Federal Court of Australia

Quickstep Holdings Limited, in the matter of Quickstep Holdings Limited [2025] FCA 317

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (Act), the Plaintiff convene and hold a meeting (Scheme Meeting) of the holders of ordinary shares in the Plaintiff (Quickstep Shareholders):

(a)    to consider and, if thought fit, agree to (with or without any modifications, alterations or conditions) the scheme of arrangement (Scheme) proposed to be made between the Plaintiff and Quickstep Shareholders, the terms of which are set out in Annexure A to these orders; and

(b)    to be held online as a virtual meeting only at 1:30pm (AET) on 14 April 2025.

2.    The Scheme Meeting be convened by sending on or before 14 March 2025 (to those Quickstep Shareholders appearing on the Plaintiff’s register of members as at 7.00pm (AET) on 5 March 2025):

(a)    in the case of Quickstep Shareholders who have elected to receive electronic shareholder communications from the Plaintiff (Email Shareholders), an email substantially in the form that appears at pages 203-204 of Exhibit RS-8 to the affidavit of Ronald William Smooker affirmed on 4 March 2025 (Fourth Smooker Affidavit) which contains links:

(i)    to a website at which each Email Shareholder can view and download an electronic copy of the document substantially in the form that appears at pages 7-171 of Exhibit RS-7 to the Fourth Smooker Affidavit, which comprises the explanatory statement as required by s 412(1)(a) of the Act (Scheme Booklet) (which contains, among other things, the Notice of Scheme Meeting at Annexure 1 to the Scheme Booklet); and

(ii)    through which each Email Shareholder can lodge proxy instructions in relation to their shareholding for the Scheme Meeting (Proxy Website);

(b)    in the case of Quickstep Shareholders who have elected to receive hard copy shareholder communications from the Plaintiff (Hardcopy Scheme Booklet Shareholders), the following documents by pre-paid post (in the case of Quickstep Shareholders with an address within Australia) or pre-paid airmail (in the case of Quickstep Shareholders with an address outside Australia);

(i)    a physical copy of the Scheme Booklet (which contains, among other things, the Notice of Scheme Meeting at Annexure 1 to the Scheme Booklet);

(ii)    a personalised proxy form; and

(iii)    if the Quickstep Shareholder has provided an address within Australia, a reply-paid envelope addressed to the Plaintiff’s share registry for the return of that proxy form; or

(iv)    if the Quickstep Shareholder has provided an address outside Australia, a self-addressed envelope addressed to the Plaintiff’s share registry for the return of the proxy form;

(c)    in the case of Quickstep Shareholders who are not Email Shareholders or Hardcopy Scheme Booklet Shareholders, or for Email Shareholders for whom the Plaintiff receives an electronic notification that the email cannot be delivered, the following documents by pre-paid post (in the case of Quickstep Shareholders with an address within Australia) or pre-paid airmail (in the case of Quickstep Shareholders with an address outside Australia):

(i)    a proforma letter substantially in the form that appears at page 205 of Exhibit RS-8 to the Fourth Smooker Affidavit which contains details of a website at which the Quickstep Shareholder can view and download an electronic copy of the Scheme Booklet (which contains, among other things, the Notice of Scheme Meeting at Annexure 1 to the Scheme Booklet);

(ii)    a personalised proxy form; and

(iii)    if the Quickstep Shareholder has provided an address within Australia, a reply-paid envelope addressed to the Plaintiff’s share registry for the return of that proxy form; or

(iv)    if the Quickstep Shareholder has provided an address outside Australia, a self-addressed envelope addressed to the Plaintiff’s share registry for the return of the proxy form.

3.    Subject to these orders, the Scheme Meeting be convened, held and conducted in accordance with the provisions of:

(a)    Pt 2G.2 of the Act (save for any replaceable rule that is displaced or modified by the Plaintiff’s constitution) that apply to a meeting of the Plaintiff’s members; and

(b)    the Plaintiff’s constitution that apply in relation to meetings of members and that are not inconsistent with Pt 2G.2 of the Act.

4.    The Quickstep Shareholders who are eligible to vote at the Scheme Meeting will be those whose names are recorded in the Plaintiff’s register of members at 1.30pm (AET) on 12 April 2025.

5.    Voting on the resolution to approve the Scheme is to be conducted by way of a poll.

6.    A proxy form in respect of the Scheme Meeting will be valid and effective if, and only if, it is completed and delivered in accordance with its terms by 1.30pm (AET) on 12 April 2025.

7.    Mr Patrick Largier, or failing him, Mr Kym Osley, be Chair of the Scheme Meeting.

8.    The Chair of the Scheme Meeting shall have the power to postpone or adjourn the Scheme Meeting to such time, date and place as he considers appropriate and, in that event, notwithstanding any other part of these orders:

(a)    the Quickstep Shareholders who are eligible to vote at the postponed Scheme Meeting will be those whose names are recorded in the Plaintiff’s register of members at 7:00pm (AET) on the date that is two calendar days before the date of the postponed Scheme Meeting;

(b)    a proxy form in respect of the postponed Scheme Meeting will be valid and effective if, and only if, it is completed and delivered in accordance with its terms at least 48 hours before the time scheduled for the postponed Scheme Meeting; and

(c)    a reference in these orders to the Scheme Meeting is taken to include a reference to the postponed Scheme Meeting.

9.    Pursuant to r 1.3 of the Federal Court (Corporations) Rules 2000 (Cth), compliance with the following rules (and their requirements) is dispensed with:

(a)    r 2.4(1)

(b)    r 2.15; and

(c)    r 3.4 and Form 6.

10.    On or before 11 April 2025, or if the Scheme Meeting is postponed in accordance with order 9 above or adjourned, on or before the date that is 5 calendar days before the ‘Second Court Date’ (as defined in the Scheme), the Plaintiff publish on its website and via an ASX Announcement a notice substantially in the form that appears at pages 163-164 of Exhibit RS-4 to the Second Smooker Affidavit.

11.    The further hearing of the originating process is adjourned to a hearing before O’Callaghan J on 16 April 2025 at 10:15am (AET).

12.    The Plaintiff be given liberty to apply.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J

Introduction

1    I made the orders set out above on 5 March 2025. These are my reasons.

2    By an originating process dated 4 February 2025, the plaintiff, Quickstep Holdings Limited (Quickstep), made an application for orders and directions pursuant to ss 411 and 1319 of the Corporations Act 2001 (Cth) (the Act) to convene and hold a meeting (Scheme Meeting) of its shareholders (Quickstep Shareholders).

3    The purpose of the Scheme Meeting is for Quickstep Shareholders to consider and, if thought fit, approve a proposed scheme of arrangement (Scheme). If implemented, the proposed Scheme will result in the acquisition of 100% of Quickstep’s ordinary shares by ASDAM Operations Pty Ltd (ASDAM).

4    Quickstep is a listed Australian public company limited by shares. It carries on business as an independent aerospace engineering and manufacturing company. It was established in 2001 and has been listed on the Australian Stock Exchange (ASX) since 2005. Its core capabilities include aerospace and defence, uninhabited air vehicles and urban air mobility, space and engineering services.

5    As at 28 February 2025, Quickstep had 71,726,214 ordinary shares on issue. As at 26 February 2025, its total market capitalisation was $40,345,995 (being 71,726,214 shares on issue at a closing price of $0.563). As at 28 February 2025, Quickstep had no options or performance rights on issue.

6    ASDAM is an unlisted private Australian company that was incorporated on 1 March 2019. All of its shares are indirectly owned by ASDAM Holdings Pty Ltd, which in turn is majority-owned and controlled by a number of private equity entities. ASDAM is part of an Australian sovereign defence and advanced manufacturing group, which provides what the evidence described as “end-to-end capability across design, engineering, manufacturing, assembly and sustainment”.

7    ASDAM’s proposal to acquire Quickstep is consistent with ASDAM’s strategic objectives of continuing to expand its sovereign capability and increase the breadth of the service it provides to customers (which include defence primes, commercial clients, governments and defence forces).

Key aspects of the scheme

8    On 20 December 2024, Quickstep entered into a binding scheme implementation deed (SID) with ASDAM. The transaction proposed by the SID involves ASDAM acquiring 100% of the shares on issue in Quickstep by way of a scheme of arrangement under Part 5.1 of the Act. It is proposed that for each Quickstep share held as at the scheme record date (being the relevant date at which the Quickstep Shareholders who are eligible to vote at the Scheme Meeting must be recorded in Quickstep’s register of members), Quickstep Shareholders will receive a cash price of $0.575 per share (Scheme Consideration). The Scheme Consideration implies an equity value for Quickstep of $41,242,573.

9    Quickstep’s directors have unanimously recommended that Quickstep Shareholders vote in favour of the Scheme, and they intend to vote in favour of the Scheme.

10    A final scheme booklet dated 5 March 2025 (Scheme Booklet) has been prepared and was in evidence. It includes the explanatory statement required by s 412 of the Act and provides a detailed description of the Scheme, including its advantages and disadvantages.

11    An independent expert report has been prepared by Deloitte and is annexed to the Scheme Booklet. That report assesses the Scheme, opines that the Scheme is “fair and reasonable” and concludes that the Scheme is in the “best interests” of Quickstep Shareholders.

12    The Scheme Booklet was also provided to the Australian Securities and Investments Commission (ASIC).

13    On 4 March 2025, ASIC sent a letter to the directors of Quickstep, indicating that it did not propose to appear to make submissions or intervene to oppose the Scheme at the first court hearing.

Statutory framework

14    The statutory framework relating to schemes of arrangement is set out in Part 5.1 of the Act and involves a three-stage process:

(a)    the hearing of an application to the court for orders to convene a meeting or meetings (s 411(1));

(b)    the holding of the meeting or meetings (s 411(4)(a)); and

(c)    the hearing of an application to the court for an order to approve the scheme (ss 411(4)(b) and 411(6)).

15    The hearing in this matter on 5 March 2025 concerned the first stage.

16    The court’s discretion to make an order under s 411(1) is enlivened if:

(a)    a compromise or arrangement is proposed between a Part 5.1 body and its members (or any class of them);

(b)    an application for the order is made in a summary way by the body;

(c)    14 days’ notice of the hearing of the application has been given to ASIC (or such lesser period as the court or ASIC permits); and

(d)    the court is satisfied that ASIC has had a reasonable opportunity to:

(i)    examine the terms of the proposed compromise or arrangement to which the application relates and a draft explanatory statement relating to the proposed compromise or arrangement; and

(ii)    make submissions to the court in relation to the proposed compromise or arrangement and the draft explanatory booklet.

See, by way of example only, Re Kidman Resources Ltd [2019] FCA 1226; (2019) 375 ALR 760 at 763–4 [22].

17    I was satisfied that the criteria set out above have been met, including that ASIC has had a reasonable opportunity to examine the terms of, and make submissions in relation to, the Scheme.

18    Accordingly, the court’s discretion to make orders for the plaintiff to convene the Scheme Meeting was enlivened.

Should the discretion be exercised?

19    The principles which apply to the exercise of that discretion are well understood. The court must be satisfied that:

(a)    the Scheme is fit for consideration by the proposed meeting in the sense that it is of such a nature and cast in such terms that, if it achieves the statutory majority at the meeting, the court would be likely to approve it on the hearing of a petition which is unopposed; and

(b)    members are to be properly informed as to the nature of the Scheme before the Scheme Meeting.

20    The role of the court at the first court hearing is supervisory. Justice Finkelstein summarised relevant authorities in an oft-cited passage in Re CSR Ltd (2010) 183 FCR 358 at 379–80 [74]–[76], explaining that the court should generally confine itself to ensuring that certain procedural and substantive requirements are met (for example, that there will be adequate disclosure), with limited consideration of issues of fairness. The court should only consider the merits or fairness of a proposed scheme at the convening hearing if the issue is such as would “unquestionably” lead to a refusal to approve the scheme at the approval hearing; that is, the scheme may “appear on its face so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further”.

21    I had the benefit of detailed and carefully prepared written and oral submissions by Ms KA Brazenor of counsel.

22    Having had the benefit of those submissions, and having read the evidence relied on, I am comfortably satisfied that the proposed Scheme is of such a nature and cast in such terms that, if it achieves the statutory majorities at the proposed Scheme Meeting, the court would be likely to approve it at the second court hearing, because:

(a)    the independent expert report concluded that the proposed Scheme is fair and reasonable and in the best interests of Quickstep Shareholders;

(b)    all relevant disclosures have been made, and all necessary information has been provided in the Scheme Booklet;

(c)    an adequate due diligence and verification process has been undertaken by both Quickstep and ASDAM in respect of the content of the Scheme Booklet; and

(d)    the proposed Scheme is the subject of a unanimous recommendation by the Quickstep board of directors (subject to obvious enough qualifications regarding the view of the independent expert, and the emergence of a superior proposal).

23    For those reasons, I was satisfied that I should make the orders convening the Scheme Meeting set out above.

Dispensation with certain compliance requirement

24    I need to mention one other matter.

25    Rule 3.4 of the Federal Court (Corporations) Rules 2000 (Cth) (the Rules) provides that, unless the court otherwise orders, a plaintiff must publish a notice of the second court hearing (that is, the hearing of the application for approval of the proposed Scheme) in a daily newspaper circulating generally in the State or Territory where the plaintiff has its principal place of business at least five days before the date of that hearing, and the notice must be in accordance with Form 6 of the Rules.

26    Paragraph 3(f) of the Federal Court’s Schemes of Arrangement Practice Note (GPN-SOA) provides as follows:

The Court will be prepared to dispense with the publication of a notice of the second Court hearing in a newspaper, if notice can be given by an announcement made on the Australian Securities Exchange or by an announcement on the scheme proponent’s website if it is not listed. A newspaper advertisement would only be required if the scheme proponent has reason to think that neither of those mechanisms would be effective to bring the scheme to the attention of its securityholders.

27    Quickstep intends to publish the notice of the second court hearing via an ASX announcement and a notice on its website. I was not made aware of any reason why this proposed method of notification would not be effective to bring the second court hearing (and the proposed Scheme more generally) to the attention of Quickstep Shareholders.

28    Accordingly, I made the order dispensing with the requirement to comply with r 3.4 of the Rules.

Disposition

29    For the above reasons, I was satisfied that the Scheme is of such a nature and cast in such terms that, if it achieves the statutory majorities at the Scheme Meeting, the court would be likely to approve it at the second court hearing. I was also satisfied that the information to be provided to Quickstep Shareholders before the Scheme Meeting as to the nature of the Scheme is adequate.

30    It was therefore appropriate to make the orders sought by Quickstep, set out above.

Associate:

Dated:    4 April 2025