[2010]JRC034
royal court
(Samedi Division)
18th February 2010
Before : |
W. J. Bailhache, Esq., Deputy Bailiff, and Jurats Morgan and Kerley. |
Between |
Rambler Media Limited |
Representor |
And |
PM Invest Company Limited (now ProfMedia Ltd) |
Respondent |
IN THE MATTER OF ARTICLE 125 OF THE COMPANIES (JERSEY) LAW 1991
Advocate R. J. MacRae for the Representor.
Advocate L. J. Springate for the Respondent.
judgment
the deputy bailiff:
1. We have had the opportunity of reading the papers carefully in advance of receiving the submissions made by Advocate MacRae on behalf of Rambler Media Limited and by Advocate Springate on behalf of ProfMedia Limited. This is an application by Rambler for the approval of the scheme of arrangement pursuant to Article 125 of the Companies (Jersey) Law 1991.
2. The background to the application is that the company is a public company authorised to issue 20 million ordinary shares of US$0.01 each. The company was admitted to trading on the AIM Market London Stock Exchange Plc on 15th June, 2005, and de-listed on 31st December, 2009. The company Profmedia Limited, formerly known as PM Invest Company Limited, which I will describe as the bidder, put forward a proposal whereby the bidder would acquire for cash the issued share capital of the company not already owned by it. The proposal was to be effected by means of a scheme of arrangement under Article 125 of the 1991 Law whereby all the scheme shares would, on the effective date of the scheme, be transferred to the bidder in exchange for the bidder paying to each scheme shareholder in consideration for the transfer of each scheme share, the sum of US$6 in cash within 14 days of the scheme becoming effective. We have been told by counsel that it is hoped that the payment in cash, if the scheme is sanctioned, will be made sooner than the 14 days which is set out in the papers and certainly we would encourage that to be so. The scheme shares do not include the excluded shares which are defined in the scheme circular as the shares in the company beneficially owned by the bidder. These total 13,599,758 shares amounting to 88.06% of the company's issued ordinary shares.
3. On 7th January, 2010, the Royal Court ordered the company should convene a meeting of the scheme shareholders for the purposes of considering and, if thought fit, approving the scheme of arrangement described above. The Court included within its order a requirement that the scheme circular, substantially in the form approved by the Court, should be sent to scheme shareholders at least 21 clear days before the meeting and enclosing a form of proxy, substantially again in the form provided to the Court. There were other technical requirements set out in the Court's order of 7th January, all of which in our view have been met. In particular the Court is satisfied that the circular was amended to include the changes set out in the Court's judgment of 7th January.
4. The Court's duty when considering applications under Article 125 is well established and it is conveniently summarised at paragraph 4 of the Royal Court's judgment of 28th January, 2010, in the matter of the Representation of CPA [2010] JRC 021 as the Bailiff then described it:-
"The Courts duty when considering applications under Article 125 was set out in the case of the Representation of Andsberg Limited [2007] JLR N 53 and has also been repeated in Re CI Traders Limited [2007] JRC 149A, where, although the case heard in 2007, the judgment has apparently only just been transcribed and published. The test is three-fold. The Court must consider:-
(i) Whether the provisions of the 1991 Law have been complied with;
(ii) Whether the class of shareholders to be affected by the proposed scheme was fairly represented by those who attended the meeting and whether that the statutory majority are acting bona fide and not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and
(iii) Whether the arrangement is such that an intelligent and honest man, a member of the class concerned and acting in respect of his interest might reasonably approve.
We therefore take each of these matters in turn."
5. In relation to the first point the Court has received and considered affidavits from Miss Jane Daniel Dolby, employed in the offices of Moore Stephens, which provides company administration services to the company and from Mr Arthur Markaryan in connection with the meeting of the scheme shareholders directed to be held pursuant to the Court's order of 7th January 2010. We are satisfied the court meeting has been properly notified to scheme shareholders and properly held. In particular we are satisfied that the explanatory statement which went out with the documents in our view explained the matter fairly and properly. We are satisfied that the records that the majority required by the statute was obtained, thus of the total of 1,797,891 scheme shares in issue shareholders holding 1,301,355 scheme shares voted in person or by proxy at the court meeting in favour of the proposal, there were no votes against the proposal at the court meeting.
6. We then turn to the second issue. We are satisfied that those who were represented at the court meeting fairly represented the scheme shareholders as a whole. In this case there was only that one class of shareholder to be considered. As indicated above shareholders, holding 1,301,355 scheme shares out of a total of 1,797,891 scheme shares in issue, voted by proxy at the court meeting; that represented 72.4% of the issued scheme shares. We have looked carefully at the terms upon which the proxies, which were rejected by the chairman of the meeting, were rejected, none of those who were given notice of the meeting and given notice that they had an entitlement to come to Court today have appeared to voice any objections and there is, on the face of it, no reason to suspect that the chairman acted other than appropriately in rejecting the proxies which he rejected. We are satisfied there was indeed fair representation of the scheme shareholders of the court meeting and there is no reason to think that anyone was acting otherwise than in good faith. Indeed as Mr MacRae correctly points out given the terms of the letter of objection which he has drawn to our attention from the company SL Capital Limited, they had the opportunity of drawing to our attention any coercion, if indeed that was to be alleged, and no such statement has been made.
7. As to the third issue namely:- "whether the arrangement as such that an intelligent and honest man, a member of the class concerned in acting in respect of his interest might reasonably approve" the scheme, we remind ourselves that the scheme shares are no longer available for sale on the listed market and that there is therefore a very limited market indeed in those shares. We have noted that share value in the company has fluctuated over the last few years and noted the submission made by Mr MacRae that a number of shares have in fact been acquired during 2009 at $6 a share. Share value is undoubtedly a matter upon which different shareholders may take a different view and we have taken account of SL Capital's objections, but in our view the offer price is not unrealistic in all the circumstances. It follows that looking at the matter in the round and given the relatively high number of votes cast in favour of the scheme, we are satisfied that this is indeed an arrangement which a shareholder could reasonably approve and indeed over 72% of all the scheme shareholders, and 100% of those who voted at the meeting, have done so. I would just add in relation to the objections of the SL Capital that the Court would undoubtedly pay particular attention to the fact that it had the opportunity to appear and voice its objections rather more vociferously and it has not done so; and it seems to us in those circumstances that the objections which are set out in the letter carry less weight than otherwise might be the case, but even giving them full weight they nonetheless would not affect the Court's exercise of discretion.
8. We have noted that funds have been provided for the acquisition of all the scheme shares and that those monies are held by the registrar of the company. We have considered the terms of the draft act put before us and noted that the undertaking has been given by Advocate Springate on behalf of her client ProfMedia Limited to be bound by the scheme of arrangement which is sanctioned and to execute and do or procure to get executed and done all such documents, or things as may be necessary, in this respect.
9. In the circumstances we approve that act and we make the orders accordingly.
Authorities
Companies (Jersey) Law 1991.