FEDERAL COURT OF AUSTRALIA Premium Investors Limited, in the matter of Premium Investors Limited [2012] FCA 1211 Citation: Premium Investors Limited, in the matter of Premium Investors Limited [2012] FCA 1211 Parties: PREMIUM INVESTORS LIMITED ACN 106 259 885 File number(s): NSD 1645 of 2012 Judge: JAGOT J Date of judgment: 31 October 2012 Legislation: Corporations Act 2001 (Cth) Date of hearing: 31 October 2012 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 9 Counsel for the Plaintiff: Mr F Gleeson SC Counsel for the Plaintiff: Corrs Chambers Westgarth IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1645 of 2012 IN THE MATTER OF PREMIUM INVESTORS LIMITED ACN 106 259 885 PREMIUM INVESTORS LIMITED ACN 106 259 885 Plaintiff JUDGE: JAGOT J DATE OF ORDER: 31 OCTOBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to subsection 411(1) of the Corporations Act 2001 (Cth) (Corporations Act): (a) the Plaintiff, Premium Investors Limited (ACN 106 259 885) (Premium), convene a meeting (Scheme Meeting) of the holders of ordinary shares in Premium, other than Excluded Shareholders (Premium Shareholders) for the purpose of considering and, if thought fit, agreeing (with or without modification) to a scheme of arrangement proposed to be made between Premium and Premium Shareholders (Scheme), being the scheme substantially in the form of the draft contained in Annexure D to the scheme booklet which is Exhibit "1" in these proceedings (Scheme Booklet); (b) the Scheme Meeting be held at 10.30am on 10 December 2012, at the offices of Computershare Investor Services Pty Ltd, Level 4, 60 Carrington Street, Sydney NSW; (c) the Chairperson of the Scheme Meeting be Lindsay Robert Mann and in his absence Wilfrid Thomas Collins; (d) the Chairperson appointed to the Scheme Meeting has the power to adjourn the Scheme Meeting in his absolute discretion; (e) all voting at the Scheme Meeting be by poll as declared by the Chairperson; (f) the explanatory statement in the Scheme Booklet for the Scheme be approved for distribution to Premium Shareholders. 2. By 8 November 2012, there be dispatched to each Premium Shareholder who in accordance with the Corporations Act has consented to receiving shareholder communications electronically: (a) an email substantially in the form of Annexure A to these orders to the nominated email address of the Premium Shareholder; and (b) an election form substantially in the form of the document at tab 12 of exhibit LRM-1 (Election Form) and a reply paid (for use in Australia only) envelope addressed to Computershare Investor Services Pty Ltd (Reply Paid Envelope) for the return of the Election Form, in the case of each such Premium Shareholder who has a registered address in Australia, by prepaid post and, in the case of each such Premium Shareholder who has a registered address outside of Australia, by prepaid air mail or air courier, and in each case addressed to the relevant address set out in the Premium register of members. 3. It shall not be necessary for the Scheme Booklet including the Notice of Meeting and a proxy form substantially in the form of the document at tab 11 of exhibit LRM-1 (Proxy Form) to be delivered personally or dispatched by prepaid post or other means to a Premium Shareholder referred to in paragraph 2 of these Orders. 4. By 8 November 2012, there be dispatched to each Premium Shareholder who has a registered address outside Australia (other than a Premium Shareholder referred to in paragraph 2 of these Orders): (a) a document substantially in the form of the Scheme Booklet; (b) a Proxy Form; (c) an Election Form; and (d) a Reply Paid Envelope for the return of the Proxy Form and Election Form, by prepaid air mail or air courier addressed to the relevant address set out in the Premium register of members; 5. Notice of the hearing of any application for an order approving the Scheme be published once in "The Australian" newspaper, by an advertisement substantially in the form of "Annexure B" to these Orders, on or before 3 December 2012 and Premium shall otherwise be exempted from compliance with Rule 3.4(3)(a) of the Federal Court (Corporations) Rules 2000 (Cth); and 6. Rule 2.15 of the Federal Court (Corporations) Rules 2000 shall not apply to the Scheme Meeting except insofar as that rule applies regulation 5.6.13 of the Corporations Regulations 2001. 7. The documents in tabs 1 and 2 of Confidential Exhibit LRM-2 to the affidavit of Lindsay Robert Mann affirmed 29 October 2012 to be treated as confidential and may only be used for the purposes of the Proceeding. Access to these documents be limited to the following persons: (a) any legal representatives of the plaintiff; (b) any judge, employee or other personnel of this Court; and (c) any person associated with the recording transcript at any hearing in the Proceeding. 8. The proceedings be stood over to 9.30am on 12 December 2012 before Justice Jagot for the hearing of any application to approve the Scheme. 9. Grant liberty to the plaintiff to apply. 10. These orders be entered forthwith. In these orders, "Excluded Shareholders" are WAM Capital Limited (WAM) and RBC Investor Services Limited as custodian for WAM. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Annexure A Premium Investors Limited ABN 47 106 259 885 Dear Premium Shareholder, Notice of Scheme Meeting The Scheme Meeting of Premium Investors Limited will be held at 10.30am (Sydney time) on Monday 10 December 2012, at the following address: Computershare Investor Services Pty Limited, Level 4, 60 Carrington Street, Sydney How to Vote To lodge your vote, please click on the 'vote here' link below. This will take you to our online voting service, InvestorVote. vote here OR copy and paste the following web address into your browser. https;………………………………. Investor Documents The following shareholder documents can be viewed through the online voting service: › Notice of Scheme Meeting › Scheme Booklet Election Form You can choose the combination of Scrip Consideration and Cash Consideration you wish to receive by using the Election Form which is being mailed to you separately. Please note that if you do not return a validly completed Election Form by the due date in the manner set out below, you will receive 100% Scrip Consideration. Yours Sincerely, Reema Ramswarup Company Secretary Premium Investors limited Limited Note that votes submitted through this site must be received by 10.30am (Sydney time) on Saturday 8 December 2012. Election Forms must be returned by mail or fax so they are received before 7.00pm (Sydney time) on Thursday 13 December 2012. You have received this message because you have elected to receive electronic shareholder communications. If you no longer want to receive electronic messages from us, unsubscribe here by entering your details and then updating your communication elections. Please do not reply to this email as it is an unattended mailbox. If you have received this email in error, report your complaint here. Annexure B Premium Investors Limited ACN 106 259 885 Notice of hearing to approve compromise or arrangement TO all the creditors and members of Premium Limited ACN 106 259 885 (Premium). TAKE NOTICE that at 9.30am (Sydney time) on 12 December 2012 the Federal Court of Australia at Level 17, Law Courts Building, Queens Square, Sydney, New South Wales 2000 will hear an application by Premium seeking the approval of an arrangement between Premium and its members, if agreed to by resolution to be considered by the members of Premium at a meeting of such members to be held on 10 December 2012 at the offices of Computershare Investor Services Pty Ltd, Level 4, 60 Carrington Street, Sydney NSW at 10.30am (Sydney time). If you wish to oppose the approval of the arrangement, you must file and serve on Premium a notice of appearance, in the prescribed form, together with any affidavit on which you wish to rely at the hearing. The notice of appearance and affidavit must be served on Premium at its address for service at least one day before the date fixed for the hearing of the application. The address for service on Premium is, c/o Corrs Chambers Westgarth, Level 36, 1 Farrer Place, Sydney, New South Wales (Reference: Stan Lewis). Lindsay Mann Chairman Premium Investors Limited IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1645 of 2012 IN THE MATTER OF PREMIUM INVESTORS LIMITED ACN 106 259 885 PREMIUM INVESTORS LIMITED ACN 106 259 885 Plaintiff JUDGE: JAGOT J DATE: 31 OCTOBER 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application under s 411(1) of the Corporations Act 2001 (Cth) seeking orders convening a meeting of the shareholders of Premium Investors Limited (Premium) to vote on a proposed scheme of arrangement pursuant to which all of Premium's issued shares will be acquired by WAM Capital Limited (WAM), other than the shares of defined excluded shareholders which are, in effect, the shares in Premium held by or on behalf of WAM itself. Both Premium and WAM are public companies listed on the Australian Securities Exchange. In short, if the scheme is approved by the shareholders and the other conditions precedent are satisfied, the shareholders in Premium who are eligible will have their shares in Premium transferred to WAM and will receive in return, at their election, either cash consideration as defined, consideration in the form of scrip or a combination of the two. 2 As set out in the written submissions, the general approach taken is that ordinarily such a meeting will not be summoned unless the scheme is of such a nature and cast in such terms that if it receives the statutory majority of votes at the meeting the Court would then be likely to approve it at the second court hearing, if the application is not opposed. In this case, there are three particular issues that have been drawn to my attention but none indicate other than that the general approach is satisfied in this case. 3 First, both the amount of the cash consideration and the scrip consideration would not be known as at the date of the meeting because they are linked to values which have to be calculated thereafter. This fact is prominently disclosed in both the chairman's letter and also the scheme booklet as part of the risks that relate to the scheme. 4 The second issue is that there are certain ineligible foreign shareholders who are Premium shareholders. As part of the scheme, it is proposed to deal with those shareholders by having the shares and options in WAM to which they would otherwise be entitled under the scheme transferred to a nominee appointed by WAM to be sold and then the average net proceeds per share of the nominee's sale, after appropriate deductions, to be remitted to each ineligible foreign shareholder. 5 There is a third issue which also receives prominent disclosure in the scheme booklet. It relates to existing arrangements which have been in place since 2009 and 2007 between Premium and Treasury Group Investment Services Limited (TGIS), a wholly owned subsidiary of Treasury Group Limited which is a shareholder of Premium. Under an investment management agreement, TGIS has been appointed as the exclusive agent to invest and manage Premium's portfolio of investments since 2009 and under a management services agreement TGIS provides accounting, company secretarial and marketing coordination services since 2007. 6 The scheme includes arrangements by which if the scheme is implemented an agreement has been reached between Premium, TGIS, WAM and Wilson Asset Management (International) Pty Limited, which WAM has retained as its investment manager, whereby TGIS will remain the investment manager of the assets of Premium for a short period. There will be a payment of a one-off fee to TGIS. That will be in consideration for the capacity of Premium to terminate the agreement and for the release of rights that would otherwise exist under the agreement. As indicated in the submissions, there is evidence that the fee to be paid represents a discount to the early termination fee that would otherwise be payable in the event of termination. 7 For the reasons set out in the written submissions, I am satisfied that the two issues relating to ineligible foreign shareholders and relating to TGIS are not class creating and, accordingly, I am satisfied that the proposal for a meeting of the shareholders as a single class is appropriate. 8 The procedural requirements have been met and I note the letter from the Australian Securities and Investments Commission (ASIC) dated 30 October 2012 in standard form by which ASIC confirmed that it has had a reasonable opportunity to examine the terms of the scheme, the draft explanatory statement and to make submissions and does not currently propose to appear to make submissions or to intervene and in fact ASIC has not done so. Otherwise the substantive aspects of the scheme, including performance risk, exclusivity provisions and the deemed warranty from shareholders in relation to their shares being free from encumbrances have been drawn to my attention and I see no reason not to make the orders as sought. 9 Accordingly, I make orders 1 through to 10 as set out in the short minutes of order dated 31 October 2012. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot. Associate: Dated: 5 November 2012