In the matter of BINGO Industries Limited

[2021] NSWSC 798

Supreme Court of NSW

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Interrogate

Catchwords

1. Corporations
2. › Scheme of arrangement
3. › First court hearing
4. › Application for order convening meeting of members
5. › Whether scheme of such nature that Court would likely approve if statutory majority achieved
6. › Corporations Act 2001 (Cth), s 411(1)
1. Corporations
2. › Scheme of arrangement
3. › Disclosure
4. › Director's recommendation where director has financial interest in scheme becoming effective
5. › Whether adequate disclosure of director's interests permits recommendation
1. Corporations
2. › Scheme of arrangement
3. › Stub equity consideration
4. › Scrip alternative in unlisted public company
5. › Whether availability of scrip alternative with adequate disclosure warrants declining to convene meeting
1. Corporations
2. › Scheme of arrangement
3. › Break fees and exclusivity provisions
4. › Whether break fee and exclusivity provisions create inappropriate disincentive to shareholders

Quick Take

A director who may receive a substantial payment if a scheme becomes effective may properly provide a recommendation in the scheme booklet where clear disclosure is made of the securities to be cancelled, their value and their potential relevance to the director's recommendation. An offer of 'stub equity' (unlisted scrip in a public company) as an alternative to cash consideration does not warrant declining to convene a scheme meeting where adequate disclosure of risks is made. A break fee of approximately 0.87% of equity value, below the Takeovers Panel's 1% guideline, does not create an inappropriate disincentive to shareholders. A six-month exclusivity period with fiduciary carve-outs is a reasonable period.