Royston Pty Limited, an Australian Corporation Case Study - Law Assignment Help

Assignment Task:

Task:

Question 1
You are acting for Royston Pty Limited, an Australian corporation. It is owned as follows:
• 35% by the public;
• 10% by two key managers - one is the founder of the business, the other joined as finance director last month at the request of MaxCo;
• 5% each by two private investors – one (based in Australia) has been a shareholder since foundation and the other (US based) acquired her shares last year; and
• the remainder by MaxCo from Singapore, which took new shares in the company last year.
The Board of Directors is made up of the Chief Executive Officer (who has been with the business for over 10 years) and the finance director, plus 3 independent non-executive directors.

Royston has been negotiating with Hatfield LLC, a New York based investor, for additional finance of US$10million to expand its business and to help it move towards profitability by a target date of end- 2023, and has sent you a draft term sheet (see Attachment 1) which it has just received from Hatfield LLC, on which it would like your advice as follows:

1 please advise Royston on matters it needs to be aware of or which it should seek to negotiate and matters which appear inconsistent or unclear. Your client has specifically asked you to state your points in the order of the most important issues first, to make it clear in your advice why you believe these points are important and, where possible, to suggest realistic alternative proposals that can be put to Hatfield LLC.
(25 marks)
2 list, and briefly describe the purposes of, the main documents that will need to be drafted in order to complete this transaction.
(5 marks)
3 who might be expected to provide the warranties regarding Royston Pty Ltd referred to in the Term Sheet under ‘Other Terms’, what objections might be expected from the various parties and what suggestions can you make to reach an agreed position?

Question 2
You have received an email from your client, Bill Posh, the chief executive of an industrial and finance conglomerate, PT Investors Corp, for which you are acting on a sale of its manufacturing business to a company listed on the London Stock Exchange. He mentions that, using the proceeds of the sale, he is negotiating an investment and potential joint venture deal, on which he needs your advice.

He has sent you a draft Memorandum of Understanding (see Attachment 2), which has just been sent to him. He has a meeting with ‘all sides’ and their advisors next month to talk about key issues. He stresses that he wants to keep the meeting focused and as short as possible.

He is concerned that there is the potential for the two main property companies (SB and CD) to fall out at some stage in the future, and so wants to take the lead in putting the arrangements together such that they will be likely to be satisfactory to all parties, but most of all to PT.

He has asked for your advice on the following specific questions, including (where applicable) thoughts about the arguments he needs to support his position, any counter-positions the other parties may put to him, and how he should be prepared to argue against those positions.
1 do you have any concerns about or comments on the financing arrangements?
(10 marks)
2 what Board representation and management protections do you advise PT to seek?
(10 marks)
3 what provisions are needed in the Joint Venture Agreement to deal with transfers of investments and exits, and what deadlock breaking provisions are needed to ensure the business is not damaged?
(10 marks)
4 are there any other issues which will need to be addressed or altered in the Memorandum of Understanding?
(5 marks)

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