Federal Court of Australia

BG&E Group Limited, in the matter of BG&E Group Limited [2025] FCA 1232

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 411(1) and s 1319 of the Corporations Act 2001 (Cth), the plaintiff is to convene and hold a meeting of the ordinary shareholders of the plaintiff (BG&E Shareholders) to consider and, if thought fit, to approve (with or without modifications or conditions) the scheme of arrangement (Scheme) proposed to be made between the plaintiff and BG&E Shareholders (Scheme Meeting), the terms of which are set out in the document comprising Exhibit P3.

2.    The following documents be approved for distribution to the BG&E Shareholders:

(a)    an explanatory statement and its annexures substantially in the form set out in tab 60 of the supplementary electronic Court book comprising Exhibit P2, tabs 4 and 6-14 of Exhibit P1 and Exhibit P3 (Scheme Booklet);

(b)    the notice of meeting in respect of the Scheme Meeting, substantially in the form appearing at tab 8 of the electronic Court book comprising Exhibit P1 (Notice of Scheme Meeting);

(c)    a proxy form (Proxy Form) substantially in the form appearing at tab 54 of Exhibit P1;

(d)    an election form by which eligible BG&E Shareholders may elect to receive fully paid preferred non-voting shares in Systra SA, substantially in the form appearing at tab 55 of Exhibit P1, including the:

(i)    Systra Securityholders Agreement;

(ii)    Nominee Deed; and

(iii)    Contribution Agreement,

substantially in the form which appear at tab 55 of Exhibit Pl and Annexure “NTG7” of the Affidavit of Nathan Thomas Greenfield dated 22 September 2025 and which are to be attached to, and form part of, the election form (Election Form);

(e)    for each BG&E Shareholder whose address as shown in the register of the plaintiff is outside of Australia and its external territories, or who is otherwise known to, or where there are reasonable grounds to believe that the BG&E Shareholder resides outside of Australia and its external territories (Foreign BG&E Shareholder), a vendor declaration (Vendor Declaration);

(f)    an email notification substantially in the form appearing at tab 51 of Exhibit P1 (Email Notification);

(g)    a letter notification substantially in the form appearing at tab 52 of Exhibit P1 (Letter Notification),

(together, the Scheme Materials);

(h)    a continuous disclosure announcement in relation to the convening of the Scheme Meeting and the dispatch of the Scheme Booklet to be uploaded to the BG&E online investor portal accessible by each BG&E Shareholder (BG&E Investor Portal) substantially in the form appearing at tab 62 of Exhibit P2;

(i)    the supplementary scheme booklet substantially in the form appearing at tab 37 of the Exhibit P1;

(j)    an email notification substantially in the form appearing at tab 35 of Exhibit P1 (Supplementary Email Notification); and

(k)    a letter notification substantially in the form appearing at tab 36 of Exhibit P1 (Supplementary Letter Notification),

(together, the Supplementary Scheme Materials).

3.    The Scheme Materials are to be despatched to each BG&E Shareholder whose name is recorded in the register of the plaintiff as being a BG&E Shareholder as at 12 pm (Sydney time) on 22 September 2025 (Register Time) and who has elected to receive shareholder communications electronically, by sending on or before 24 September 2025:

(a)    the Email Notification by way of email to their nominated email address, which is to include:

(i)    an embedded link to the BG&E Investor Portal, which enables each BG&E Shareholder to access an electronic copy of the Scheme Booklet and Notice of Meeting;

(ii)    for each eligible BG&E Shareholder, a personalised Election Form, provided as an attachment to the email;

(iii)    an embedded link, which enables each BG&E Shareholder to lodge the Proxy Form and submit their voting instructions online; and

(iv)    for Foreign BG&E Shareholders, information regarding their need to provide the Vendor Declaration to ensure that Systra is not required to withhold a portion of their Scheme Consideration (with a personalised Vendor Declaration form to be sent as an attachment to a separate email to the nominated email address of each Foreign BG&E Shareholder).

4.    In the case of any BG&E Shareholder whose name is recorded in the register of the plaintiff and who has not expressly elected to receive electronic communications (Personal Service Shareholder), the Scheme Materials are to be served via email in accordance with Order 3 above and the following Scheme Materials are to be delivered via express courier or process server to the relevant address recorded in the plaintiffs register of members for the Personal Service Shareholder on or before 24 September 2025:

(a)    the Letter Notification;

(b)    a hard-copy of the Scheme Booklet and Notice of Meeting;

(c)    a hard-copy personalised Election Form; and

(d)    a hard-copy personalised Proxy Form.

5.    The Supplementary Scheme Materials are to be despatched to each BG&E Shareholder whose name is recorded in the register of the plaintiff as being a BG&E Shareholder as at Register Time and who has elected to receive shareholder communications electronically, by sending no less than ten business days before the Scheme Meeting, the Supplementary Email Notification by way of email to their nominated email address, which is to include an embedded link to the BG&E Investor Portal, which enables each BG&E Shareholder to access an electronic copy of the Supplementary Scheme Materials.

6.    In the case of the Personal Service Shareholder, the Supplementary Scheme Materials are to be served via email in accordance with Order 5 above and via express courier or process server to the relevant address recorded in the plaintiffs register of members for the Personal Service Shareholder no less than ten business days before the Scheme Meeting.

7.    If the plaintiff receives (through its share registrar, Boardroom Pty Ltd ACN 003 209 836) an automatic electronic “bounce back” notification that the Email Notification or Supplementary Email Notification (as the case may be) was unable to be delivered to the nominated email address of any BG&E Shareholder (Undelivered Email Shareholder):

(a)    the plaintiff is to contact the Undelivered Email Shareholder by telephone to confirm the correctness (or otherwise) of the email address used;

(b)    if the Undelivered Email Shareholder informs the plaintiff of an alternate or corrected email address that can be used or if the plaintiff is aware of an alternate or corrected email address because the Undelivered Email Shareholder is a shareholder, the Undelivered Email Shareholder to be sent the Scheme Materials or Supplementary Scheme Materials (as the case may be) to such email address;

(c)    if there is no alternate or corrected email address that can be used, or if the Undelivered Email Shareholder cannot be contacted by telephone, then they are to be sent the materials referred to in subparagraph 7(d) below in the manner described in that subparagraph;

(d)    for any Undelivered Email Shareholder that cannot be contacted by telephone or does not have an alternate or corrected email address that can be used, they are to be sent, by any one or more of the following means:

(i)    hand delivery;

(ii)    courier or process server;

(iii)    prepaid express post (in the case of BG&E Shareholders whose postal address as shown on the register of members is within Australia); or

(iv)    prepaid express airmail (in the case of BG&E Shareholders whose registered postal address as shown on the register of members is outside Australia) to their postal address,

a hard copy of (as the case may be) the following documents:

(v)    the Letter Notification;

(vi)    the Scheme Booklet and Notice of Scheme Meeting;

(vii)    a personalised Proxy Form;

(viii)    a personalised Election Form;

(ix)    if a Foreign BG&E Shareholder, a Vendor Declaration; and

(x)    the Supplementary Scheme Materials,

provided that this subparagraph (d) will not apply to the Personal Service Shareholder where the plaintiff has served the Scheme Materials or Supplementary Scheme Materials (as the case may be) on that Personal Service Shareholder in accordance with Order 4.

8.    Dispatch of the Scheme Materials and the Supplementary Scheme Materials in accordance with Orders 3, 4 and 5 above shall be taken to be sufficient notice of the Scheme Meeting.

9.    The plaintiff is not obliged to send any document forming part of the Scheme Materials or the Supplementary Scheme Materials to any person who becomes a BG&E Shareholder after the Register Time.

10.    The plaintiff cause a copy of the Scheme Materials and the Supplementary Scheme Materials to be provided to any BG&E Shareholder upon request before the date of the Scheme Meeting.

11.    A proxy in respect of the Scheme Meeting will be valid and effective if, and only if, it is lodged in accordance with the instructions on the Proxy Form by 5 pm (AEDT) on 13 October 2025.

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

(a)    Part 2G.2 of the Act (save for any applicable replaceable rule) that apply to a meeting of the plaintiffs members; and

(b)    the plaintiffs Constitution that apply in relation to meetings of members and that are not inconsistent with Part 2G.2 of the Act.

13.    The Scheme Meeting is to be held as a hybrid meeting and conducted in person and virtually simultaneously on Wednesday, 15 October 2025 commencing at 5 pm (Sydney time) or following the conclusion or adjournment of the General Meeting (whichever is later) with the physical venue of the Scheme Meeting at Levels 1 and 2, 8 Windmill Street, Millers Point, New South Wales and via an online platform that allows for remote participation as set out in the Notice of Scheme Meeting.

14.    BG&E Shareholders may vote at the Scheme Meeting by attending in person or by proxy, attorney or corporate representative (if applicable), with votes to be cast via the submission of Proxy Forms or via the online platform, as set out in the Notice of Scheme Meeting.

15.    Pursuant to s 1319 of the Act:

(a)    Peter Watson, or failing him, Gaye McMath, be the chairperson of the Scheme Meeting; and

(b)    the chairperson of the Scheme Meeting shall have the power to adjourn the Scheme Meeting to such time, date and place as they consider appropriate.

16.    The plaintiff may provide access to the Scheme Meeting to such other persons as it thinks fit.

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

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

(a)    r 2.4(1), to the extent that rule requires the affidavit filed with the originating process to state the facts in support of the process;

(b)    r 2.15; and

(c)    r 3.4 and Form 6.

19.    By no later than Friday, 17 October 2025, the plaintiff is to publish an announcement on its website substantially in the form which appears at tab 58 of Exhibit P1, which sets out the details for the second Court hearing and the process for any person wishing to appear at that hearing to oppose the approval of the Scheme.

20.    The further hearing of the originating process in respect of the plaintiff’s application pursuant to s 411(4)(b), and if necessary s 411(6), of the Act for approval of the Scheme, is adjourned to 10.15 am (Sydney time) on Friday, 24 October 2025.

21.    Liberty to the plaintiff to apply on two business days’ notice, specifying the relief sought.

THE COURT DIRECTS THAT:

22.    Pursuant to s 1319 of the Act that all BG&E Shareholders who are on the plaintiffs register at 5:00pm on the day that is two business days prior to the Scheme Meeting, including any who are Defaulting Members (as defined in the plaintiffs Constitution), are entitled to attend, speak and vote at the Scheme Meeting convened pursuant to these orders.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    By an originating process filed on 28 August 2025 the plaintiff, BG&E Group Limited, sought orders pursuant to s 411 and directions pursuant to s 1319 of the Corporations Act 2001 (Cth) for the convening of a meeting (Scheme Meeting) of its members (Scheme Shareholders) to consider a proposed scheme of arrangement (Scheme) between it and the Scheme Shareholders. On 22 September 2025 I made the orders and directions sought. These are my reasons for doing so.

2    BG&E is an unlisted public company. It conducts an engineering and consultancy business which operates in Australia and internationally, the origins of which can be traced back to a business formed in 1970 in Perth, Western Australia.

3    BG&E provides multidisciplinary services across the infrastructure, property and resource sectors. Its core activities include civil and structural engineering and related technical services. Its client base includes public and private sector entities. BG&E was incorporated in 2021 and became the parent company of the BG&E Group.

4    The majority of BG&E’s shareholders are current employees or directors (or entities under the control of or associated with current employees or directors) of the BG&E Group. The balance of BG&E’s shareholders are former employees or directors (or entities under the control of or associated with current employees or directors) of the BG&E Group.

5    On 3 June 2025 BG&E announced, via its online investor portal, that it had entered into a scheme implementation agreement (SIA) with Systra SA, the parent company of the Systra Group. Systra is a French company located in Paris. Systra Group provides a range of services across the entire life cycle of transportation infrastructure projects. It specialises in rail infrastructure, communications based train control and high speed rail across five continents.

Overview of the Scheme

6    If the Scheme is approved and implemented Systra will acquire 100% of the issued shares in BG&E (BG&E Shares). The consideration to be provided to BG&E shareholders under the terms of the Scheme will be paid in the following tranches:

(1)    Initial Scheme Consideration (see [8] below);

(2)    any First Contingent Consideration (see [14] below);

(3)    any Second Contingent Consideration (see [15] below); and

(4)    any unused balance of the SPR Holdback Amount (see [8] below).

7    Systra has agreed to acquire all BG&E Shares for $360 million (which equates to $12.15344043 per BG&E share). However, this amount is subject to adjustments to be made according to an agreed formula to reflect balances of cash, debt and working capital as at the implementation of the Scheme (Implementation Date) or shortly thereafter to align with a month end. The outcome of those adjustments is referred to as the Final Value which will not be known until the finalisation of the financial statements reflecting the financial position of BG&E immediately prior to the Implementation Date (Completion Accounts) which are to be prepared after the implementation of the Scheme.

Initial Scheme Consideration

8    The Initial Scheme Consideration is calculated as an estimate of the Final Value (Estimated Value) less a Completion Accounts Holdback Amount, which is the greater of 7.5% of the Estimated Value and $27 million, and an SPR Holdback Amount of $500,000.

9    BG&E intends to issue a supplementary Scheme booklet which will set out the amount of the Estimated Value and the Initial Scheme Consideration no less than 10 business days before the Scheme Meeting. A draft of the supplementary Scheme booklet was in evidence before me.

10    A BG&E shareholder may elect to receive some or all of the Initial Scheme Consideration in the form of fully paid preferred non-voting shares in Systra which carry the rights attached to ordinary shares in Systra other than voting rights (Systra Shares). BG&E shareholders must make their election by the date that is five business days before the date of the Scheme Meeting (Election Date), failing which they will receive all consideration in cash. The value of the Systra Shares that may be issued to BG&E shareholders is subject to a cap of $60 million. There is a pro rata scale back mechanism if the elections made by BG&E shareholders result in the cap being exceeded.

11    The number of Systra Shares to be issued to BG&E shareholders who make valid elections in respect of each BG&E share is referred to as the Relevant Ratio which, in turn, depends on the Estimated Value and average EUR:AUD exchange rate for the five business days up to and including the day before the Election Date. The supplementary Scheme booklet will also include the Relevant Ratio subject only to changes in the EUR:AUD exchange rate between the issue date of the supplementary Scheme booklet and the date before the Election Date.

Scheme Participants’ Representative and the SPR Holdback Amount

12    Two executive directors of BG&E, Francesco Cerra and Paul Farrugia, have agreed to act as the Scheme Participants’ Representative. Its role is to assist with the preparation of the Completion Accounts and the determination of the First Contingent Consideration and the Second Contingent Consideration.

13    The SPR Holdback Amount is $500,000 and is to be deducted from the Estimated Value when calculating the Initial Scheme Consideration. The Scheme Participants’ Representative is permitted to make deductions from the SPR Holdback Amount to satisfy any of the costs, expenses, claims, liabilities and losses (including a right of indemnity) it incurs, or may incur, in discharging its role under the Scheme. If there is a remaining balance of the SPR Holdback Amount after deducting the costs and expenses, this will be paid to Scheme Shareholders by 20 business days after the second anniversary of the Implementation Date.

First Contingent Consideration and Second Contingent Consideration

14    An obligation to pay any First Contingent Consideration will arise where the Final Value exceeds the Estimated Value less the Completion Accounts Holdback Amount. In those circumstances, the excess will be paid out of the Completion Accounts Holdback Account to Scheme Shareholders. Systra has an obligation to pay a Top-up Amount (defined in cl 6.13(c)(ii) of the Scheme) to make up any shortfall so that Scheme Shareholders receive the full amount by which the Final Value exceeds the Estimated Value less the Completion Accounts Holdback Amount.

15    In the determination of “Debt” in the Completion Accounts, certain debt-like items may be included in respect of provisions for claims and deductibles that are not reimbursable by insurance coverage. If, on or before the second anniversary of the Implementation Date, those items are no longer classified as Debt, then the amount of those items less the amount of any items of Debt which were under-provisioned in the Completion Accounts is payable by Systra to Scheme Shareholders as the Second Contingent Consideration.

Permitted Dividends

16    The SIA allows the BG&E board to pay one or more dividends to BG&E shareholders before implementation of the Scheme (Permitted Dividends). The Permitted Dividends do not form part of the Scheme consideration. They represent a mechanism to deliver value to BG&E shareholders upon or prior to the implementation of the Scheme.

17    BG&E intends declare or determine a minimum amount of Permitted Dividends to be paid to BG&E shareholders on or before the Implementation Date if the Scheme becomes effective. The amount to be paid by way of Permitted Dividends will be recorded in the supplementary Scheme booklet. The Initial Scheme Consideration will not be reduced by the amount of Permitted Dividends determined or declared in accordance with the SIA after the announcement of the Estimated Value.

Recommendation of the BG&E board

18    The BG&E directors have unanimously recommended that BG&E shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to the independent expert continuing to conclude that the Scheme is in their best interests. Subject to those same qualifications, the BG&E directors who hold or control BG&E shares intend to vote all of their BG&E shares in favour of the proposed Scheme.

19    The BG&E directors have based their recommendation on the indicative calculations of the Initial Scheme Consideration, Estimated Value and Permitted Dividends which are disclosed in the Scheme booklet. The BG&E directors do not make any recommendation regarding whether BG&E shareholders should elect to receive some or all of the Initial Scheme Consideration in the form of Systra Shares.

20    The supplementary Scheme booklet will disclose whether there has been any change in the directors’ recommendation upon the calculation and announcement of the actual Estimated Value, the Initial Scheme Consideration, the Permitted Dividends and the Relevant Ratio also to be included in the supplementary Scheme booklet

Independent expert report

21    An independent expert report has been prepared by BDO Corporate Finance Australia Pty Ltd and is annexed to the Scheme booklet. The independent expert has concluded that the Scheme is fair and reasonable and in the best interests of the BG&E shareholders, in the absence of a superior proposal. That is so whether a BG&E shareholder elects to take cash consideration or scrip consideration. The independent expert’s opinion is based on the indicative calculations of the Initial Scheme Consideration and Permitted Dividends only as disclosed in the Scheme booklet.

22    Once again, the supplementary Scheme booklet will disclose whether there has been any change in the independent expert’s opinion upon the calculation and announcement of the actual Estimated Value, the Initial Scheme Consideration, the Permitted Dividends and the Relevant Ratio.

Statuory framework

23    Part 5.1 of Ch 5 of the Corporations Act concerns arrangements and reconstructions. Where a compromise or arrangement is proposed between a Pt 5.1 body and its members, s 411(1) of the Corporations Act empowers the Court to order a meeting relevantly of the members (or any class of them) to be held at the place and convened in such manner as the Court directs and to approve the explanatory statement required by s 412(1)(a) to accompany the notice of meeting.

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

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

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

(3)    14 days’ notice of the hearing of the application has been given to the Australian Securities and Investments Commission (ASIC) (or such lesser period as the Court or ASIC permits); and

(4)    the Court is satisfied that ASIC has had a reasonable opportunity to 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 make submissions to the Court in relation to the proposed compromise or arrangement and the draft explanatory booklet,

see Clemenger Group Limited, in the matter of Clemenger Group Limited [2025] FCA 1161 at [48].

25    In Clemenger O’Callaghan J conveniently summarised the principles that guide the exercise of the Court’s discretion to convene a meeting at [51]-[52]:

51    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.

52    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”.

Consideration

26    I was satisfied that the Court’s discretion to make an order had been enlivened. Among other things: BG&E is a Pt 5.1 body; the Scheme is proposed between BG&E and its shareholders; the Scheme can be properly described as an arrangement or compromise. It is bona fide and properly proposed; and ASIC had been notified of the hearing and had a reasonable opportunity to examine the terms of the Scheme and make submissions if it so wished. By letter dated 19 September 2025, ASIC indicated that it did not intend to appear to make submissions or intervene to oppose the Scheme at the first court hearing.

27    I was also satisfied that the Scheme booklet provides adequate disclosure, contains the prescribed information and that appropriate steps had been taken to ensure that the information contained in it was verified.

28    At the first court hearing a number of issues were raised for the Court’s consideration in the exercise of its discretion to convene the Scheme meeting which I address below.

Permitted Dividends

29    As set out above, the SIA enables the board of BG&E to pay one or more dividends to BG&E shareholders before implementation of the Scheme. On 13 June 2025, a Permitted Dividend of $0.62 per share fully franked was paid to BG&E shareholders. The BG&E board intends to declare a minimum amount of further Permitted Dividends, some of which will be conditional on the Scheme becoming effective.

30    As observed by Jackman J in Re Vita Group Limited (2023) 165 ACSR 576; [2023] FCA 400 at [8]-[9] the payment of contingent or conditional dividends in the context of members’ schemes of arrangement is not unusual and is consistent with the constraints imposed by s 254T of the Corporations Act. As was the case in Re Vita Group where the contingent nature of the dividend is adequately disclosed to shareholders, as I am satisfied it is here, the contingency is not a reason not to convene a scheme meeting. In any event, a large part of the contingency will be removed prior to the Scheme meeting given that the board’s decision to declare or determine a minimum amount of Permitted Dividends will be announced to shareholders in the supplementary Scheme booklet.

31    In addition, as BG&E submitted the Permitted Dividends do not give rise to any issue of financial assistance to Systra. This is because Systra does not hold a relevant interest or any voting power in any BG&E shares: see Re Vita Group at [10].

Contingent consideration

32    There are two aspects to the contingent consideration.

33    In relation to the First Contingent Consideration:

(1)    the Scheme requires the Scheme Participants’ Representative to prepare and provide to Systra the draft Completion Accounts no later than 45 business days after implementation of the Scheme or, if later, the last day of the calendar month in which the implementation of the Scheme occurs;

(2)    the Completion Accounts are required to reflect the financial position of BG&E at the end of that day, which is referred to as the Implementation Date or the Revised Adjustment Date; and

(3)    Schedules 1 and 2 to the Scheme set out respectively the principles to be applied in the preparation of the Completion Accounts and the form of those accounts. The Scheme provides that where there is a dispute between the Scheme Participants’ Representative and Systra in relation to the calculation of the Final Value, it will be determined by an independent expert.

34    In relation to the Second Contingent Consideration:

(1)    the calculation of Debt for the purposes of determining the Final Value will include provisions for claims and deductibles that are not reimbursable by insurance coverage (Accrued Non-Reimbursable Claims) and which include any claims against a member of the BG&E Group for which an insurer has not confirmed it is on risk;

(2)    no later than 20 business days after the first to occur of the second anniversary of the Implementation Date and the last date at which as a matter of fact each Accrued Non-Reimbursable Claim no longer satisfies the criteria of being Debt (in either case such date being the Testing Date), Systra must prepare a draft report (Debt Like items Report) as at the Testing Date and deliver it to the Scheme Participants’ Representative;

(3)    the Debt Like items Report must compare the amount of the Accrued Non-Reimbursable Claims in the Completion Accounts with the amount of claims that have crystallised by the Testing Date and any amount of Debt which was under provisioned in the Completion Accounts, excluding any increases to the extent they were caused by the actions or omissions of Systra after the Implementation Date;

(4)    if the aggregate of Accrued Non-Reimbursable Claims less actual crystalised debt less any under provisioned amount is a positive number, then that amount will represent the Second Contingent Consideration which must be paid by Systra to the Scheme Shareholders; and

(5)    the Scheme provides that where there is a dispute between the Scheme Participants’ Representative and Systra about the calculation of the Second Contingent Consideration, an independent expert is to be appointed.

35    As BG&E submitted, the quantification of the First Contingent Consideration is contingent on the financial position of BG&E as at the Implementation Date or the Revised Adjustment Date and the quantification of the Second Contingent Considerations is contingent on the financial position of BG&E as at the Testing Date. Those amounts are to be determined using objective factors set out in Sch 1 of the Scheme and, in the event of a dispute, an independent expert is to determine the relevant amounts. If the Scheme becomes effective, BG&E shareholders will have the right to receive the First Contingent Consideration and the Second Contingent Consideration calculated at the times and in the manner summarised above.

36    It is well established that, provided the nature of the consideration under a proposed scheme is sufficiently disclosed, the fact that some consideration for scheme shares is deferred and contingent on future events is not a reason to decline approval of the scheme: see for example Re Centrebet International Ltd [2011] FCA 870 at [17]-[26] (Emmett J); Re Patersons Securities Ltd [2019] FCA 1438 at [8] (Colvin J).

37    To that end, I was satisfied that the First Contingent Consideration and the Second Contingent Consideration as well as the possibility that any unused balance of the SPR Holdback Amount may be paid to BG&E at a future date were adequately disclosed in the Scheme booklet.

38    Further, the independent expert and the BG&E directors did not base their recommendations or opinion in relation to the Scheme on the BG&E shareholders receiving any amount by way of the First Contingent Consideration, the Second Contingent Consideration or the SPR Holdback Amount. Rather the independent expert came to the view that the Initial Scheme Consideration is fair and reasonable and thus in the best interests of shareholders.

Performance risk and escrow arrangements

39    BG&E drew to my attention the mechanics for payment of the amounts due under the Scheme and the disclosure of how those payments were to be made, including whether there was any payment risk in respect of any of those amounts. I was satisfied that the Scheme includes appropriate measures to mitigate any performance risk in the payment of the Scheme consideration to BG&E shareholders and that any residual risk is adequately disclosed.

Debenture

40    BG&E addressed the question of whether the obligation on the part of Systra to pay the First Contingent Consideration, the Top-up Amount or the Second Contingent Consideration was the issue of a debenture for the purposes of the Corporations Act.

41    Relevantly, s 283AA(1) of the Corporations Act provides that before a company issues debentures under a scheme of arrangement, the body must enter into a debenture trust deed that complies with s 283AB and appoint a trustee that complies with s 283AC of the Corporations Act.

42    Section 9 of the Corporations Act defines a debenture as:

… a chose in action that includes an undertaking by the body to repay as a debt money deposited with or lent to the body. The chose in action may (but need not) include a security interest over property of the body to secure payment of the money. However, a debenture does not include:

…

For the purposes of this definition, if a chose in action that includes an undertaking by a body to pay money as a debt is offered as consideration for the acquisition of securities under an off-market takeover bid, or is issued under a compromise or arrangement under Part 5.1, the undertaking is taken to be an undertaking to repay as a debt money deposited with or lent to the body.

43    In 3Q Holdings Limited, in the matter of 3Q Holdings Limited (No 2) [2022] FCA 1359 Cheeseman J considered whether the arrangements for payment of the second tranche of the scheme consideration involved the issue of debentures for the purposes of the Corporations Act. At [55]-[57] Cheeseman J set out the following relevant principles:

55    3Q submitted, and I accept depending on the relevant context, that a debenture can include a contingent debt. 3Q relied on s 124(1)(b) of the Act, Lemon v Austin Friars Investment Trust Limited [1926] 1 Ch 1 at 15 and 19, and Burns Philp Trustee Co Ltd v Commissioner of Stamp Duties (NSW) (1983) 83 ATC 4,477 at 4,479. I would add to the authorities cited by 3Q, the discussion of this issue, albeit in the context of a highly complex financial product, by the Full Court in ABN AMRO Bank NV v Bathurst Regional Council [2014] FCAFC 65 at [667] to [669].

56    3Q further submitted that a contingent debt is considered to be a debt where a company has subjected itself to a conditional but unavoidable obligation to pay a sum of money at a future time, relying on Hawkins v Bank of China (1992) 26 NSWLR 562 at 572, 576 and 578.

57    In ABN AMRO, the Full Court observed (at [684]):

…it is true that a debt is capable of including a debt that is repayable on a contingency. But the word “debt” is not one of precise and inflexible denotation. It must be applied in a practical and common sense fashion, consistent with its context and statutory purposes: Hawkins v Bank of China (1992) 26 NSWLR 562 at 572. Similarly, any attempt to formulate a universally applicable definition of a contingent debt is difficult, if not impossible. What is, or what is not, a contingent debt depends largely upon the statutory context and the commercial usages in which the question arises.

The Full Court continued at [689]:

As the High Court said in Handevel at 196, not every document creating or acknowledging a debt of a company was a debenture. Similarly, not every chose in action which includes an undertaking to make payment of a sum of money, dependent upon any form of contingency, constitutes a debenture of the type contemplated by the definition in s 9.

44    Her Honour was satisfied, having regard to the way in which the scheme before her Honour was to operate, that the deferred receipt of part of the scheme consideration by the scheme shareholders did not have the effect that debentures were issued under the scheme. As is evident a scheme that involves the release of funds out of an escrow account or an obligation to pay additional amounts on a contingency which may or may not arise does not constitute a chose in action that includes an undertaking by the bidder “to pay money as a debt”.

45    That is the case in relation to the Scheme such that the potential for the deferred receipt of Scheme consideration does not amount to the issue of debentures for the purposes of the Corporations Act. As BG&E submitted:

(1)    the obligations of Systra to pay the First Contingent Consideration and the SPR Holdback Amount will not be extant obligations of Systra to pay money “as a debt”. Systra’s obligations in respect of those payments will already have been satisfied on implementation of the Scheme by Systra having paid or procured the payment of the Completion Accounts Holdback Amount and the SPR Holdback Amount into the relevant escrow accounts no later than the business day before the Implementation Date. The amounts held in escrow are thereafter distributed by the escrow agent in accordance with the terms of the Scheme;

(2)    if the Scheme becomes effective, the obligation to pay any Top-up Amount is not an undertaking by Systra to pay money “as a debt”. There will be no presently existing obligation to pay a Top-up Amount. Such an amount is only payable if the Final Value exceeds the Estimated Value less the Completion Accounts Holdback Amount. It may never be payable and, if payable, cannot be quantified pending preparation of the Completion Accounts; and

(3)    the obligation to pay any Second Contingent Consideration is not an undertaking by Systra to pay money “as a debt”. If the Scheme becomes effective, there will be no presently existing obligation to pay the Second Contingent Consideration. Any such obligation will only arise on the Testing Date and the calculation of a positive number in the Debt Like items Report. The Second Contingent Consideration may never be payable and, if payable, cannot be quantified pending preparation of the Debt Like items Report.

Scheme Participants’ Representative

46    The role of the Scheme Participants’ Representative is described above.

47    BG&E submitted that by acting as the Scheme Participants’ Representative, Messrs Cerra and Farrugia would not be administering the arrangement between BG&E and its shareholders as contemplated by subs 411(7)(ba) and (d) of the Corporations Act and thus would not require the Court’s leave.

48    Section 411(7) relevantly provides:

Except with the leave of the Court, a person must not be appointed to administer, and must not administer, a compromise or arrangement approved under this Act between a body and its creditors or any class of them or between a body and its members or any class of them, whether by the terms of that compromise or arrangement or pursuant to a power given by the terms of a compromise or arrangement, if the person:

…

(ba)    is a director, secretary, senior manager or employee of the body; or

…

(d)    is not a registered liquidator; or

49    BG&E submitted that a person who “administer[s] a compromise or arrangement … between a body and its members” is someone who has general powers in respect of the scheme and who manages the body’s property to administer the arrangement or compromise approved by the requisite majorities of the members, or someone on whom the scheme expressly confers powers of administration. It contended that the connection between the functions of an administrator and managing the property of the body is illustrated by the provisions of the Corporations Act which apply to a person who administers an arrangement. Such a person is an officer of the company (s 9AD(1)(i)) and, pursuant to s 411(9), is required to comply with a number of requirements that ordinarily apply to receivers, eg by lodging returns about the management of the company’s property (ss 422A, 422B, 432, 434), having their remuneration fixed by the Court (s 425), notifying ASIC in relation to their appointment (s 427(2) and (4)) and disclosing on any public documents of the company that a controller is acting (s 428).

50    BG&E submitted that, in contrast, the Scheme Participants’ Representative has a limited role under the proposed Scheme: it assists with the preparation of the Completion Accounts and the Debt Like items Report in accordance with the terms of the Scheme and gives payment instructions based on those calculations. The Scheme Participants’ Representative does not act on behalf of the company and does not make any final determinations, with any dispute as to quantum of those amounts to be resolved by an independent expert. Nor does the Scheme Participants’ Representative control any company property, act as an agent of the company or control any Scheme consideration.

51    I accepted those submissions and that, in the circumstances, Messrs Cerra and Farrugia in acting as the Scheme Participants’ Representative would not be administering the arrangement between BG&E and its shareholders and thus did not require the Court’s leave under subs 411(7)(ba) or (d).

Conclusion

52    For those reasons I was satisfied that the Scheme is of such a nature and cast in such terms that, if the statutory majorities are achieved at the Scheme meeting, the Court would be likely to approve the Scheme and made the orders sought by BG&E.

Associate:

Dated:    9 October 2025