Renaissance Capital Ltd v African Minerals Ltd

A contractual tail provision using the word “consummated” may have a meaning distinct from “completion”. In this case it referred to agreement of all, or the main, terms of a sale, whether or not a definitive agreement had been executed or conditions precedent satisfied. Contractual scope is determined objectively, by the words used in their commercial and factual context. A clause giving an investment bank a first and reasonable opportunity to submit a proposal does not, without clearer language, create a right of first refusal or oblige the client to appoint the bank. An agreement covering a sale of shares in one company does not automatically extend to associated infrastructure companies.

Renaissance, an investment bank, claimed fees and damages from African Minerals under engagement agreements concerning the Tonkolili and Marampa mining projects, equity and debt raisings, and transactions involving CRM and Shandong.

The principal issues were the meaning of “consummated” in the contractual tail provision; whether the mandate covered sales involving AML itself or associated infrastructure companies; whether CRM’s anti-dilution investment was part of the original transaction; and whether the Umbrella Agreement gave Renaissance a right of first refusal or an enforceable right to be appointed for later financings.

1. Construction of “consummated”. Applying the objective approach in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 (HL), the court held that “consummated” in the tail provision meant that all, or the main, terms of an agreement for a sale had been agreed. It did not mean completion, receipt of consideration, execution of a definitive agreement, or satisfaction of conditions precedent. The presumption against synonymity supported that construction, as did the commercial context and the distinction between “consummated” and “Completion”.
2. The relevant background for the amended agreement was the background existing when the amendment was made, including knowledge that the amended clause replaced an earlier provision. Pre-contractual negotiations were excluded as background information, applying Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101. The agreement with Shandong was therefore consummated when its material terms were agreed, at the latest on 29 July 2011, within the tail period.
3. The contractual mandate covered a sale of an interest in TIO and AML, but not the Tonkolili infrastructure companies. The “whereby” wording and the definition of consideration could not extend the mandate to every remotely connected company or asset. The sale of the 25% interest in TIOSL therefore generated a fee, but the sales involving ARPSSL and APSL did not.
4. The Off-take Agreement was a separate legal transaction and did not postpone consummation of the share sale. It was not itself a sale of an iron-ore asset and, in any event, was outside the relevant definition of Sale as an ordinary-course transaction.
5. CRM2 was part of the original CRM1 transaction. The wording covering any transaction or series or combination of transactions, together with the reference to receipt of “any” consideration, included the later exercise of the anti-dilution option.
6. Clause 3 of the Umbrella Agreement gave Renaissance a first and reasonable opportunity to submit a proposal. It did not confer a right of first refusal, a right to match a third-party offer, or an obligation to negotiate or appoint Renaissance. The reasoning in Astrazenca UK Ltd v Albemarle International Corporation [2011] EWHC 1574 (Comm) was distinguished because the wording there expressly created a right of first refusal. The equity-raise and debt-raise claims were dismissed.
7. The Shandong claim succeeded only for the sale of the 25% interest in TIOSL. The CRM1 and CRM2 claims succeeded. The November 2010 Equity Raise Claim and February 2011 Debt Raise Claim were dismissed.