Ann: WAV/RULE: PFI: PFI: Waiver from LR 7.1.5c, 7

• Release Date: 23/05/13 12:06
• Summary: WAV/RULE: PFI: PFI: Waiver from LR 7.1.5c, 7.1.10, 7.1.11, 7.1.12 & 7.1.13
• Price Sensitive: No
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PFI
23/05/2013 10:06
WAV/RULE

REL: 1006 HRS Property for Industry Limited

WAV/RULE: PFI: PFI: Waiver from LR 7.1.5c, 7.1.10, 7.1.11, 7.1.12 & 7.1.13

2 May 2013
NZX Regulation Decision
Property For Industry Limited
Application for Waiver from NZSX Listing Rules 7.1.5(c), 7.1.10, 7.1.11,
7.1.12 and 7.1.13

Background
1. Property For Industry Limited ("PFI") is an Issuer with ordinary shares
listed on the NZX Main Board. Direct Property Fund Limited ("DPF") is an
unlisted limited liability company and is externally managed by DPF
Management Limited ("DPFM"). PFI is externally managed by PFIM Limited, which
is a wholly owned subsidiary of DPFM.
2. PFI and DPF are currently planning to merge by way of a scheme of
arrangement under Part 15 of the Companies Act 1993 ("Merger"). PFI will be
the continuing entity following the Merger and will continue as a Listed
Issuer on the NZX Main Board.
3. In connection with the Merger:
(a) DPF and PFI will obtain approval of their respective shareholders; and
(b) PFI will prepare an offer document in respect of the shares to be issued
to the DPF shareholders by way of a simplified disclosure prospectus
("Offering Document") as required under the Securities Act 1978.
Application
4. PFI has approached NZX Regulation ("NZXR") seeking waivers in respect of
the requirements in NZSX Listing Rules ("Rules") 7.1.5(c), 7.1.10, 7.1.11,
7.1.12 and 7.1.13 to include certain information in the Offering Document.
5. In support of its application, PFI submits that:
(a) A waiver from Rules 7.1.5(c) and 7.1.10 is appropriate as:
(i) The nature of the offer of PFI shares to DPF shareholders will not
require a subscription application by DPF shareholders.  Instead, if all
necessary approvals are obtained, the Merger will become effective and PFI
will issue PFI shares to the DPF shareholders entered on the register of DPF
on the specified record date, in accordance with the share entitlement ratio
set out in the Offering Document. Therefore, PFI is unable to comply with
Rules 7.1.5(c) and 7.1.10;
(ii) Implementation of the offer will be by way of a shareholder vote and
Court order and not by the return of a subscription application. Accordingly,
there will not be a subscription application; and
(iii) The lack of a subscription application will not materially affect DPF
shareholders, as those shareholders will be entitled to vote on the merger
and PFI shares will only be issued to DPF shareholders if all necessary
approvals for the Merger are obtained.
(b) A waiver from Rule 7.1.11 is appropriate as:
(i) PFI will be unable to predict the market price of the PFI shares to be
issued at the time the Offering Document is registered. Accordingly, PFI will
be unable to determine the relevant Minimum Holding in Appendix 2 of the
Rules that will apply to shareholders of PFI;
(ii) The offer by PFI will be for DPF shareholders to exchange their existing
shares in DPF for shares in PFI. Setting a Minimum Holding may mean that some
DPF shareholders are unable to be issued PFI shares, which will prevent
completion of the Merger;
(iii) PFI will issue PFI shares to DPF shareholders in accordance with the
share entitlement ratio set out in the Offering Document. There will be no
ability for DPF shareholders, who are entitled to PFI shares which are below
a Minimum Holdings, to "top up" their shares by subscribing for further PFI
shares at the time the issue is made; and
(iv) Removing the requirement for a Minimum Holding does not materially
prejudice other shareholders.
(c) A waiver from Rule 7.1.12 is appropriate as:
(i) PFI will issue PFI shares to DPF shareholders in accordance with the
share entitlement ratio set out in the Offering Document. Therefore the
number of PFI shares to be issued by PFI will be a fixed amount and there
will be no over-subscriptions in respect of the offer; and
(ii) While PFI can state in the Offering Document that there will be no
over-subscriptions, PFI's preference is to obtain a waiver from this
requirement in its entirety in order to keep the offer Document succinct and
easily understandable, without the inclusion of unnecessary information which
may confuse shareholders.
(d) A waiver from Rule 7.1.13 is appropriate as:
(i) The 'consideration' to be provided by DPF shareholders will be the shares
those shareholders hold in DPF on the specified record date and accordingly,
no subscription moneys will be sought. Therefore, there will be no period in
which a refund of subscription moneys may be made nor will interest be
payable and PFI will be unable to specify the information which is required
by Rule 7.1.13 in the Offering Document; and
(ii) While PFI can state in the Offering Document that no subscription moneys
are payable and therefore there is no period in which a refund of
subscription moneys will be paid, PFI's preference is to obtain a waiver form
this requirement in its entirety for the reasons discussed above at 5(c)(ii).

Rules
6. The relevant part of Rule 7.1.5(c) provides:
  Every Offering Document shall contain:
 ...
  (c) in its subscription application a field for subscribers to insert their
CSN number (if any).

7. Rule 7.1.10 provides:

Every Offering Document, after stating that applications may be made to the
Issuer, shall state that they may be lodged with any Primary Market
Participant, the Organising Participant or any other channel approved by NZX
(in that order) in time to enable forwarding to the appropriate place prior
to the application closing date.

8. Rule 7.1.11 provides

In any issue of Securities (other than by a Rights issue or issue under Rule
7.3.11(e), the minimum subscription by any person shall not be less than a
Minimum Holding.

9. Rule 7.1.12 provides:

Every Offering Document shall state the method of dealing with
over-subscriptions, and the maximum amount of over-subscriptions which will
be accepted.

10. Rule 7.1.13 provides:

Each Offering Document shall specify:
(a)the period within which a refund of subscription moneys will be made to
applicants for Securities to whom allotments are not made; and
(b)whether or not interest will be paid on amounts refunded in terms of (a)
and, if so, the basis upon which interest will be calculated.

Decision
11. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants PFI waivers from:
(a) the requirement in Rule 7.1.5(c) that the Offering Document contain in
its subscription application a field for subscribers to insert their CSN
number;
(b) the requirement in Rule 7.1.10 that the Offering Document state that
application may be made to the Issuer, and/or state that the applications may
be lodged with any Primary Market Participant, the Organising Participant or
any other channel approved by NZX;
(c) the requirement in Rule 7.1.11 that in any issue of Securities the
minimum subscription by any person shall not be less than a Minimum Holding;
(d) the requirement in Rule 7.1.12 that the Offering Document state the
method of dealing with over-subscriptions and the maximum amount of
over-subscriptions which will be accepted; and
(e) the requirement in Rule 7.1.13 that the Offering Document specify the
period within which refunds of subscription money will be made, and whether
or not interest will be paid on amounts refunded to applicants for
Securities.
Reasons
12. In coming to the decision to grant PFI waivers from Rules 7.1.5(c),
7.1.10, 7.1.12 and 7.1.13 NZXR has considered the following matters:
(a) the offer is made only to the shareholders of DPF, who will become
holders of the PFI shares on the register on the specified record date.
Accordingly, the offer will not require that a subscription application be
received by PFI and, therefore, the requirement to include CSN details and
details of third parties to whom applications may be sent in the Offering
Document is unnecessary;
(b) as holders of DPF shares will be issued PFI shares in accordance with the
share entitlement ratio set out in the Offering Document, the concept of
oversubscriptions is not applicable to the offer and a statement regarding
these matters would be redundant in the context of this offer; and
(c) as no subscription money will be received in respect of the offer, Rule
7.1.13 is not relevant.
13. In coming to the decision to grant PFI a waiver from Rule 7.1.11, NZXR
has considered that:
(a) The policy underlying Rule 7.1.11 is to prevent the issue of small and
unmarketable parcels of securities which would be difficult for security
holders to deal with, and which would be expensive for Issuers to administer;

(b) The specific facts of this application warrant the granting of a waiver.
The issue of securities proposed is not a new issue to the public for
subscriptions, but a mechanism to effect the Merger of PFI and DPF. DPF
shareholders will have the chance to vote on whether the Merger should
proceed. In making this decision, DPF shareholders will be provided with all
information required to make a fully informed decision, including their
respective entitlements to securities, in the notices of meeting to be sent
prior to the meetings. Without a waiver from Rule 7.1.11, the Merger will not
be able to proceed;
(c) PFI shares are widely held, and relatively liquid, therefore, PFI
security holders with small parcels of securities may top up their holding or
exit the investment with relative ease;
(d) Following the completion of the Merger, PFI will have the opportunity to
invoke Rule 8.5.1 to reduce the Minimum Holdings of the Securities, and to
account to small PFI security holders for the proceeds.  NZXR understands,
however, that there is no present plans to invoke Rule 8.5.1; and
(e) PFI has indicated that it will disclose in the information memorandum to
be provided to both PFI and DPF shareholders that PFI can and may invoke Rule
8.5.1 in the future.
Confidentiality
14. PFI has requested confidentiality until the information memorandum, which
includes notices of meeting for PFI and DPF shareholders, a simplified
disclosure prospectus for the offer of PFI shares to DPF shareholders and
additional information on the merger and the merged group, are released to
the market.
15.  NZXR grants PFI's request, as it accords with Rules 1.11.2 and 1.11.4
and the footnotes to those Rules.

ENDS.
End CA:00236555 For:PFI    Type:WAV/RULE   Time:2013-05-23 10:06:21