Inmarsat Plc, Re

At a scheme-sanction hearing, the court must decide whether the scheme presented is one which an honest and intelligent member of the relevant class might reasonably approve. The scheme need not be the only fair scheme or the best bargain available. The court must independently scrutinise fairness, while giving substantial weight to an informed and properly conducted class vote. The explanatory statement must explain the commercial effect of the scheme and provide reasonably available, up-to-date information sufficient to enable shareholders to decide how to vote. The sanction hearing is not an opportunity to negotiate a better deal or postpone the transaction because a more favourable outcome might later emerge. A scheme may be sanctioned where the statutory requirements are met, the meeting was properly conducted, the information was sufficient, and no material post-vote change undermines the vote.

Inmarsat plc proposed a scheme of arrangement under Part 26 of the Companies Act 2006 to implement a recommended cash takeover by Connect Bidco Limited. Certain shareholders objected, principally arguing that the explanatory statement inadequately addressed risks associated with deferred payments under a commercial agreement concerning Ligado’s proposed spectrum modification, that a contingent value right should have been negotiated, and that events after the scheme meeting justified an adjournment or reconsideration.

The scheme had been approved by the requisite majority at the court meeting. The central questions were whether the statutory and procedural requirements had been satisfied, whether the explanatory statement provided sufficient information, whether the scheme was fair, and whether there had been a material change in circumstances since the vote.

1. The scheme was sanctioned. It was an arrangement within Part 26 of the Companies Act 2006, the statutory requirements and court orders concerning the meeting had been complied with, the requisite majorities had been obtained, and the scheme had been fairly presented to the meeting.
2. The governing fairness question was whether the scheme was one which an honest and intelligent member of the relevant class, acting in that capacity and in respect of his interests, might reasonably approve. The court was not required to determine that the scheme was the only fair scheme or the best scheme available. The possibility that a better transaction might have been negotiated did not justify refusing sanction.
3. The court was required to scrutinise the scheme independently, even where opposition had diminished or disappeared. It could take account of, but was not bound by, the views expressed at the scheme meeting. Where shareholders had acted on sufficient information, with time to consider the proposal and without oppression, the court should be slow to differ from their commercial judgment.
4. Under section 897 of the Companies Act 2006, the explanatory statement had to explain the effect of the arrangement. This required an explanation of how the scheme would affect shareholders commercially and such up-to-date information as could reasonably be provided about the scheme and the available alternative. The statement satisfied that standard: the relevant commercial contingencies and risks concerning Ligado were already sufficiently disclosed in the market and no further specific explanation had been identified.
5. The proposed contingent value right and an extension of the longstop date were directed towards obtaining a better bargain, rather than determining whether the scheme presented was reasonably approvable. They were therefore not grounds for refusing sanction. Nor had the post-vote press speculation and continuing opposition to the spectrum modification created a material change; the prospect of the modification remained as uncertain as it had been when shareholders voted. The scheme accordingly contained no blot and was sanctioned.