Golar LNG Ltd v World Nordic SE

• Jurisdiction: Bermuda
• Judgment Date: 18 February 2011
• Date: 18 February 2011
• Docket Number: Commercial Jurisdiction 2009 No. 163
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Commercial Jurisdiction 2009 No. 163

In the Matter of a Compulsory Acquisition Notice under section 103(1) of the Companies Act 1981 dated 8 May 2009 relating to shares in BW Gas Limited

And

in the Matter of an Application for appraisal under section 103(2) of the Companies Act 1981

BETWEEN:

GOLAR LNG LIMITED

Applicant

and

WORLD NORDIC SE

Respondent

Mr A Martin and Mr J Garrood for the Applicant

Mr C Luthi for the Respondent

The following cases were referred to in the judgment:

In re Holt, decdWLR [1953] 1 WLR 1488

McKay v McSparranDNI [1974] NI 137

Gorne v ScalesUNK [2006] EWCA Civ 311

Cyprus Anvil Mining Corp v Dickson (1982) 40 BCLR 180

Irvine v Irvine (No. 2)UNK [2007] 1 BCLC 445

Abstract:

Valuation of shares - Acquisition of shares of minority shareholders - Minority discount

JUDGMENT of GROUND, CJ

1. In these proceedings Golar LNG Ltd. ('Golar') seeks an appraisal under section 103 of the Companies Act 1981 ('the Act') of its shares in BW Gas Limited ('the Company'). Both are Bermuda exempted companies. The Company is, via the respondent, a subsidiary of BW Group Limited, which is also the holding company of various other BW denominated shipping and tanker entities. The Company itself is the holding company of the BW Gas group of companies, which is a leading global provider of gas marine transportation services and one of the largest owners and operators of carriers of liquefied petroleum gas ('LPG') and liquefied natural gas ('LNG').

2. The relevant provisions of section 103 of the Act are:

"Holders of 95% of shares may acquire remainder

103. (1) The holders of not less than ninety-five per cent of the shares or any class of shares in a company (hereinafter in this section referred to as the "purchasers") may give notice to the remaining shareholders or class of shareholders of the intention to acquire their shares on the terms set out in the notice. When such a notice is given the purchasers shall be entitled and bound to acquire the shares of the remaining shareholders on the terms set out in the notice unless a remaining shareholder applies to the Court for an appraisal under subsection (2):

Provided that the foregoing provisions of this subsection shall not apply unless the purchasers offer the same terms to all holders of the shares whose acquisition is involved.

(2) Any shareholder to whom a notice has been given under subsection (1) may within one month of receiving the notice apply to the Court to appraise the value of the shares to be purchased from him and the purchasers shall be entitled to acquire the shares at the price so fixed by the Court. "

3. Golar held 234,400 of the common shares in the Company, representing 0. 0575% of its issued share capital. On 8 May 2009 the Respondent, World Nordic SE ('World Nordic'), having acquired in excess of 95% of the shares, issued a notice of its intention to acquire the outstanding shares in the company pursuant to section 103 of the Act, ('the 'Notice'). The Notice set an offer price of NOK 21 (about US $3. 23) per share. World Nordic was, at the time of the Notice, the owner of 99. 37% of the shares in the Company. Under the terms of section 103 (2), minority shareholders had one month to bring an application to appraise the value of the shares to be purchased. Golar exercised its right to do so on 8 June 2009. Golar contends that the Notice significantly undervalues the shares, which it originally said the Court should appraise at a value of NOK 61. 5 (or approx. $9. 38 per share) that representing its valuer's initial assertion as to the fair value of the shares, although in his evidence his estimate tumbled to a range of NOK 33 - 37.

4. The issues narrowed somewhat immediately prior to the hearing. A potentially substantial argument concerning an accounting 'impairment' of the value of four LNG vessels was abandoned. Also Golar's original contention that the shares should be valued as at the date of the hearing was, rightly, abandoned, leaving an essentially academic issue as to whether it should be the date of the section 103 notice or the date of the election for a valuation or even the last day of the objection period (those latter being on the facts of this case the same date, 8th June 2009). In my view it should be the date of the section 103 notice, that being the date from which the acquirer becomes bound.

5. There were some preliminary issues, with which I can deal quite quickly at the outset. There was a question as to the proper approach to valuation. I think that the court should appraise the shares at their fair value. In ascertaining that the court is likely to have regard to the market value, when that is available, but it is also going to have regard to all the relevant information that is put before it. No prescriptive rule applicable to all cases is possible, and as courts are fond of saying, valuation is as much an art as a science.

6. There was a question as to where the burden of proof lay. I think that it is neutral - it is up to the court to assess the value and neither side bears a burden to establish the value for which it contends. On the other hand, to the extent that either side asserts a factual situation, it is up to it to prove it.

7. The remaining issues are:

(a) The weight to be given to the quoted share price.

(b) The Net Asset Value ('NAV') of the Company, in respect of which the issues were - (i) the incidence of tonnage tax, and whether legal developments after the valuation date could be taken into account; (ii) the value of the Company's LPG carrier fleet; (c) a commission on the acquisition of four LNG vessels from World Nordic.

(c) The extent, if any, to which a minority discount should be applied to the NAV.

8. The valuation evidence...