WD & HO Wills Application [1999] NSWSC 866

New South Wales Supreme Court CITATION : WD & HO Wills Application [1999] NSWSC 866 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 2987/99 HEARING DATE(S) : 16 July 1999, 20 and 23 August 1999 JUDGMENT DATE : 23 August 1999

PARTIES : WD & HO Wills Holdings Ltd (P) JUDGMENT OF : Austin J

COUNSEL : S G Finch SC (P) M B Oakes SC (Rothmans Holdings Ltd) SOLICITORS : Allen Allen & Hemsley (P) Clayton Utz (Rothmans Holdings Ltd) CATCHWORDS : Corporations - companies - members' scheme of arrangement - conditions precedent expressed as the issue of certificates that specified events have occurred - when additional evidence of occurrence of those events is appropriate ACTS CITED : Corporations Law, s 411 DECISION : Scheme approved

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

MONDAY 23 AUGUST 1999

2987/99 - W D & H O WILLS HOLDINGS LTD (APPLICATION OF)

JUDGMENT

1 HIS HONOUR: This matter comes before me today after two meetings of shareholders of the plaintiff have been held at which the scheme of arrangement, which I am asked to approve, was agreed to by shareholders by majorities of 99.94 percent and 100 percent respectively. 2 The scheme has the effect of causing the shareholders of the plaintiff, other than BAT Australia Pty Ltd, to transfer their shares into Rothmans Holdings Ltd for cash consideration. There is a selective share buy-back of the shareholding of BAT Australia Pty Ltd and then Rothmans Holdings issues shares in that company to BAT Australia. 3 The conditions precedent stated in the scheme relate to various approvals by regulators including the Foreign Investments Review Board and the New Zealand Commerce Commission, as well as shareholder approvals in respect of the buy-back by Wills' minority shareholders and also an approval by Rothmans shareholders. One of the conditions relates to certain transactions ('the Imperial transactions') by which assets of the plaintiff are the subject of a structure of mutual offers of sale and purchase by the plaintiff and Imperial Tobacco Group plc, which will lead to sale of the assets to Imperial Tobacco Group if the offers are accepted. There are similar conditions in the merger implementation agreement. 4 In order to identify specific matters which the plaintiff will be able to prove so as to establish the satisfaction of the conditions, the scheme is drafted so that certificates are to be issued. One certificate is a certificate of Wills, Rothmans and Imperial Tobacco which confirms that the condition relating to the Imperial transactions has been satisfied or waived by the parties to the transactions. The other certificate is by Rothmans and Wills to the effect that the conditions precedent in the merger implementation agreement have been satisfied or waived and the conditions precedent to the scheme have been satisfied. 5 The evidence before me today includes an affidavit by Nicholas Frank Hugo Greiner of 23 August 1999 which annexes a copy of a certificate signed on behalf of the plaintiff and Rothmans Holdings Ltd, certifying that upon the making of an order by this Court at a hearing scheduled to take place on 20 August 1999, each of the conditions precedent to the merger implementation agreement and the scheme of arrangement will have been satisfied. There is no evidence as to the date upon which that certificate was signed, but if it was signed before 20 August 1999 it could not have been comprehensively correct, because one of the scheme conditions (namely, the condition requiring a certificate with respect to the Imperial transactions) had not, at that stage, been met. 6 The certificate by the plaintiff, Rothmans Holdings and Imperial Tobacco Group with respect to the Imperial transactions is in evidence. Two of the signatures bear the date 22 August 1999. 7 The matter came before me on 20 August 1999 and on that day I was informed that the Imperial transactions certificate was not yet ready. The case was called and there was no appearance other than for the plaintiff. I then adjourned the matter until today. 8 As at today the position is that the certificate with respect to the Imperial transactions has been provided and the certificate with respect to satisfaction of the other conditions of the scheme covers satisfaction of those conditions in every other respect. I am, therefore, satisfied that the scheme conditions have been met and there is no obstacle to my making the orders which are now sought. 9 Counsel for the plaintiff drew my attention to the fact that when notice of the meetings of shareholders was first published in the Sydney Morning Herald on 2 August 1999, the notice as published omitted the name of the plaintiff company. The notice was otherwise in proper form and was published again, this time with the name of the company clearly shown, on 5 August 1999. 10 I am satisfied that, in the circumstances, the requirements of the Corporations Law and of my orders made on 16 July 1999 have been complied with and that it is not necessary in the circumstances for the Court to make any further curative order because of the publishing error. 11 Finally, I should note that the drafting of the scheme to nominate specific events - namely, the issue of certificates of compliance to simplify the task of proving the satisfaction of conditions precedent which relate to complex events - seems to me to have been a useful technique to have adopted in the circumstances of this case. Nevertheless, where there are important regulatory issues at stake, it appears to me desirable that the Court be provided with additional evidence to show that the regulatory approval to which the condition relates has in fact been given, and not merely that there is a certificate to that effect. 12 In the present case the transaction raises important competition issues which have been examined by the Australian Competition and Consumer Commission, especially with respect to the Imperial transactions. The plaintiff tendered evidence to show that undertakings had been given to the satisfaction of the Commission. It seems to me appropriate that such evidence should have been adduced, in addition to evidence that a certificate had been issued by the parties to the Imperial transactions. 13 The plaintiff has handed up short minutes of orders which I initial and date for the purposes of identification. I make orders 1, 2 and 3 in that document. I direct that Exhibit DR 1 of the affidavit of Mr Reichel of 23 August 1999 be returned to the plaintiff. * * * * * * * * * *