In the matter of OTS (Australia) Pty Ltd [2017] NSWSC 175

In the matter of OTS (Australia) Pty Ltd [2017] NSWSC 175

Because OTS's affairs had been declared oppressive, s 233 was enlivened. The Court valued OTS primarily by an EV/EBITDA approach, checked against an EV/Revenue approach, rejected the contention that existing cash was surplus working capital, added back the after-tax value of excess director benefits and New Zealand pricing adjustments and tax losses, and concluded OTS was worth not less than $5.4 million. Cameron Marketing's one-third shareholding was therefore worth $1.8 million. A winding-up order would not adequately remedy oppression involving benefits already received by the defendants, and the defendants had no sufficient basis for a further adjournment to oppose the purchase order...

Jurisdiction
Australia
Judgment Date
03 March 2017
Procedural Posture
Corporations Oppression Proceeding Seeking Share Purchase Order or Winding Up Order / Principal Judgment Determining Relief and Valuation After Consent Declaration That the Conduct of Ots's Affairs Was Oppressive to Cameron Marketing
Outcome
The second defendant was ordered to purchase the plaintiff's shareholding in the first defendant for $1,800,000, with liberty to apply for implementation directions; costs were reserved for further argument.
Legal Topics
["members' Remedies" 'oppression' 'compulsory Purchase Order' 'valuation of Shares' 'valuation Methodology' 'winding Up as Alternative Relief']
['corporations Law' 'equity'] ["members' Remedies" 'oppression' 'compulsory Purchase Order' 'valuation of Shares' 'valuation Methodology' 'winding Up as Alternative Relief']

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Procedural Posture

Corporations Oppression Proceeding Seeking Share Purchase Order or Winding Up Order / Principal Judgment Determining Relief and Valuation After Consent Declaration That the Conduct of Ots's Affairs Was Oppressive to Cameron Marketing

Legal Issues

  1. 1 ['Whether a compulsory purchase order was appropriate' 'The value of the Cameron Marketing shareholding for the purposes of a compulsory purchase order' 'Whether an EV/EBITDA earnings-based valuation or an EV/Revenue revenue-based valuation was preferable' 'Whether cash held by OTS should be treated as surplus cash and added to enterprise value' 'Whether the defendants should be given a further opportunity to adduce hardship evidence before a purchase order was made']

Ratio Decidendi

Because OTS's affairs had been declared oppressive, s 233 was enlivened. The Court valued OTS primarily by an EV/EBITDA approach, checked against an EV/Revenue approach, rejected the contention that existing cash was surplus working capital, added back the after-tax value of excess director benefits and New Zealand pricing adjustments and tax losses, and concluded OTS was worth not less than $5.4 million. Cameron Marketing's one-third shareholding was therefore worth $1.8 million. A winding-up order would not adequately remedy oppression involving benefits already received by the defendants, and the defendants had no sufficient basis for a further adjournment to oppose the purchase order...

Court Disposition

The second defendant was ordered to purchase the plaintiff's shareholding in the first defendant for $1,800,000, with liberty to apply for implementation directions; costs were reserved for further argument.

Orders

  • ["The second defendant purchase the plaintiff's shareholding in the first defendant at a price of $1,800,000." 'There be liberty to apply for further directions in respect of the implementation of this order.']