Ten Entertainment Group PLC, Re

On an application to sanction a scheme of arrangement under Companies Act 2006, the court considers whether the statutory requirements have been met, whether the class was fairly represented and acted bona fide, whether an intelligent and honest member might reasonably approve the scheme, and whether there are any blots on it. A shareholder voting both for and against may be counted in both categories for the majority in number test where that approach has been adopted in the relevant authorities. Irrevocable undertakings and letters of intent do not create a class issue where they confer no additional consideration. Subject to compliance with these requirements, the court may sanction the scheme.

Ten Entertainment Group PLC applied for sanction of a scheme under Part 26 of the Companies Act 2006 to enable Neon Buyer Limited to acquire the company’s issued and to be issued ordinary share capital for cash consideration of 412.5 pence per share.

The scheme shareholders approved the scheme at the court meeting by the requisite majorities. Three shareholders voted both for and against, and were counted in both categories for the majority in number test. Bidco had also received irrevocable undertakings and letters of intent from certain shareholders. No party opposed the application. The issues were whether the meeting and statutory requirements had been complied with and whether the scheme should be sanctioned.

1. Application granted. The court sanctioned the scheme and made the orders sought, following Bidco’s undertaking to be bound by it.
2. The court applied the four matters identified in Re TDG PLC [2009] 1 BCLC 445: compliance with the statutory provisions; fair representation and bona fide conduct by the statutory majority; whether an intelligent and honest member of the relevant class, acting in their own interests, might reasonably approve the scheme; and whether there were any blots on the scheme.
3. There had been a minor defect in the timing stated in notices, but it was immaterial and had been announced to the market in good time. The meeting had been properly convened, the statutory majorities had been achieved, and there was no evidence of coercion or want of bona fide conduct.
4. In assessing the majority in number, the court applied the approach in Re Equitable Life Assurance Society (No. 1) [2002] BCC 319 and Re Cardtronics PLC (Companies Act 2006) [2021] EWHC 1617 (Ch), under which shareholders voting both for and against were treated as members in both categories.
5. The scheme was unanimously recommended, properly explained, approved by the shareholders, and offered consideration significantly above the pre-announcement market price. The irrevocable undertakings and letters of intent did not create a class issue because no additional consideration was provided, applying Re Telewest Communications plc (No. 1) [2004] EWHC 924 (Ch).

not stated in the judgment.