AMP Ltd [2003] FCA 1479 (12 December 2003)

Last Updated: 15 December 2003

FEDERAL COURT OF AUSTRALIA

AMP Ltd [2003] FCA 1479

IN THE MATTER OF AMP LIMITED (ABN 49 079 354 519)

N3054 OF 2003

EMMETT J

12 DECEMBER 2003

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N3054 OF 2003

	IN THE MATTER OF AMP LIMITED (ABN 49 079 354 519) PLAINTIFF
JUDGE:	EMMETT J
DATE OF ORDER:	12 DECEMBER 2003
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth), the Scheme of Arrangement between the plaintiff and its ordinary shareholders which is annexed hereto and marked `A' be and is hereby approved;

2. these orders be entered forthwith.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N3054 OF 2003

IN THE MATTER OF AMP LIMITED (ABN 49 079 354 519) PLAINTIFF

JUDGE:	EMMETT J
DATE:	12 DECEMBER 2003
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 On 16 October 2003, I ordered, pursuant to s 411(1) of the Corporations Act 2001 (Cth) (`the Corporations Act') that a meeting of the members of the plaintiff, AMP Limited (`AMP'), be convened for the purposes of considering and, if thought fit, agreeing to an arrangement between AMP and its members: see In the matter of AMP Ltd [2003] FCA 1465. I now have before me an application by AMP for an order, pursuant to s 411(4)(b) of the Corporations Act, approving the arrangement comprised in the scheme which has been agreed to at the meeting of members so convened.

2 By the operation of s 411(10), any order made for the purposes of s 411(4)(b) will not have any effect until an office copy of the order is lodged with the Australian Securities and Investments Commission (`the Commission'). Further, under s 411(17), the Court must not approve an arrangement pursuant to s 411 unless either the Court is satisfied that the arrangement has not been proposed for the purpose of enabling any person to avoid the operation of Ch 6 of the Corporations Act (which deals with takeovers) or there is produced to the Court a statement in writing by the Commission that the Commission has no objection to the arrangement.

3 I am satisfied from the evidence contained in the affidavits read on the hearing of this application that a meeting of the members of AMP was convened in accordance with my order of 16 October 2003. In that regard, I have considered affidavits relating to activities of the following service providers in relation to the convening of the meeting:

* Text Pacific Publishing Pty Ltd, formatting, typesetting and printing the Explanatory Memorandum;

* Security Mail Pty Ltd, preparing packages for distribution by Australia Post to AMP members containing one or other of a hard copy package, a CD Rom package or a proxy package, according to whether or not the member had elected to receive notification in electronic form;

* The Ball Group Pty Ltd, creating an internet web link to an electronic duplicate of the Explanatory Memorandum and a CD containing an electronic copy of the Explanatory Memorandum;

* Technicolor Australia, burning duplicates of the CD created by The Ball Group Pty Ltd;

* Australia Post, delivering the hard copy packages, CD Rom packages and proxy packages.

4 As I indicated in my reasons of 16 October 2003 for making orders convening the meeting of members of AMP, the Demerger (as defined in those reasons) involves several inter-related steps. The scheme of arrangement agreed to by members of AMP (`the Scheme') is conditional upon several conditions precedent. Under cl 1.3 of the Scheme, AMP is required to provide to the Court, on the hearing of the application pursuant to s 411(4)(b) of the Corporations Act, a certificate confirming whether or not all of the conditions precedent in the Scheme, other than those relating to the Court's approval and lodgement of an office copy of the order with the Commission, have been satisfied. A Conditions Precedent Certificate dated 11 December 2003 is in evidence before me confirming that the relevant conditions have been fulfilled.

5 The conditions included the passing of a resolution at an extraordinary general meeting of shareholders of AMP approving a capital adjustment. That meeting was held on the same day as the meeting convened by my earlier orders and the adjustment resolution was passed by 667,190,772 votes to 4,282,825.

6 At the meeting convened pursuant to my orders, a resolution was proposed as follows:

`... pursuant to, and in accordance with, the provisions of section 411 of the Corporations Act 2001 (Cwlth), the arrangement proposed between AMP Limited and the holders of its fully paid ordinary shares, designated the "Scheme", as contained in and more particularly described in the document accompanying the notice convening this meeting is agreed to (with or without modification as approved by the Federal Court of Australia).'

On the taking of a poll, 139,190 members present, either in person or by proxy, voted in favour of the motion and 3,527 members present, either in person or by proxy, voted against the motion. Those voting in favour of the motion were the holders of 668,478,183 shares. The members voting against the motion were the holders of 4,384,101 shares. It follows that the requirements of s 411(4)(a) have been satisfied in that the resolution in favour of the Scheme was passed by a majority in number of the members and was passed by 75 per cent of the votes cast on the resolution, on the basis that each member had one vote for each share held.

7 There is also in evidence before me a letter dated 11 December 2003 from a delegate of the Commission to AMP's solicitors in the following terms:

`I advise that, under paragraph 411(17)(b) of the Corporations Act 2001 (`Act'), the Australian Securities and Investments Commission (`ASIC') has no objection to the Scheme of Arrangement between AMP Limited and its members on the basis that it is satisfied that the Scheme has not been proposed for the purpose of enabling any person to avoid the operation of any of the provisions of Chapter 6 of the Act.

Therefore I advise you that ASIC does not currently propose to appear to make submissions, or intervene to oppose the Scheme, at the second hearing which commences today.

This letter is provided in reliance on the affidavit of Mr Paul Leaming referred to below and on the basis that AMP will draw to Justice Emmett's attention the matters referred to below which ASIC considers may be relevant to His Honour in deciding whether to exercise his discretion to approve the scheme.

As disclosed in the Explanatory Memorandum for the Scheme, if implementation of the Scheme would result in an event of default under the terms of the Income Securities or other debt securities, AMP would need to repay or refinance the securities.

Perpetual Trustee Company Limited, the trustee for AMP's Income Securities, has applied to the Supreme Court of New South Wales for judicial advice in relation to the effect of the Scheme on the Income Securities. The application has been adjourned until Thursday 18 December 2003.

In his affidavit dated 11 December 2003, Mr Paul Leaming states that AMP has adequate credit facilities in place to enable it to repay the relevant debt securities if required and that he does not consider that any additional interest expense and cost that would be incurred in repaying the securities would have a material adverse effect on AMP's financial position, performance or prospects.'

8 In the course of the hearing of the application, senior counsel for AMP drew the Court's attention to three matters that were the subject of a Supplement to the Explanatory Memorandum, which was published for the benefit of AMP shareholders. The Supplement provides additional information to AMP members concerning recent developments in three areas as follows:

* the publication of the United Kingdom listing particulars of HHG (as defined in my earlier reasons) and its likely listing date;

* an application brought by Perpetual Trustee Company Limited (`Perpetual') seeking judicial advice in relation to the Income Securities issued by AMP in 1999;

* AMP's decision to defer the application of approximately $600 million towards a restructuring of some of its outstanding senior and subordinated debt until the first quarter of 2004.

The Supplement was released to ASX on 28 November 2003 and, on the same day, AMP placed the Supplement on its internet web site. The Supplement was published in full on 29 November 2003 in The Australian Financial Review, The Australian, The Daily Telegraph and The Times (London) newspapers and in major New Zealand daily newspapers.

9 The Supplement describes the more significant of the matters set out in the listing particulars published by HHG with the United Kingdom Listing Authority to facilitate the listing of HHG on the London stock exchange. Those matters included:

* a proposed HHG equity raising;

* HHG's regulatory capital position;

* the consequences of a consultation paper relating to the United Kingdom regulatory capital requirements applying to the businesses of HHG; and

* the fact that there will be insufficient cash earnings to facilitate the payment of a dividend by HHG in the near future.

10 The Explanatory Memorandum made reference to the Income Securities of AMP. The Explanatory Memorandum contained a statement that AMP did not consider that in an event of default had or would occur under the terms of the Income Securities as a result of the announcement or implementation of the Demerger. The Explanatory Memorandum also stated that, if such an event of default were to occur, then the trustee for the holders of the Income Securities, or any holder in relation to that holder's Income Securities may declare the outstanding principal amount of the Income Securities, to be due and payable by AMP Group Finance Services Ltd. If such a declaration were valid, AMP would need to repay or refinance all or some of the Income Securities.

11 On 28 November 2003, Perpetual commenced a proceeding in the Equity Division of the Supreme Court of New South Wales seeking advice that Perpetual was justified in acting on the basis that the implementation of the Demerger would not constitute an event of default in relation to the terms of the Income Securities. On 3 December 2003, Perpetual filed an amended summons seeking advice that Perpetual was justified in proceeding for the time being on the basis that no event of default under the terms of the Income Securities would occur if the scheme was approved by shareholders of AMP and the Demerger was implemented. The proceeding in the Equity Division was listed for hearing before Young CJ in Eq on 1 December 2003 and 3 December 2003. On the latter date, Young CJ in Eq concluded that it was not necessary for the Court to give any advice at that point and adjourned the matter to 18 December 2003.

12 AMP has AUD $1.24 billion of Income Securities on issue. If, contrary to the views expressed in the Explanatory Memorandum, the application for judicial advice results in the Equity Division concluding that a default event has occurred, then, under the terms of the Income Securities, AMP could be required to redeem or refinance all of the Income Securities at their face value. Against that possibility, which AMP does not believe is likely, AMP has taken steps to secure a bridging facility for up to AUD $2.7 billion, which exceeds its current combined indebtedness under the Income Securities and other debt securities.

13 In an affidavit sworn on 11 December 2003, Mr Paul Donald Leaming, the Chief Financial Officer of AMP, expressed the opinion that, in the event that AMP is required to draw down under that bridging facility, to redeem the Income Securities or other debt securities, the additional interest expense and costs that would be incurred in doing so would not have a material adverse effect on AMP's financial position, performance or prospects and, if it were necessary to draw down under the bridging facility, that would not have a material adverse affect on AMP because it would amount to the substitution of one form of debt for another form of debt.

14 The term of the bridging facility is twelve months to allow AMP sufficient time to put in place longer-term funding arrangements at a lower cost than a bridging facility. Any draw down by AMP under the bridging facility is subject to conditions that are designed to ensure that AMP's condition is such that longer-term refinancing of the bridging facility can be completed successfully. I also have evidence before me in the form of an affidavit of Jonathan Gidney, who has had significant experience in relation to capital raisings by listed companies. Mr Gidney says that he is confident that AMP would be able to refinance the bridging facility for up to AUD $2.7 billion at the end of its 364 day term, if required to do so. Mr Leaming is also confident that AMP will be able to refinance the bridging facility within the 12 month period.

15 I do not consider that the matters referred to in the Supplement constitute a reason why the Court should not approve the Scheme pursuant to s 441(4)(b) of the Corporations Act.

16 On 16 October 2003, I ordered that compliance with certain provisions of the Federal Court (Corporations) Rules 2000 be dispensed with. However, I ordered that, not later than 5 December 2003, AMP's application for orders under s 411(4)(b) be advertised once in The Australian newspaper. The form of advertisement pursuant to that order stated that anyone who wished to oppose the approval must file a notice of appearance by 4 pm on 10 December 2003. I am satisfied by the evidence of Mr Ashley John Black, a partner of AMP's solicitors, Mallesons Stephens Jaques, that no notice of appearance has been filed on behalf of any person intending to oppose the making of orders pursuant to s 411(4)(b) of the Corporations Act.

17 In the circumstances, I consider that it is appropriate to make an order in accordance with s 411(4)(b) of the Corporations Act approving the Scheme as agreed to at the meeting of members of AMP convened on 9 December 2003, pursuant to the orders made by me on 16 October 2003.

I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated: 12 December 2003

Counsel for the Plaintiff:	T F Bathurst QC with A S McGrath
Solicitor for the Plaintiff:	Mallesons Stephen Jaques
Date of Hearing:	11, 12 December 2003
Date of Judgment:	12 December 2003