Federal Court of Australia Symbio Holdings Limited, in the matter of Symbio Holdings Limited (No 2) [2024] FCA 40 File number(s): NSD 1331 of 2023 Judgment of: GOODMAN J Date of judgment: 30 January 2024 Date of publication of reasons: 31 January 2024 Catchwords: CORPORATIONS – scheme of arrangement – application for directions concerning supplementary disclosure – application granted Legislation: Corporations Act 2001 (Cth), ss 411, 1319 Cases cited: Billabong International Limited, in the matter of Billabong International Limited (No 2) [2018] FCA 496 Newcrest Mining Limited, in the matter of Newcrest Mining Limited (No 2) [2023] FCA 1251 Re AGL Ltd [2022] NSWSC 576 Re Origin Energy Ltd (No 2) [2023] NSWSC 1351 Re Prime Media Group Ltd [2019] NSWSC 1888 Re Redflex Holdings Limited (No 2) [2021] FCA 474; (2021) 152 ACSR 557 Re Tabcorp Holdings Ltd [2022] NSWSC 448 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial and Corporate Insolvency Number of paragraphs: 20 Date of hearing: 30 January 2024 Counsel for the Plaintiff: Mr I Ahmed SC Solicitor for the Plaintiff: King & Wood Mallesons Counsel for Aussie Broadband Limited: Mr T O'Brien Solicitor for Aussie Broadband Limited: Gadens Lawyers ORDERS NSD 1331 of 2023 IN THE MATTER OF SYMBIO HOLDINGS LIMITED (ACN 118 699 853) SYMBIO HOLDINGS LIMITED (ACN 118 699 853) Plaintiff order made by: GOODMAN J DATE OF ORDER: 30 JANUARY 2024 THE COURT ORDERS THAT: 1. The plaintiff is directed, pursuant to sections 411(1) and 1319 of the Corporations Act 2001 (Cth): a. to make available on the ASX market announcements platform on or by Wednesday, 31 January 2024 a copy of the announcement substantially in the form set out in Annexure TCH-10 to the affidavit of Thomas Charles Harrison sworn 30 January 2024 (Announcement); b. that it may send a copy of the Announcement to the holders of fully paid ordinary shares in the capital of the plaintiff (Symbio Shareholders) who are registered as shareholders of the plaintiff as at the date of the Scheme Booklet (being Exhibit 1 in the proceeding): i. in the case of each Symbio Shareholder who has made an election to receive shareholder communications electronically – by email; ii. in the case of each Symbio Shareholder who has made an election to receive certain shareholder communications in hard copy – by prepaid post or courier; and iii. in the case of each Symbio Shareholder who has not made an election as to how to receive shareholder communications – by prepaid post or courier. 2. These orders be entered forthwith. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT GOODMAN J 1 This proceeding concerns a scheme of arrangement for the acquisition of all of the ordinary fully paid shares in the plaintiff, Symbio Holdings Limited, by Aussie Broadband Limited (the bidder). 2 On 22 December 2023, Yates J made a series of orders including orders that: (1) Symbio convene and hold a scheme meeting; (2) Symbio notify its shareholders of the scheme meeting by sending a Scheme Booklet and other information to each Symbio shareholder by email for shareholders who had elected to receive shareholder communications electronically, or otherwise by prepaid post; and (3) a second court hearing be scheduled for 16 February 2024 for any application for the approval of the proposed scheme. 3 By an interlocutory application filed on 29 January 2024 supported by affidavits of: (1) Ms Helen Fraser (Chief Legal Officer of Symbio) sworn 20 December 2023; and (2) Mr Thomas Harrison (a senior associate in the employ of Symbio's solicitors) sworn on 29 and 30 January 2024, Symbio sought a direction, pursuant to ss 411(1) and 1319 of the Corporations Act 2001 (Cth), that it make available on the Australian Securities Exchange Ltd (ASX) market announcements platform on or by 31 January 2024 a copy of an announcement which is reproduced in Schedule 1 to these reasons. 4 On 30 January 2024, I made the direction sought by Symbio. I also made a direction enabling Symbio to provide the announcement to its shareholders using the means previously utilised to notify them of the scheme meeting. These are my reasons for doing so. 5 As is evident from the announcement, Symbio and the bidder have agreed to amend cl 6.1(b)(i), and the definition of "Available Cash Consideration" in cl 1.1 of the proposed scheme. 6 The reasons for the agreed amendments are explained in some detail in Mr Harrison's first affidavit and the helpful submissions prepared by Mr Ahmed of senior counsel, who appeared for Symbio. It is sufficient for present purposes to record that: (1) under the proposed scheme and subject to certain exceptions, Symbio's shareholders may elect to receive the consideration for their shares by way of cash, scrip of the bidder, or a prescribed mixture of cash and scrip (being approximately 75 per cent cash and 25 per cent scrip). In the absence of an election, the default position (again subject to certain exceptions) is the mixed consideration; (2) although the proposed scheme provides for the scaling back of the cash consideration in certain circumstances, this does not apply to all shareholders; (3) cl 6.1(b)(i) of the proposed scheme provides for the total cash consideration payable by the bidder to be capped in an amount approximately equal to 75 per cent of the total consideration; (4) it is possible, depending upon the elections made by particular shareholders, for the total cash consideration to exceed that cap; (5) in the week commencing 22 January 2024, it became clear to Symbio, the bidder and their respective advisers that an amendment to the proposed scheme was needed to avoid the possibility that the total cash consideration payable to Symbio shareholders would exceed the cap; and (6) on 29 January 2024, Symbio and the bidder entered into a deed the effect of which was to amend the proposed scheme in the manner identified at [5] above. 7 The effect of the amendment to cl 6.1(b)(i) is to remove the cap on the total cash consideration payable by the bidder and to provide that the bidder will pay all cash consideration required. The amendment to the definition of "Available Cash Consideration" is a consequential amendment made so as to prevent the calculation of such an amount producing a negative number. 8 Symbio does not propose to amend the resolution that is to be put to the scheme meeting. It intends, as it explains in the announcement, to seek at the second court hearing approval of the proposed scheme in a form which includes the agreed amendments. In this regard it has foreshadowed to the Australian Securities and Investments Commission (ASIC) and to the Court reliance upon the decision of Yates J in Billabong International Limited, in the matter of Billabong International Limited (No 2) [2018] FCA 496. His Honour was persuaded in the circumstances of that case to approve a scheme with a modification to increase the scheme consideration from $1.00 to $1.05 per scheme share, which modification was agreed during the course of the scheme meeting, but not put to the meeting to vote upon. However, those present at the scheme meeting were made aware of the proposed modification: see Billabong at [11]. See also Re Redflex Holdings Limited (No 2) [2021] FCA 474; (2021) 152 ACSR 557 at 561 [22] (Yates J). 9 I made a direction in the terms sought by Symbio for the following reasons. 10 First, the Court's power to approve a form of supplementary disclosure is well-established. The Court's discretion is broad and the factors which may inform the exercise of that discretion are various and may include: the nature and adequacy of the supplementary information; the manner in which it is presented; the time available to consider it; the nature of the amendments made to the scheme and whether the scheme as amended is more favourable to shareholders than the proposed scheme identified in the orders made at the first court hearing; and ASIC's position: see e.g. Re Origin Energy Ltd (No 2) [2023] NSWSC 1351 at [11] (Black J); Re Prime Media Group Ltd [2019] NSWSC 1888 at [6] (Black J). 11 Secondly, the agreed changes to the terms of the proposed scheme and the fact that an order will be sought at the second court hearing for an order giving effect to those changes may be material to the shareholders when casting their votes. 12 Thirdly, I am satisfied that the announcement adequately explains the agreed amendments and the course proposed by Symbio at the second court hearing. 13 Fourthly, if the announcement were made in accordance with the direction, then those of Symbio's shareholders who read the announcement should have sufficient time to consider the matters raised in the announcement, which are relatively straightforward. 14 Fifthly, ASIC was informed of Symbio's present application and of the evidence (including the proposed announcement) and submissions relied upon by Symbio and expressed no opposition to the making of the direction sought. 15 Finally, there was no factor identified which weighed against the making of the direction sought by Symbio. 16 I turn now to the second direction that I made, which enabled Symbio to provide the announcement to its shareholders using the means previously utilised to notify them of the scheme meeting. I made that direction for the following reasons. 17 First, the adequacy of information provided to the shareholders for the purpose of the scheme meeting, and the time provided for them to consider information of the kind contained in the announcement, may be matters which inform the exercise of the Court's discretion at the second court hearing. 18 Secondly, whilst the agreed amendments in the present case might ultimately be considered technical and to the benefit of Symbio's shareholders, the information in the announcement may nevertheless be material to their consideration of how to vote on the proposed scheme and to the exercise of the Court's discretion at the second court hearing. 19 Thirdly, I was not persuaded that the present case is on all fours with Billabong. In contrast to Billabong, in the present case there is apparently sufficient time to notify shareholders – using the methods utilised to convene the scheme meeting – of the amendments to the proposed scheme in advance of the scheme meeting. 20 Finally, I was not persuaded that the making of the announcement through its publication by the ASX would of itself be sufficient notice to Symbio's shareholders of the matters contained in the announcement because: (1) there was no evidence as to the likely extent to which an announcement published in that way would come to the attention of shareholders of Symbio; (2) there was no evidence suggesting any difficulty in notifying Symbio's shareholders of the agreed amendments by the means used to notify them of the scheme meeting; and (3) I did not regard the cases relied upon by Symbio for the proposition that notification via the ASX could be sufficient – Re Tabcorp Holdings Ltd [2022] NSWSC 448 (Black J); Re AGL Ltd [2022] NSWSC 576 (Black J) and Newcrest Mining Limited, in the matter of Newcrest Mining Limited (No 2) [2023] FCA 1251 (Beach J) – to be on point. In the first two of these cases, the disclosure approved did not involve agreed amendments to the proposed schemes. In the third, there was no application to the Court for prior approval of the disclosure made of agreed amendments to the proposed scheme (albeit that the amended scheme was ultimately approved). I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Goodman. Associate: Dated: 31 January 2024 SCHEDULE 1 – ANNOUNCEMENT