Metlifecare will seek shareholder support to pursue litigation against its former suitor after the High Court rejected an application that would have preserved a shareholder vote on the teetering $1.5 billion takeover.
The retirement village operator and developer is suing EQT and its Asia Pacific Village Group unit over the Swedish buyout firm's decision to back out of the deal, citing the impact of the covid-19 pandemic on Metlifecare's prospects.
Metlifecare petitioned the High Court to let it proceed with a shareholder vote on the scheme implementation agreement and argued that EQT was prevented by the terms of the agreement from using the pandemic as a reason to quit the deal.
Justice Graham Lang rejected Metlifecare's application, saying there was too much uncertainty as to whether an arrangement was still in place, given the dispute over whether it's been terminated.
The judge also said a ruling on the termination before the end of January 2021 was unlikely, meaning there will be a delay of at least eight or nine months between the proposed shareholder meeting and final orders being sought.
"A delay of that length between a shareholder's meeting and final orders is very unusual," the judge said.
In saying that, Justice Lang accepted that Metlifecare's shareholders will probably accept the delay and uncertainty if there's a prospect of EQT being held to the terms of the deal.
Support for litigation
The judge said the primary focus of the meeting will likely be whether shareholders support the litigation rather than the scheme, but that wasn't the right purpose for the court to direct that a meeting be held.
"It is therefore difficult to see why it would feel the need to hold a meeting under Part 15 to ensure it has the support of the remaining shareholders. That could be done at any general meeting of the company," he said.
The judge granted Metlifecare leave to rely on material used to support the application of any renewed bid for initial and final orders.
Metlifecare's board said it will postpone the planned meeting until mid-July to seek support to continue with the legal action.
The three-week hearing is scheduled to start on Nov. 23 in the High Court at Auckland.
"The necessary legal action to compel APVG and EQT to fulfil their contractual obligations under the SIA has already secured the public support of a significant proportion of our biggest investors," chair Kim Ellis said in a statement.
"At next month's meeting, the board of Metlifecare will also be seeking formal endorsement of shareholders to continue pursuing litigation options to enforce the SIA and implement the scheme."
Notice coming next week
Metlifecare said it will send out a notice of meeting and accompanying material next week.
A spokesperson for EQT's Asia Pacific Village Group said the ruling was sensible.
"Since Metlifecare announced its intention to contest the termination notice, despite the significant impact covid-19 has and is continuing to have on its financial performance, our focus has been on the substantive hearing set in late November," he said in a statement.
"We are pleased the High Court has sought to resolve these substantive issues first. APVG is confident in its position and looks forward to presenting its evidence to the court."