This was a first court hearing with respect to two schemes of arrangement under Part 5.1 of the Corporations Act 2001 (Cth).
The first was for the demerger of Straits’ coal and metal businesses, the latter to be owned by a subsidiary company of Straits. Under the demerger scheme, shareholders would receive shares in both companies corresponding to their shareholding in Straits.
The second scheme was for the acquisition of the shares in Straits by a third company (PTT) in the event that the demerger occurs.
Straits sought the convening of a single meeting of shareholders to consider the two schemes.
A small number of ineligible foreign investors, representing 0.29% of shareholders in Straits, were held not to constitute a separate class of shareholders: -.
The two-step demerger structure was not a selective reduction of capital even though the ineligible foreign investors would receive a cash amount rather than shares in the demerged entity: .
Standard Chartered Private Equity Limited holds a significant amount of convertible notes. It entered into a conversion agreement with Straits such that its convertible notes would be converted into shares to enable those shares to be voted. The Court did not consider this to create separate classes of shares: . However, it was regarded by the Court as appropriate for that company’s votes to be separately tagged to enable the second court hearing to consider the question of fairness: .
Relevant paragraphs of Ford
[7.427], [19.140], [22.130], [24.071], [24.130], [24.160]