In the matter of ResApp Health Ltd [2022] NSWSC 1116

Supreme Court New South Wales

Medium Neutral Citation: In the matter of ResApp Health Ltd [2022] NSWSC 1116 Hearing dates: 19 August 2022 Date of orders: 19 August 2022 Decision date: 19 August 2022 Jurisdiction: Equity - Corporations List Before: Black J Decision: Meeting of members postponed to a date to be fixed. Catchwords: CORPORATIONS — Scheme of arrangement — Application to postpone the meeting of members to consider scheme of arrangement — Where meeting has been convened but not yet commenced — Where there is a question as to the adequacy of disclosure of information to shareholders — Whether the meeting should be cancelled, postponed or permitted to continue. Legislation Cited: Corporations Act 2001 (Cth), s 1319 Cases Cited: - Re Asciano Ltd (No 2) [2015] NSWSC 1651 Category: Procedural rulings Parties: ResApp Health Limited (Plaintiff) Representation: Counsel: P M Wood/A Papamatheos (Plaintiff) D F C Thomas SC (Acquirer)

Solicitors: DLA Piper (Plaintiff) Allens (Acquirer) File Number(s): 2022/191161

Judgment – EX TEMPORE (Revised 22 August 2022)

Nature of the application and background 1. The Plaintiff, ResApp Health Ltd ("ResApp") sought orders to "postpone" a scheme due to take place today, 19 August 2022, at 2pm. The reference here to "postponement" has the sense noted by Mr Damian and Mr Rich, in the fourth edition of their text, Schemes, Takeovers and Himalayan Peaks at p 202, as an order made prior to a scheme meeting to defer that meeting, as distinct to an adjournment made after the scheme meeting had commenced. ResApp initially also sought orders approving the issue of a second explanatory statement, and as to the means of dispatch of further information to its shareholders, and approving a range of further communications to shareholders, including further call scripts and reminder to vote emails. As matters have developed, ResApp, rightly, does not now press the orders approving that second explanatory statement or the disclosure to shareholders, as a result of difficulties which have arisen during the course of the hearing today, and seeks only a postponement of the scheme meeting to a date to be fixed. 2. I should say something as to the background of the application and the difficulties which have arisen today, although I will consciously do so relatively briefly, since ResApp is now seeking to address the difficulties which have arisen, so as to put accurate and informative information before its shareholders. On 16 August 2022, more than two days ago, ResApp announced to Australian Securities Exchange ("ASX") that it had been informed by the acquirer in respect of the scheme, Pfizer Australia, that the amount that it had offered for ResApp shares was its best and final offer, and that it would not increase its offer, subject to no competing proposal emerging. That ASX announcement also indicated that Pfizer had agreed to provide a $680,000 bridging loan to "enable ResApp to meet its working capital needs during the scheme period", which would be repayable on ten business days' notice on the occurrence of certain events of default. The ASXC announcement also stated that, if ResApp failed to repay the bridging loan, implicitly within the ten business day period, it was required to grant Pfizer Australia a non-exclusive licence over certain intellectual property to the extent that would not be prohibited by certain matters. 3. A first difficulty with that announcement was that it offered no explanation as to why ResApp had come to realise, some three or so days before the scheduled scheme meeting, that it had so urgent a need for working capital that it was required to enter this transaction and potentially place that intellectual property at risk of Pfizer Australia exercising its security for the loan. A second difficulty with that announcement, which has emerged in the course of the hearing today, is that it may have misstated aspects of the bridging loan agreement, so far as at least some events of default arise on a five day notice period and, if an event of default has occurred, then Pfizer Australia can declare all of the amount due and owing no less than five (rather than ten) business days after the date of notice of that event of default. Mr Wood, with whom Mr Papamatheos appeared for ResApp, did not submit that the ten days referred to in the announcement were the total of the five day notice period in respect of a default and the further five day period after notice when the amount fell due, and accepted that an error has, or may have, occurred here. 4. Two business days later, on 18 August, ResApp approached the Court in the late afternoon, foreshadowing an application for the scheme meeting to be postponed. When the matter was listed at 4pm on 18 August, ResApp was not ready to proceed and the matter was stood over to today, 19 August, being the date of the scheme meeting.