RE HARTSHEAD RESOURCES NL; EX PARTE HARTSHEAD RESOURCES NL [2026] WASC 177

[2026] WASC 177 Page 1 JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA IN CHAMBERS CITATION : RE HARTSHEAD RESOURCES NL; EX PARTE HARTSHEAD RESOURCES NL [2026] WASC 177 CORAM : HILL J HEARD : 29 APRIL 2026 DELIVERED : 29 APRIL 2026 PUBLISHED : 6 MAY 2026 FILE NO/S : COR 40 of 2026 MATTER : IN THE MATTER OF HARTSHEAD RESOURCES NL EX PARTE HARTSHEAD RESOURCES NL Plaintiff ACAM GP LTD AS GENERAL PARTNER OF ACAM LP Interested Party Catchwords: Corporations law - Proposed scheme of arrangement - Application for orders convening scheme meeting under s 411(1) of the Corporations Act 2001 (Cth) - Independent expert of opinion that proposed scheme is not fair but reasonable - Whether requirements to order scheme meeting are satisfied - Orders made convening scheme meeting -- 1 of 18 -- [2026] WASC 177 Page 2 Legislation: Corporations Act 2001 (Cth) s 411, s 412, s 1319 Corporations Regulations 2001 (Cth) sch 8 Result: Orders made convening scheme meeting Category: B Representation: Counsel: Plaintiff : J Malone Interested Party : J M Ammendolea Solicitors: Plaintiff : Blackwall Legal LLP Interested Party : Gilbert + Tobin Case(s) referred to in decision(s): Re Amcom Telecommunications Ltd [2015] FCA 341 Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 Re Atlantic Gold NL [2014] FCA 697 Re Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600 Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 Re Foster's Group Ltd (No 2) [2011] VSC 547 Re Hills Motorway Limited [2002] NSWSC 897 Re Kangaroo Resources Ltd [2018] WASC 327 Re Mosaic Oil NL [2010] FCA 985 Re NSX Ltd [2025] FCA 1133 Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20 Re Pacific Energy Limited [2019] WASC 443 Re SRG Ltd [2018] FCA 1092 Re Viridian Financial Group Ltd [2025] FCA 997 Re Wattyl Ltd [2010] FCA 854 Re Wesfarmers Ltd [2018] WASC 308 -- 2 of 18 -- [2026] WASC 177 HILL J Page 3 HILL J: 1 Hartshead Resources NL (Hartshead) is a public no liability company, which is listed on the Australian Securities Exchange (ASX).1 On 22 December 2025, Hartshead entered into a scheme implementation deed (SID) with ACAM GP Limited as general partner of ACAM LP (ACAM) in respect of a proposed scheme of arrangement in relation to Hartshead's shares (Scheme).2 2 Under the Scheme, it is proposed that ACAM will acquire all ordinary and partly paid shares in Hartshead. If the Scheme is implemented, Hartshead will become a wholly owned subsidiary of ACAM and be delisted from the ASX.3 3 On 29 April 2026, the originating process (which was filed on 13 April 2026) came before me for the first court hearing. On that date, I ordered that a meeting of Hartshead's shareholders be convened to consider and vote on the proposed Scheme (Meeting). Orders were also made approving the distribution of a Scheme booklet, and for the conduct of the Meeting. 4 In making those orders, I stated I would subsequently publish written reasons for the orders I made. These are those reasons. Nature of the proposed Schemes 5 Hartshead is an oil and gas exploration and development company. Through its 100% owned subsidiary in the United Kingdom, Hartshead Resources Ltd, it owns or part owns multiple petroleum tenements in the Southern Gas Basin in the United Kingdom.4 Its primary asset is a 40% interest in United Kingdom Petroleum Production Licence No P2607, which was issued by the North Sea Transition Authority and comprises five blocks containing four existing gas fields.5 6 As at 9 April 2026, Hartshead's capital structure is comprised of:6 (a) 2,808,682,128 fully paid ordinary shares; (b) 5,703,550 partly paid ordinary shares; 1 Affidavit of Nathan Lude filed 13 April 2026 [12]. 2 Affidavit of Nathan Lude filed 13 April 2026, 'NL2'. 3 Affidavit of Nathan Lude filed 13 April 2026 [46]. 4 Affidavit of Nathan Lude filed 13 April 2026 [19]. 5 Affidavit of Nathan Lude filed 13 April 2026 [20] - [21]. 6 Affidavit of Nathan Lude filed 13 April 2026 [36], [50]. -- 3 of 18 -- [2026] WASC 177 HILL J Page 4 (c) 32,500,000 performance rights expiring 13 October 2026 (Performance Rights); and (d) 15,000,000 options exercisable at $0.00 and expiring on 13 October 2026 (Options). 7 ACAM is an unlisted company registered in Jersey, Channel Islands and is the general partner of ACAM LP, a privately held Jersey based limited investment partnership with a particular focus on the natural resources sector.7 8 Under the proposed Scheme, shareholders will receive $0.014 in cash for each fully paid ordinary share, and $0.0007 in cash for each partly paid share. The consideration for the partly paid shares is 1/20th of the consideration payable for a fully paid share, which is proportionate to the amount of cash paid up on each partly paid share (Scheme Consideration).8 9 Hartshead is required, under the terms of the SID to take such action as is necessary to ensure that, subject to the Scheme being effective, on the Effective Date of the Scheme:9 (a) the 32,500,000 Performance Rights currently on issue automatically lapse or are cancelled for no consideration; and (b) the 15,000,000 Options are automatically exercised, or taken to be exercised, without any action required by the relevant option holder. The holders of the Options will be issued fully paid ordinary shares on or before the Record Date and will receive the Scheme Consideration as Scheme Participants. 10 The directors of Hartshead have unanimously recommended that shareholders vote in favour of the Scheme in the absence of a superior proposal. 11 Hartshead engaged BDO Corporate Finance Australia Pty Ltd (BDO) to provide an expert opinion on the Scheme (IER). BDO has concluded that, in the absence of a superior proposal, the Scheme is not fair but reasonable, and as a result, is in the best interests of the Scheme Participants. The basis for this conclusion, including the valuation and methodology used by BDO, are set out in the IER. 7 Affidavit of Michael Charles Adams filed 29 April 2026 [7]. 8 Affidavit of Nathan Lude filed 13 April 2026 [70]. 9 SID, cl 5.1, cl 5.2. -- 4 of 18 -- [2026] WASC 177 HILL J Page 5 12 The Scheme will not be implemented unless and until a number of conditions precedent, as set out in the SID are satisfied or waived.10 The obligations of ACAM under the Scheme is supported by a scheme deed poll which has been executed by ACAM (Deed Poll).11 Legal principles in respect of the Schemes 13 Pursuant to s 411 of the Corporations Act 2001 (Cth) (Act), a scheme of arrangement can be used to re-organise a company which is binding on members and creditors where: (a) the arrangement is agreed by the requisite majorities prescribed by s 411(4)(a) of the Act, namely, 75% of shareholders by value and 50% by number; and (b) the court approves the arrangement pursuant to s 411(4)(b) of the Act. 14 There are three stages to an application under s 411 of the Act. First, the court approves the convening of a scheme meeting. Second, the members vote on the proposed scheme at the scheme meeting. Third, assuming the first two stages have occurred, the court approves the proposed scheme.12 15 There are well established principles that apply to each stage. In relation to the first court hearing, the court will order the scheme meeting to be convened if it is satisfied that:13 (a) there is a pt 5.1 body; (b) there is a compromise or arrangement within the meaning of s 411 of the Act; (c) the proposed scheme booklet contains the prescribed information14 and provides proper disclosure;15 (d) the scheme is bona fide and properly proposed; 10 SID, cl 3.1. 11 Affidavit of William Edward Moncrieff filed 28 April 2026, 'MCA-3'; Affidavit of Michael Charles Adams affirmed 24 April 2026, 'MCA-3'. 12 Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 [7]. 13 Re SRG Ltd [2018] FCA 1092 [11]; Re Wesfarmers Ltd [2018] WASC 308 [60]. 14 Corporations Act 2001 (Cth) s 412(1)(a)(ii); Corporations Regulations 2001 (Cth) reg 5.1.01, sch 8 cl 8301 - 8310. 15 Corporations Act 2001 (Cth) s 412(1)(a)(i). -- 5 of 18 -- [2026] WASC 177 HILL J Page 6 (e) the Australian Securities and Investments Commission (ASIC) has had at least 14 days' notice of the proposed hearing date and a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions;16 (f) the procedural requirements of the Act and the Supreme Court (Corporations) (WA) Rules 2004 (WA) (Corporations Rules) have been met; and (g) the scheme is of such a nature that, if it receives the necessary statutory majority at the scheme meeting, the court will be likely to approve it. 16 Any issue about classes of members is usually determined at the first hearing.17 This is so that costs and court time are not wasted which would otherwise occur if this issue was left to the second hearing.18 17 The standard of review that is undertaken by the court at the first hearing is whether the proposed scheme is not inappropriate and is one that sensible businesspeople might consider is of benefit to its members.19 If the proposed arrangement is one that appears fit for consideration by a meeting of members and is a commercial proposition likely to gain the court's approval if passed by the necessary majority, leave should be given to convene the meeting.20 Should orders be made for the convening of the Meeting and the dispatch of the Scheme booklet? 18 At the first court hearing, Hartshead relied on seven affidavits, being: (a) an affidavit of Nathan Lude, an executive director of Hartshead, filed 13 April 2026; (b) an affidavit of Fraser Lewis Doling Dudfield, a solicitor at Blackwall Legal LLP (Blackwall) the solicitors for Hartshead, filed 15 April 2026; 16 Corporations Act 2001 (Cth) s 411(2)(b). 17 Re CSR Ltd [73] (Finkelstein J). 18 Re Opes Prime Stockbroking Ltd [2009] FCA 813; (2009) 179 FCR 20 [20]. 19 Re Amcom Telecommunications Ltd [2015] FCA 341 [10]. 20 Re SRG Ltd [12]; Re Wesfarmers Ltd [72] - [76]. -- 6 of 18 -- [2026] WASC 177 HILL J Page 7 (c) four affidavits of William Edward Moncrieff, a consultant with Blackwall, filed 15 and 28 April 2026, and two on 29 April 2026; and (d) an affidavit of Michael Charles Adams, an authorised representative of Ocorian Corporate Services (Jersey) Ltd, one of two corporate directors of ACAM, filed 29 April 2026. 19 These affidavits provide the formal matters which Hartshead is required to establish. 20 On the evidence before me, there was nothing to suggest that the Scheme was not properly proposed. 21 There are a number of conditions precedent to the Scheme. Hartshead is not aware of any reason to believe that any of these conditions precedent will not be satisfied or waived prior to implementation of the Scheme.21 Disclosure and Scheme booklet 22 I was provided with a copy of the draft Scheme booklet and am satisfied that there will be proper disclosure as to the effect of the proposed Scheme and material consideration for shareholders. 23 There is evidence before me as to the due diligence and verification process undertaken by both Hartshead and ACAM.22 I accept that Hartshead and ACAM have undertaken processes to verify the accuracy of statements attributable to each of them in the Scheme booklet and to ensure the Scheme booklet does not omit any material information. 24 Based on the checklist provided by Hartshead,23 I was and am satisfied the draft Scheme booklet contained the prescribed information in accordance with s 411(3) and s 412 of the Act and reg 5.1.01 and sch 8 of the Corporations Regulations 2001 (Cth). 25 In written and oral submissions, counsel for Hartshead drew my attention to some specific matters which are addressed below. 21 Affidavit of Nathan Lude filed 13 April 2026 [69]. 22 Affidavit of Nathan Lude filed 13 April 2026 [102] - [112], 'NL-21'; Affidavit of Michael Charles Adams filed 29 April 2026 [25] - [34], 'MCA-4' - 'MCA-6'. 23 Affidavit of William Edward Moncrieff filed 15 April 2026, 'WEM3'. -- 7 of 18 -- [2026] WASC 177 HILL J Page 8 No class issue 26 Hartshead submitted the holders of fully paid shares and the holders of partly paid shares should form a single class. For the following reasons, I accept that no class issue arises in this case. 27 The fully paid shares and partly paid shares rank equally in all respects, save that the partly paid shares are subject to a call for the unpaid amount. While this is an important difference, it does not of itself result in the creation of a separate class. The question is whether the interests of these shareholders are so different as to make it impossible for them to consult together.24 28 In my view, this difference between the shares does not make it impossible for shareholders and partly paid shareholders to consult together with a view to their common interest. This is because this difference is outweighed by the common interest of all shareholders. This common interest is that under the proposed Scheme, all shareholders will give up their shares (and any rights attached to the shares) in return for cash which will be paid in the same proportion relative to their current shareholding in Hartshead. 29 This approach is consistent with previous authorities which have held that holders of fully paid and partly paid shares form a single class in respect of members' schemes.25 30 I also note that ASIC has requested and Hartshead has agreed to 'tag' any votes that are cast by an associate of ACAM, who has agreed to abstain from voting at the Scheme Meeting. Independent expert's report on Scheme 31 The independent expert, BDO, has concluded the proposed Scheme is not fair but is reasonable. In the absence of a superior proposal, BDO concluded the proposed Scheme is in the best interests of shareholders. 32 In Re Beadell Resources Ltd, Vaughan J (as his Honour then was) summarised the approach that the court should take where the independent expert reaches this conclusion on the proposed scheme.26 24 Re Hills Motorway Limited [2002] NSWSC 897 [12]. 25 Re Wattyl Ltd [2010] FCA 854 [11] - [17]; Re Mosaic Oil NL [2010] FCA 985 [10] - [11]; Re Foster's Group Ltd (No 2) [2011] VSC 547 [18] - [37]; Re Atlantic Gold NL [2014] FCA 697 [16] - [24]; Re Viridian Financial Group Ltd [2025] FCA 997 [59] - [67]; Re NSX Ltd [2025] FCA 1133 [27] - [37]. 26 Re Beadell Resources Ltd [2018] WASC 410; (2018) 133 ACSR 600 [60] - [64]. -- 8 of 18 -- [2026] WASC 177 HILL J Page 9 In essence, provided that shareholders are adequately informed of the independent expert's conclusion and the basis for it, it is ultimately a decision for shareholders, and not the court, whether the scheme is in their best interests. 33 The basis for BDO's assessment that the Scheme is not fair is because the value of a fully paid share (on a controlling interest and diluted basis) is between $0.016 and $0.055 with a preferred value of $0.027, which is higher than the value of the Scheme Consideration of $0.014 per fully paid share.27 BDO concluded the proposed Scheme is reasonable because the advantages of the Scheme outweigh the disadvantages. 34 I have carefully considered the explanations contained in the IER for BDO's assessment that the Scheme is not fair but reasonable. I was and am satisfied that the matters referred to in the IER justify the conclusion reached. In my view, there is appropriate disclosure of the basis for the opinion of the independent expert and sufficient information is provided to shareholders enable them to understand and assess for themselves the basis of the independent expert's opinion and make an informed decision whether or not to approve the Scheme. 35 I do not consider the conclusion of the IER the Scheme is not fair but reasonable was a basis to refuse to order the convening of the Meeting. The independent expert's opinion was open, and the Scheme is one that sensible businesspeople may consider will be of benefit to shareholders. Accordingly, it was and is my view that the Scheme is fit for consideration by shareholders. Performance risk 36 On the evidence before the court, I was and am satisfied that the shareholders are adequately protected against any performance risk. 37 Under the terms of the Scheme:28 (a) on the date that is two business days prior to the implementation date of the Scheme, ACAM must deposit the Scheme Consideration into an Australian dollar trust account with an ADI operated by Hartshead as trustee for the shareholders; 27 IER [1.2]. 28 Scheme, cl 6.2, cl 6.3. -- 9 of 18 -- [2026] WASC 177 HILL J Page 10 (b) transfer of the shares to ACAM is subject to the provision of the Scheme Consideration; and (c) beneficial title does not pass unless the Scheme Consideration has been paid. 38 These arrangements are supported by the Deed Poll, which can be enforced by Hartshead and its directors on behalf of any shareholder.29 Exclusivity provisions and exclusivity fee 39 The SID contains the standard lock-up devices which include, where usual, fiduciary carve outs.30 In certain circumstances, a break fee of $400,000 is payable by Hartshead to ACAM (Break Fee).31 40 In considering whether the exclusivity provisions impact on completion of transaction and the duties of directors, the court has regard to:32 (a) the period of the exclusivity, which should be no more than a reasonable period and capable of precise ascertainment; (b) whether the provisions are subject to an overriding obligation that the directors do not breach their fiduciary duties or are otherwise unlawful; and (c) whether there is adequate prominence given to these provisions in the Scheme booklet. 41 In this case, the exclusivity period is, at most, approximately six months from the date of the SID (unless extended by agreement).33 The exclusivity provisions are subject to the appropriate fiduciary carve-outs. 42 The amount of the Break Fee is approximately 1% of equity value of Hartshead as at the date of the SID.34 This is within the generally accepted commercial parameters and in accordance with Guidance Note 7 of the Takeovers Panel. The Break Fee is intended to 29 Deed Poll, cl 1.3. 30 SID, cl 10. 31 SID, cl 11. 32 Re APN News & Media Ltd [2007] FCA 770; (2007) 62 ACSR 400 [29] - [35]; Re Kangaroo Resources Ltd [2018] WASC 327 [57] - [61]; Re Pacific Energy Limited [2019] WASC 443 [58]. 33 SID, cl 11. 34 SID, cl 11.4. -- 10 of 18 -- [2026] WASC 177 HILL J Page 11 compensate ACAM for its costs if the Scheme does not proceed.35 The Break Fee is not payable if shareholders do not vote in favour of the Scheme. In my view, the amount of the Break Fee is unlikely to influence shareholders on their decisions to vote on the Scheme. 43 Importantly, the exclusivity arrangements and Break Fee are disclosed in the Scheme booklet.36 Directors' benefits and recommendations 44 The directors of Hartshead have recommended that, in the absence of a superior proposal, and subject to BDO continuing to conclude the Scheme is in the best interests of shareholders, that shareholders vote in favour of the Scheme. 45 Counsel for Hartshead drew my attention two matters. First, each of the directors have interests in shares.37 Second, in the event the Scheme is implemented, it is anticipated that the executive service agreements of each of the directors will be terminated and each will be entitled to receive up to six months' fees.38 46 For the following reasons, I accept it is appropriate for the independent directors to make a recommendation in respect of the Scheme. 47 First, the consideration that each director will receive for their shares is the same consideration as that every other shareholder of Hartshead will receive. 48 Second, in the event that payments are made to the directors for the termination of their service agreements, these payments will be made for that reason and not as an incentive to promote or support implementation of the Scheme. 49 Finally, and importantly, these interests are fully disclosed in the Scheme booklet.39 Shareholders are able to assess the recommendations of the directors in the context of this disclosure. 35 SID, cl 11. 36 Scheme booklet [1.4]. 37 Scheme booklet [10.1]. 38 Scheme booklet [10.4]. 39 Scheme booklet [10.1], [10.4]. -- 11 of 18 -- [2026] WASC 177 HILL J Page 12 Directors' voting intention statements 50 Each of the directors of Hartshead have confirmed they intend to vote in favour of the proposed Scheme, in the absence of a superior proposal and subject to BDO continuing to conclude that the Scheme is in the best interests of shareholders.40 The directors, as at the Last Practicable Date, collectively held approximately 10.27% of Hartshead shares.41 51 I was and am satisfied these statements are appropriately disclosed in the Scheme booklet. Deemed warranties and no encumbrances 52 Hartshead drew my attention to the deemed warranty and no encumbrance provisions in the proposed Scheme.42 These clauses are not unusual and are acceptable provided there is adequate disclosure. 53 These provisions are disclosed in the Scheme booklet.43 I was and am satisfied that adequate disclosure has been given of these clauses. Proposed Securityholder communications 54 Hartshead also drew my attention to the steps it proposes to take in terms of shareholder communications. Hartshead has engaged Georgeson Shareholder Communications Australia Pty Ltd to operate both an inbound telephone line as well as outbound telephone communications.44 55 A script will be provided to all staff who communicate with shareholders, consistent with the disclosure in the Scheme booklet, with instructions not to depart from the script. Dispatch of the Scheme booklet 56 Hartshead sought orders pursuant to s 1319 of the Act for dispatch of the draft Scheme booklet and related materials by email and post.45 57 I was and am satisfied that the orders proposed for the dispatch of the Scheme booklet are appropriate. 40 Scheme booklet [4.7]. 41 Affidavit of William Edward Moncrieff filed 28 April 2026 [14]. 42 Scheme, cl 5.6(d). 43 Scheme, cl 5.6. 44 Affidavit of Nathan Lude filed 28 April 2026 [141] - [145]. 45 Affidavit of Nathan Lude filed 13 April 2026 [82]. -- 12 of 18 -- [2026] WASC 177 HILL J Page 13 Conclusion and orders 58 At the first hearing before me, I was and am satisfied that the substantive and procedural requirements under s 411 (1) and s 1319 of the Act had been satisfied and that the proposed Scheme is fit for consideration by Hartshead's shareholders. 59 On this basis, at the conclusion of the hearing on 29 April 2026, I made orders in terms of Annexure 'A' of this judgment in respect of the Scheme. -- 13 of 18 -- [2026] WASC 177 HILL J Page 14 Annexure 'A' -- 14 of 18 -- [2026] WASC 177 HILL J Page 15 -- 15 of 18 -- [2026] WASC 177 HILL J Page 16 -- 16 of 18 -- [2026] WASC 177 HILL J Page 17 -- 17 of 18 -- [2026] WASC 177 HILL J Page 18 I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia. KS Associate to the Hon Justice Hill 6 MAY 2026 -- 18 of 18 --