Yeeda Pastoral Company - Case Update

The Supreme Court of Western Australia (Court of Appeal) has dismissed an appeal by a shareholder of Yeeda Pastoral Company who claimed to be unfairly prejudiced by the transfer of its shares to a Canadian government-backed fund as part of a DOCA approved by the company’s creditors.

In April, we wrote about how the Supreme Court of Western Australia had granted leave to Richard Tucker, Anthony Miskiewicz and David Osborne of KordaMentha, the voluntary administrators of Yeeda Pastoral Company and certain of its subsidiaries, to transfer all shares in the company to TLP4 Australian Holdings, a fund backed by the Canadian government. TLP4 had proposed a DOCA which allowed continuity for the companies, their businesses and retained employees through a share transfer to the purchaser for consideration including $38.5 million plus approximately $755 per cattle. The takeover was approved by creditors, and subsequently also received the approval of the Foreign Investment Review Board, the Pastoral Lands Board and the ACCC prior to the administrators seeking approval from the Court.

Fitzroy River LLC, one of Yeeda’s shareholders, opposed the transfer on the basis that there was residual value in the equity of Yeeda. After receiving additional submissions on the value of Yeeda's pastoral leases, the Court ultimately approved the transfer, determining that Yeeda’s assets (pastoral leases and an abattoir) were insufficient to cover its liabilities, with a shortfall of at least $66 million. Accordingly, the shares had no residual value, and Fitzroy and the other shareholders were not unfairly prejudiced by the DOCA.

Fitzroy appealed, arguing that the primary judge incorrectly found that the administrators had adduced admissible evidence concerning the value of the abattoir and impermissibly relied on such evidence in concluding that the transfer of the shares would not unfairly prejudice the interests of Yeeda's shareholders.

The Court of Appeal upheld the transfer of the shares. The Court found that the administrators’ reports and affidavits contained information derived from financial records, communications with management, and professional inquiries that administrators were entitled and obliged to make. These were admissible either as business records or as the basis of opinion evidence where the administrators were qualified to express it.

Even if some of the evidence lacked formal valuation rigour, the Court held that the primary judge had not erred in relying on it. The judge had not treated the figures as precise valuations but rather as indicators that the shareholders would not likely be unfairly prejudiced by the share transfer.

The Court also agreed with the primary judge’s conclusion that there was no real unfair prejudice to Yeeda’s shareholders given the company’s insolvency, lack of residual equity for shareholders and the need for a financial rescue.

The decision can be found HERE.

Professionals involved:

• Paul Edgar SC & Stefan Tomasich of Quayside Chambers (instructed by Lavan) for the administrators, Richard Tucker, Anthony Miskiewicz and David Osborne of KordaMentha

• Justin Hewitt SC of Eight Selborne and George Pasas of Clayton Utz for TLP4 Australian Holdings

• Michael Sims SC and Tom Webb of Quayside Chambers (instructed by Fairweather Litigation) for Fitzroy