Case: Re APN News &amp; Media Ltd (2007) 62 ACSR 400
Outcome: cited
By cl 8.2(b) of the Scheme, the Bolnisi shareholders are deemed to warrant to Coeur that the shares the subject of the transfer to Coeur Australia will be unencumbered and that the shareholders will have full power and capacity to transfer them to that company. The attention of Bolnisi shareholders is drawn to the deemed warranty in the Scheme Booklet. I have no difficulty with such a deemed warranty: see Re APN News &amp; Media Ltd (2007) 62 ACSR 400 at [57] [63]. 23 Clause 12 of the MIA is headed "Exclusivity" and may be described as containing a "no shop" provision. Clause 13 of the MIA, headed "Payment of costs", may be described as providing for a "break fee". There is a "fiduciary carve out" from cl 12. The maximum period during which the no shop provision can operate is the period of seven months from the date of the MIA, that is to say, the period from 3 May 2007 to 3 December 2007. 24 The amount of the break fee is US$7.78 million. Interestingly, as counsel for Bolnisi observe in their submission, in this case the break fee is "reciprocal", that is to say, the break fee is payable by Coeur, as well as by Bolnisi, in the circumstances set out in the MIA. Of course the break fee is not payable by Bolnisi merely because its shareholders do not agree to the Scheme. 25 I discussed no shop and no talk and break free provisions in Re APN News &amp; Media Ltd (2007) 62 ACSR 400 at [25] [55] and in Re Investa Properties Ltd [2007] FCA 1104 at [31] [35]. In the present case, Norman Alfred Seckold, the Chairman and a Director of Bolnisi, states as follows in his affidavit of 25 October 2007: 22. Clause 12 of the Merger Implementation Agreement between Bolnisi and Coeur ... is an exclusivity provision which provides that, during the exclusivity period, competing third party proposals are not to be sought and discussions or negotiations may not be entered into in relation to a third party proposal. Clause 12 also provides that if third party proposals are received by a party, that party must notify the other party at least 48 hours before the Board of Bolnisi or Coeur (as applicable) recommends acceptance to their shareholders. 23. Clause 13 of the Merger Implementation Agreement is a break fee provision that enables either Bolnisi or Coeur to compensate the other party a break fee of US$7.78 million within 10 days of a demand for payment if certain events occur. 24. Both clauses 12 and 13 of the Merger Implementation Agreement were agreed between Bolnisi and Coeur following arm's length commercial negotiations over a period of one month. Both parties were separately advised and represented in such negotiations by external legal advisers and by external financial advisers, with extensive experience of transactions of this kind. Bolnisi received legal advice from Minter Ellison on the operation of both provisions and that Bolnisi had regard to the Takeovers Panel Guidance Note 7 in the negotiations set out above. 25. I believe that the no shop, no talk and exclusivity provisions do not operate against the interests of Shareholders and it was in their interests that the board of Directors determined to include such provisions.