Regional Publishers Pty Limited v Elkington [2006] FCA 1017

Regional Publishers Pty Limited v Elkington [2006] FCA 1017

The nomination of Ernst & Young by ASIC was valid notwithstanding the misnomer, as the statutory term 'person' includes companies and no injustice was shown. The methodology for determining fair value under s 667C does not require inclusion of 'special value' or benefits to the acquirer, but rather allocation based on financial risk, voting and distribution rights. The expert report, while not perfectly aligned to the sequence required by s 667C, together with evidence before the Court, established that the $2.50 per preference share was fair value, as it exceeded the valuation produced by appropriate EBITDA multiples and allocation per statutory presumptions.

Parties
Plaintiff: Regional Publishers Pty Limited; First Defendant: Gordon Bradley Elkington; Second Defendant: Gepps Pty Ltd
Jurisdiction
Australia
Judgment Date
11 August 2006
Procedural Posture
Corporations Law Compulsory Acquisition / Application for Court Approval of Compulsory Acquisition Under S 664 F of the Corporations Act 2001 (cth)
Outcome
Application approved; acquisition approved; costs to defendants.
Legal Topics
Compulsory Acquisition of Shares, Court Approval of Compulsory Acquisition, Fair Value for Preference Shares, Interpretation of Statutory Terms 'person', Expert's Report Validity, Allocation of Company Value Between Share Classes
Corporations Law Compulsory Acquisition of Shares Court Approval of Compulsory Acquisition Fair Value for Preference Shares Interpretation of Statutory Terms 'person' Expert's Report Validity Allocation of Company Value Between Share Classes

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Parties

Regional Publishers Pty Limited

Plaintiff

Gordon Bradley Elkington

First Defendant

Gepps Pty Ltd

Second Defendant

Procedural Posture

Corporations Law Compulsory Acquisition / Application for Court Approval of Compulsory Acquisition Under S 664 F of the Corporations Act 2001 (cth)

Legal Issues

  1. 1 Whether the nomination of Ernst & Young by ASIC as expert was valid under the Act
  2. 2 Whether a company can be nominated as an 'appropriate person' to prepare an expert's report under Part 6A.4
  3. 3 Whether the price proposed constituted 'fair value' for the preference shares under s 667C

Ratio Decidendi

The nomination of Ernst & Young by ASIC was valid notwithstanding the misnomer, as the statutory term 'person' includes companies and no injustice was shown. The methodology for determining fair value under s 667C does not require inclusion of 'special value' or benefits to the acquirer, but rather allocation based on financial risk, voting and distribution rights. The expert report, while not perfectly aligned to the sequence required by s 667C, together with evidence before the Court, established that the $2.50 per preference share was fair value, as it exceeded the valuation produced by appropriate EBITDA multiples and allocation per statutory presumptions.

Court Disposition

Application approved; acquisition approved; costs to defendants.

Orders

  • The Court approves the acquisition by the plaintiff of all the cumulative preference shares in the capital of Harris and Company Pty Limited on the terms set out in the compulsory acquisition notice dated 20 March 2006.
  • The plaintiff pay the costs of the first and second defendants.