Re Readymix Plc
| Jurisdiction | Ireland |
| Judge | Mr. Justice Kelly |
| Judgment Date | 16 May 2012 |
| Neutral Citation | [2012] IEHC 194 |
| Court | High Court |
| Date | 16 May 2012 |
[2012] IEHC 194
THE HIGH COURT
COMPANIES ACT 1963 S201
COMPANIES ACT 1963 S74
COLONIA INSURANCE IRELAND LTD 2005 1 IR 497
DEPFA BANK PLC, IN RE UNREP KELLY 2.10.2007 2007/13/2709 2007 IEHC 463
OSIRIS INSURANCE LTD, IN RE 1999 1 BCLC 182
ENGLISH SCOTTISH & AUSTRALIAN 1893 3 CH 385
TDG PLC, IN RE 2009 1 BCLC 445
COMPANIES ACT 1963 S72
COMPANIES ACT 1963 S205
1. This is the petition of Readymix Plc (the Company), presented pursuant to s. 201 of the Companies Act 1963 (the Act), for the sanction of the court in respect of a scheme of arrangement. In the event of such an order being made, the court's confirmation of the reduction of the share capital of the Company is also sought, pursuant to s. 74 of the Act.
2. The Company's application is opposed by two of it's shareholders namely Messrs. Tom Goode (who holds 266 shares) and Seamus Maye (who holds two shares).
3. Prior to the presentation of the petition by the Company, I directed the holding of a meeting of the shareholders of the Company to be affected by the scheme so that they might consider it. That meeting was held in accordance with the court's directions.
4. The meeting took place on 5 th April, 2012.
5. 294 shareholders were present or were represented at the meeting and voted in person or by proxy at it. The 294 shareholders represented 21,874,094 shares.
6. The resolution put to that meeting was to the effect that the scheme of arrangement proposed to be made between the Company and the holders of the "scheme shares" as defined in that scheme should be approved. It is that scheme which is the subject of this application.
7. 286 shareholders voted in favour of the resolution. They represented 19,694,692 shares. Eight shareholders voted against the resolution. They represented 2,179,402 shares. Thus, 96.94% of the shareholders by number voted in favour of the scheme with 3.06% against. The 96.94% voting in favour of the resolution represented 90.04% of the shares with the remaining 9.96% of the shares being represented by the 3.06% shareholders who voted against the scheme.
8. Mr. Maye owns 0.0000047% of the shares affected by the scheme. Mr. Goode owns 0.00063% of the shares affected by the scheme.
9. Before considering the objections, I will outline the task of the court on an application such as this.
10. In many cases where the court is asked to approve a scheme of arrangement, it does so in the context of a company which is insolvent. That is not the case here. Neither was it so in the case of Colonia Insurance Ireland Limited [2005] 1 I.R. 497, where I considered the relevant English authorities and set out what I believe are the issues with which the court should concern itself on an application of this sort. The five matters which I concluded had to be demonstrated to the satisfaction of the court are as follows:-
(1) The court must be satisfied that sufficient steps have been taken to identify and notify all interested parties.
(2) The statutory requirements and all directions of the court must be complied with.
(3) The classes of creditors or shareholders as the case may be must be properly constituted.
(4) There must no coercion present.
(5) The scheme of arrangement must be such that an intelligent and honest man, a member of the class concerned, acting in respect of his interest might reasonably approve of it.
11. In considering each of those matters there are two overriding considerations to bear in mind. First, the court must not act as a rubber stamp for the decision of the company. In other words, it must apply a critical eye to the material placed before it. That said, the court should be slow to differ from the considered view of the majority.
12. I had to consider the matter again in the case of Re Depfa Bank Plc (Unreported, 2 nd October, 2007) where I followed the earlier decision in Re Colonia which in turn followed English decisions in Re Osiris Insurance Limited [1999] 1 BCLC 182 and Re English Scottish and Australian Chartered Bank [1893] 3 Ch. 385.
13. My attention has been drawn to a more recent decision of Morgan J. in the Chancery Division in England in a case of Re TDG Plc [2009] 1 BCLC 445.
14. That judge summarised the matters that require attention on an application such as this in the following terms. He said:-
i "(i) The court must be satisfied that the provisions of the statute have been complied with.
(ii) It must be satisfied that in relation to the class of shareholders, the subject of the court meeting, was fairly represented by those who attended the meeting and the statutory majority are acting bona fide and not coercing the minority in order to promote interests adverse to those of the class they purport to represent.
(iii) An intelligent and honest person, a member of the class concerned and acting in respect of his own interest, might reasonably approve the scheme of arrangement
(iv) There must be no blot on the scheme."
15. He went on to say:-
"It is also right to record that the court does not act as a rubber stamp simply to pass without question the view of the majority but, equally, if the four matters I have referred to are all demonstrated, the court should show reluctance to differ from the views of the majority, and should certainly be slow to differ from the majority, on matters such as what an intelligent, honest person might reasonably think."
16. Whilst Morgan J. reduced the relevant matters for consideration from five to four, in truth, there is little between them. An intelligent and honest person is, I think, unlikely to reasonably approve a scheme which has a blot on it.
17. The Company is a public limited company and a leading manufacturer and supplier of concrete and concrete products for the construction industry and agriculture. It was established in 1965. For the financial year ending 31 st December, 2011, it had a turnover of €45.1m and employed about 310 people at its operations in Ireland and the Isle of Man.
18. The authorised capital of the Company is €15,600,000 divided into 130m ordinary shares of €0.12 each. 109,645,169 ordinary shares have been issued and are credited as fully paid up.
19. 61.2% of the ordinary shares are held by companies within the Cemex Group. The Cemex Group is a global building material supplier which is established in Spain.
20. A company called Readymix Investments is a wholly owned subsidiary of Cemex España S.A. which is part of the Cemex Group of companies. The objects of Readymix Investments are to carry out the business of an investment holding company. The scheme envisages that the entire issued share capital of the Company, other than any shares legally or beneficially already held by any member of the Cemex Group, will be acquired by Readymix Investments. These are the 'scheme shares'. The consideration for the acquisition comprises cash with €0.25 being paid for each scheme share. The scheme shareholders are the holders of the ordinary shares of €0.12 each in the capital of the Company but excludes holders of ordinary shares legally or beneficially owned by any member of the Cemex Group.
21. The independent directors of the Company proposed the scheme and the meeting of shareholders comprised only the scheme shareholders.
22. The scheme intends that the scheme shares should be purchased for the consideration which I have mentioned and then they will be cancelled pursuant to ss. 72 and 74 of the Act. The reserve arising from the cancellation of the scheme shares will be capitalised to issue fully paid new shares to Readymix Investments or its nominees. As a result of all this the Company will become a wholly owned indirect subsidiary of Cemex España S.A.
23. The independent directors, having taken the view that the scheme should proceed, were obliged to ensure that the transactions envisaged were conducted in accordance with the provisions of the Takeover Panel Act 1997 and the Takeover Rules. The Takeover Rules comprise general principles and rules designed to ensure fair and equal treatment of all shareholders in transactions such as the scheme in suit. If there is any doubt about whether a proposed course of conduct is in accordance with the general principles or rules then the Takeover Panel must be consulted.
24. On the evidence before me, there has been close liaison by the Company's advisers with the Takeover Panel. That Panel reviewed and commented on the circular document issued to the scheme shareholders before it was issued to them. In addition to the other documents and information provided to it, the panel was sent copies of all documents lodged by the Company in these proceedings. Furthermore, the panel was, by my direction, served with the petition grounding this application and did not appear before the court.
25. Having regard to the evidence, I am satisfied that the scheme and all of the procedures relating to it have been proposed and conducted in compliance with the Irish Takeover Rules. The Panel has not exercised or indicated any intention to exercise any relevant power in relation to the scheme.
26. Both objectors make serious allegations about alleged wrongdoing and illegalities in the cement business. These include anticompetitive behaviour, selling below cost and cartel activities. Both objectors have through their companies sued CRH Plc., Irish Cement Limited, Roadstone Provinces Limited, Roadstone Dublin Limited, Tradburn Limited,...
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Allergan Plc v The Companies Act 2014
...supervision of the Panel. A similar position applied in the case of the scheme of arrangement which was considered in In Re Readymix plc [2012] IEHC 194, where Kelly J. noted that the transactions envisaged by the scheme at issue in that case were required to be conducted in accordance with......