We studied contract law in 1983 and corporate law a year or two later and worked for Baker & McKenzie top 10 law sharks in 1990-1.
[Actually we failed our first contract law exam but passed the course, in part because we were in shock at the death of our inventor grandfather Joseph Ford. Being a bit of an emotional cripple at the time we didn't really know how to process the loss of that genuinely kind old guy and got 42 out of 100 in the first semester. Ouch. The only exam we have ever failed in our lives and proving yes perhaps lawyers are people too.]
We haven't done any fresh research but having listened carefully to Prof Ian Ramsey of Melbourned University Staff Profile on ABC 702 before 7 am this morning we can feel some preliminary legal advice coming on.
It all revolves around the law of offer and acceptance: So the private equity barbarians at Airline Partners Australia (APA) have a clause in their offer to buy that asserts a 100% purchase of a shareholding in any partial acceptance to sell a fraction of a shareholding.
But that's just a bald assertion, and indeed sleazy try on, unless it's actually agreed to by the share owner/seller. Who is to say such an offer to buy with such a clause is the one accepted? It actually might be the shareholder has rejected the conditioned offer of APA, and simply made a counter offer to sell to APA to only sell a fraction, which is then accepted by APA to buy the fractional shareholding and only the fraction of shares.
Offer with conditions, rejection and counter offer is just as plausible a scenario and as old as business itself.
It would all turn on the evidence and the reality of the intentions of the multitude of diverse shareholder parties by document, word and conduct etc.
That would be quite a messy litigation of the evidence across many stakeholder parties union, to govt to companies Qantas and APA to investors and likely public insterest folks like Australian Shareholder Association etc with wildly varying interpretations one imagines of individual contracting parties offer and acceptance.
To restate: Anyone can baldly assert conditions in an offer like APA seems to have done. But that's no contract. Anyone can reject such a conditioned offer. It depends what is actually accepted especially if they have in fact declined the conditional offer and made a counter offer to sell only a fraction of shares which is then accepted by APA.
Then consider such a messy litigation with some real legal evidentiary questions to resolve over offer and acceptance taking say 3 years in the NSW Supreme Court, with very willing combatants. Consider the wider political and business context of barely 50% of total shares purchased by APA as pointed out by Treasurer Costello (that there just was not much seller interest), and now very serious allegations of illegal foreign ownership holdings contrary to the sale of Qantas legislation.
No wonder we hear 9 am abc news just now that Aircraft Partners Australia, so called, have raised the legal white flag. Sure enough some smarty in Allens, Bakers or somewhere has reached roughly the same conclusion as here.
Tom McLoughlin, solicitor in NSW
Postscript #1 early 10 May 07: We have since had the benefit of some public commentary from Stephen Mayne founder of crikey.com.au on abc 702 radio with Virginnia Trioli, and secondly an article by crusty Bryan Frith a veteran in the back business pages of Murdoch press (The Australian) earlier this week. Both say the 'partial acceptance full purchase' conditional offer to buy from APA are pretty standard in takeovers.
BUT also especially via Frith, that hedge fund shareholders usually have a swathe of legal entities that they spread their shares, in this case Qantas shares, over. Thus the hedges choreograph which of their legal shells accept and which don't to circumvent an APA conditional full purchase conditional offer to buy. Then add the reality that Foreign Ownership of Qantas legislation has almost certainly been breached during the takeover process, it seems the legals and the politics of any court action by APA fell over before it even started - as much for embarrassment and risk of legal blow back as evidentiary legal problems (if any) over offer and acceptance in contract law as suggested above.