Jersey Unreported Judgments

[2007]JRC179

royal court

(Samedi Division)

26^th September 2007 

Before     :

M. C. St. J. Birt, Esq., Deputy Bailiff, and Jurats de Veulle, and Newcombe.

 

IN THE MATTER OF THE REPRESENTATION OF ANDSBERG LIMITED

AND IN THE MATTER OF PART 18a OF THE COMPANIES (JERSEY) LAW, 1991.

Advocate D. R. Wilson for the Representor.

Advocate S. M. Gould for the Excluded Shareholders.

Advocate M. E. Millar for Lanzville.

judgment

the deputy bailiff:

1.        This is an application under Article 125 of the Companies (Jersey) Law 1991 for the Court's sanction of a scheme of arrangement between the company in question and its members.

2.        The background to the application is that the company Andsberg Limited, a Jersey company, was demerged from a company called Antofagasta Plc.  As Andsberg was to be an unquoted company, investors in Antofagasta were given the opportunity of redeeming their Andsberg shares at that time, and such redemptions were funded by a fresh issue of shares to entities associated with the Luksic family.   But a number of shareholders did not sell and they have remained as shareholders of Andsberg.

3.        The company has an issue share capital of 138,479,526 redeemable ordinary shares and 58,691,813 non-redeemable ordinary shares of US$0.00001 each, and two non-redeemable ordinary shares of US$1 each.  All of the non-redeemable ordinary shares and the great majority of the redeemable shares are held by the Luksic entities and these are referred to as the "excluded shares".  Indeed, less than 5% of the redeemable shares are held by independent shareholders, and it is those shares which are the subject of this scheme of arrangement, and they have been referred to as the "scheme shares".

4.        The company only has two assets of note, other than cash.  One is a small shareholding in Banco de Chile, but the only substantial asset of the company is a 33% shareholding in Quiňenco S A, a company listed on the Chilean stock exchange.

5.        It appears that the shares in Quiňenco have increased quite significantly in value since the demerger, but there is, of course, no mechanism by which shareholders in Andsberg can realise their shares at present.  Although Andsberg is a public company because of the number of shareholders, its shares are not listed on any stock exchange.  We are told that a number of the scheme shareholders have indicated to the board of Andsberg that they would like the opportunity of being able to realise their investment.

6.        So it is these circumstances that Lanzville Investments Establishment, a Liechtenstein establishment, has on behalf of the Luksic family made an offer to acquire all the outstanding redeemable shares, provided that the matter proceeds by way of a scheme of arrangement.  The result of this, of course, is that if the requisite majorities are obtained, Lanzille will acquire all the outstanding shares, even those of persons who were not in favour of selling at this stage.  The price offered is $4.1854 per share by way of a cash offer.

7.        Now the test which the Court must apply in such matters is well established.  The Court has convened the necessary meetings, which have now been held, and the Court must now consider three things: first, that the provisions of the Statute have been complied with; secondly, that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent; and thirdly, that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve.

8.        Taking each of those in turn, we are satisfied that the statutory provisions have been complied with.  At the meeting of scheme shareholders there were 108 members in favour and 14 against.  This represented, in terms of shareholdings, 93.06% in favour and 6.94% against.  The requisite majorities required by the statute have therefore been met.

9.        The second issue is whether the class is fairly represented and the majority have been acting bona fide.  Now the important aspect here is that the meeting consisted solely of scheme shareholders, in other words, solely of those who are not members of the Luksic family.  All of the Luksic shares were treated as excluded shares and the shareholders were not convened to the meeting.  Of the scheme shareholders 122 out of 369 either attended, or were represented by proxy, at the meeting and those who voted constituted 52.7% of the total number of scheme shares.  So we consider that the class was indeed fairly represented and there is no evidence of a majority of those shareholders coercing the minority in any way.

10.      The third matter we must consider is whether an intelligent and honest man acting in respect of his interest as a scheme shareholder might reasonably approve the scheme.  The price payable for the shares is based upon the net asset value of the company, which in turn is based upon the price of the Quiňenco shares.  No discount for the fact that a minority shareholding is being acquired has been built into the price; it is simply based on the net asset value.  Furthermore, and most importantly, the only director of Andsberg who has considered this matter is an independent director.  He has, in turn, sought advice from J P Morgan Cazenove, who have therefore been looking after the interests of the scheme shareholders.  In the scheme documentation it is stated that the director advised by J P Morgan Cazenove considers the scheme, and particularly the price, to be fair and reasonable and J P Morgan Cazenove have consented to that appearing in the documentation.  J P Morgan Cazenove are to be taken as having given that opinion and that gives the Court additional comfort.  In all the circumstances we are satisfied that this is indeed a scheme of which a reasonable and intelligent person could approve.

11.      In all the circumstances we think that the requirements have been met and we approve this scheme and we approve the draft act.

Authorities

Companies (Jersey) Law 1991.