The proposed merger of Home Building Society and StateWest Credit Society suffered a setback in the Federal Court in Perth late today.
The proposed merger of Home Building Society and StateWest Credit Society suffered a setback in the Federal Court in Perth late today.
StateWest had sought court orders to convene a meeting of its members to consider the proposed scheme of arrangement and to approve the dispatch of the scheme booklet to its members.
However Justice Tony Siopis declined to grant the orders.
Home chairman Tony Howarth said the court ruling was "an unexpected setback but we don't see this as a deal breaker at all".
"Both sides are still strongly in favour," he said.
Mr Howarth acknowledged that the ruling would push out the timing of the merger.
The key issue in the court ruling was the disclosure of the proposed salary package for Greg Wall, who is StateWest's current chief executive and has been named managing director of the merged entity.
Justice Siopis said there was an "arguable" case concerning the timing of the disclosure of Mr Wall's package, which comprises a $400,000 base salary, a performance bonus of up to $120,000 and up to 250,000 share options.
The details of the package were not included in documents sent to StateWest members on 14 October, in advance of their meeting to vote on demutualisation.
However the details were included in an explanatory memorandum sent to Home shareholders on 27 October, in advance of their annual general meeting.
StateWest lawyer Dean Hely said the difference arose because the details of the salary package had not been finalised when the StateWest documentation was sent out.
He said StateWest had planned to include details of the package in documents due to be sent to its members later this month.
Mr Hely said StateWest would consider an appeal. If that was not successful, StateWest would need to hold a postal ballot so its members could vote for a second time on demutualisation.
The merger has been opposed by a group of former StateWest members and directors, including former chairman Pat Kirwan.
During the Federal Court hearing this week, Mr Kirwan's lawyer, Tottle Partners' Stephen Penrose, questioned the voting procedures at last month's meeting of StateWest members, where they voted strongly in favour of demutualisation.
StateWest accepted votes from holders of partly-paid shares, which Mr Penrose said was not appropriate.
However, Justice Siopis did not refer to this matter in his decision.
At the StateWest meeting, 30,366 ballot votes were counted (representing 52 per cent of StateWest members) and 90 per cent of these were in favour of demutualisation.
The next step in the merger process was meant to be the second meeting of StateWest members, scheduled for 31 January 2006.
That was to be followed by another court hearing to approve the scheme of arrangement, which was scheduled to be implemented in February.
Home shareholders approved a series of resolutions related to the merger at their annual general meeting last month.
Ends
