considered relevant to the exercise of its discretion. This included the circumstances in which the Supplementary Scheme Booklet had been prepared, the process by which the Scheme Booklet and the Supplementary Scheme Booklet had been dispatched, the subsequent communications with OneVue shareholders and the procedure undertaken for the purposes of the Scheme Meeting including in relation to the lodgement and collation of proxies.

19    Finally, there was evidence before me of voter turnout at the Scheme Meeting. The relevant voter turnout percentages based on a combination of votes for and against and abstentions as a percentage of the total electorate were:

    shares participating - approximately 85.44%; and

    members participating - approximately 37.72%.

20    While these percentages have no statutory significance, the view has been expressed that a low turnout percentage might suggest a flaw in the convening procedure: see Avoca Resources Limited, in the matter of Avoca Resources Limited [2011] FCA 208 at [21]. Given these percentages and the evidence about the dispatch of the Scheme Booklet and the Supplementary Scheme Booklet, there is no basis for such an inference to be drawn here.

Conclusion

21    For those reasons I made the orders sought by OneVue at the second court hearing.

Associate:

Dated:    2 November 2020