NPX
17/10/2013 15:23
WAV/RULE
REL: 1523 HRS Nuplex Industries Limited
WAV/RULE: NPX: NPX - Application for Waivers from NZSX Listing Rules
Background
1. Nuplex Industries Limited ("NPX") is a Listed Issuer ("Issuer") with
ordinary shares quoted on the NZX Main Board.
2. NPX proposes to establish a performance rights plan ("Plan"), under which
eligible employees ("Participants") are offered performance share rights
("Performance Rights") for the financial years from 1 July 2013 to 31 June
2016. Performance Rights will be offered to Participants annually, with the
first offer to be made if shareholder approval for the Plan is given at NPX's
2013 annual meeting and subsequent offers expected to be made in August 2014
and August 2015, up to an aggregated maximum of 5,943,774 Performance Rights.
If the maximum number of Performance Rights were issued and all Performance
Rights were to vest, 5,943,774 shares would be issued under the Plan.
3. Performance Rights will be issued with effect from 1 July each year, with
the number of Performance Rights to be issued to each Participant being
determined based on the volume weighted average price of NPX shares on the
NZX Main Board over the 10 trading days prior to and including the 30 June
preceding the date of offer of the Performance Rights.
4. At the end of specified measurement periods, where certain performance
conditions ("Performance Measures") have been satisfied, NPX's board of
directors ("Board") will determine the extent to which Performance Rights
vest.
5. Where the value of the Performance Rights that will vest ("Vested Rights
Value") exceeds $1,000, the Participant will be entitled to receive
restricted shares in NPX ("Shares"), either by way of a new issue by NPX, or
as a result of a purchase on market.
6. In the case of the issue of new Shares, or a purchase on market, NPX will
provide financial assistance to the Participant in respect of the issue price
or the market value paid for the Shares on market (as applicable), and any
costs associated with operating the plan.
7. NZSX Listing Rule ("Rule") 7.3.2(a) requires that an issue made solely to
Employees (as defined in Rule 7.3.6), pursuant to Rule 7.3.1(a), be completed
within 36 months after the passing of the relevant resolution.
8. Rule 7.6.5 allows an Issuer to give financial assistance under Rule
7.6.3(b) if the terms and conditions of that financial assistance has been
approved by each Class of Quoted Equity Securities of the Issuer whose rights
or entitlements are materially affected by the giving of financial
assistance.
9. Rule 7.6.6(a) requires that a proposal authorised by resolution pursuant
to Rule 7.6.5 and transacted solely with Employees (as defined in Rule 7.3.6)
is to be completed within 36 months of the passing of the resolution.
10. NPX intends to obtain shareholder approval of the terms of the Plan at
its upcoming annual meeting.
Application 1
11. NPX has approached NZX Regulation ("NZXR") seeking a waiver from the
requirements in Rules 7.3.2(a) and 7.6.6(a) so as to allow it to issue Shares
on the vesting of the Performance Rights, and to provide Participants
financial assistance to acquire those Shares, more than 36 months after
obtaining shareholder approval.
12. In support of its application, NPX submits that:
a. Shareholders will have approved the provision of financial assistance with
full knowledge of the waivers sought. Shareholders will also receive a full
explanation of the terms and conditions and the maximum number of Performance
Rights that could be provided to Participants pursuant to the Plan;
b. At the time of the provision of financial assistance to the Participants,
Shareholders will also receive a disclosure document pursuant to the
Companies Act 1993 ("Act"), which will set out the full details of the
financial assistance;
c. The policy rationale behind Rule 7.6.6(a) is to protect shareholders in
the event of a significant change in circumstances from the time approval is
given to the time the actual assistance is given. If circumstances do
significantly alter then it is unlikely that the performance measures will be
met; and
d. Ongoing protection is also afforded to shareholders by the provisions of
the Act as, immediately prior to the issue of Shares or the provision of
financial assistance to the Participants, the directors of NPX must have
regard to the requirements of the Act. Relevant provisions require the
directors to determine that the issue of Shares or the provision of financial
assistance, is fair and reasonable to NPX and that, after the provision of
financial assistance, the solvency test will be met by NPX.
Rules 7.3.2(a) and 7.6.6(a)
13. Rule 7.3.2(a) provides:
"An issue authorised by resolutions passed pursuant to Rule 7.3.1(a) shall be
completed:
(a) if that issue is made solely to Employees (as defined in Rule 7.3.6)
within 36 months after the passing of those resolutions..."
14. Rule 7.6.6(a) provides:
"A Proposal authorised by resolutions passed pursuant to Rule 7.6.5 shall be
completed:
(a) if that Proposal is transacted solely with Employees (as defined in Rule
7.3.6) within 36 months after the passing of those resolutions..."
Decision
15. Subject to the conditions in paragraph 16 below and on the basis that the
information provided to NZXR is full and accurate in all material respects,
NZXR grants NPX a waiver from Rules 7.3.2(a) and 7.6.6(a) so that NPX may
issue Shares and provide Participants with financial assistance pursuant to
the terms of the Plan, beyond 36 months of obtaining shareholder approval.
16. The waiver contained in paragraph 15 is granted on the following
conditions:
a. NPX obtains shareholder approval under 7.6.5 for the provision of
financial assistance to Participants in the Performance Rights Plan;
b. NPX obtains shareholder approval under Rule 7.3.1(a) for the issue of
Performance Rights and Shares in accordance with the terms of the Performance
Rights Plan.
c. NPX discloses in its annual report:
(i) the terms and effect of the waiver;
(ii) details of the number of Restricted Shares which have vested in
Participants during the reporting period; and
(iii) the amount of financial assistance provided to Participants for the
purpose of acquiring Restricted Shares during the reporting period.
Reasons
17. In granting a waiver from Rules 7.3.2(a) and 7.6.6(a), NZXR has
considered the following:
a. Rule 7.3.2(b) prevents Issuers from obtaining approval to issue Equity
Securities too far in advance of the issue of those Securities. The Policy
considerations behind this restriction include:
(i) ensuring that the holders of quoted equity securities who are affected by
the issue of new equity securities are the same security holders who
authorised the issue; and
(ii) seeking to ensure that the issue of equity securities occurs within such
a timeframe so as to, as far as is possible, increase the likelihood that the
circumstances of the Issuer have not materially changed from those which
existed at the time approval was considered and obtained.
b. The terms of the Plan will be outlined to shareholders when obtaining the
relevant approval, including the Performance Measures, which must be met
before the Performance Rights vest and Shares are issued.
c. The Performance Measures provide an objective measure so that, in the
event that NPX's circumstances were to materially change between the date of
approval and the possible date of issue, this may be reflected in the ability
to achieve those Performance Measures and consequently whether any Shares are
issued or not.
d. Although not a Security, the Performance Rights offered are analogous to a
Convertible Security in that they will convert to ordinary shares at some
stage in the future, provided the performance hurdles are met pursuant to the
terms of the Plan. Were they to be Convertible Securities for the purposes of
the Rules, Rule 7.3.2(a) would not apply as the Restricted Shares could be
issued pursuant to Rule 7.3.11. NPX should not be prejudiced as a result of
this structural distinction.
e. NPX's existing shareholders will be asked to approve the terms of the Plan
with full knowledge of the waivers sought. Accordingly, they will be aware
that the Restricted Shares may be issued, and financial assistance may be
provided, outside of the 36month period prescribed in the Rules.
f. Details of any Shares issued under the Plan and the financial assistance
provided for the purposes of the Plan will be published in each Annual Report
of NPX relating to the period in which the Shares were issued. Accordingly,
existing shareholders and any prospective investors will be aware of how the
Plan operates, the number of Shares that have already been issued under the
Plan and the amount of financial assistance which has been provided for the
purposes of the Plan.
g. The Act requires the directors of NPX, immediately prior to the issue of
Shares or the provision of financial assistance to the Participants, to
determine that the issue of Shares or the provision of financial assistance
is fair and reasonable to NPX and that, after the provision of financial
assistance, the solvency test will be met by NPX.
Application 2
18. Rule 6.2.1(h) requires any notice that includes a resolution under Rule
7.6.5 authorising the giving of financial assistance to be put to a meeting
of an Issuer to include information as to the amount of that assistance.
19. NPX has approached NZXR seeking a waiver from Rule 6.2.1(h), to the
extent that the Rule requires the amount of financial assistance to be
included in the notice of meeting provided to shareholders.
20. In support of its application, NPX submits that:
a. Until certain variables are known, such as the extent of the vesting of
Performance Rights and the price at which Shares may be purchased, the amount
of financial assistance that may be given by NPX to Participants to purchase
the Shares is unknown; and
b. The total number of Performance Rights which might be issued under the
Plan and which might vest, is capped at 5,943,774.
Rule 6.2.1(h)
21. Rule 6.2.1(h) provides:
"The text of any resolution to be put to a meeting of an Issuer for the
purposes of Rules 7.3.1, 7.3.5(a)(iii), 7.3.6, 7.5 or 7.6.5 shall be set out
in the notice of the relevant meeting. That notice shall be approved by NZX
in accordance with Rule 6.1, and shall contain the precise terms and
conditions of the specific proposal to issue, ratify the issue of, acquire,
or redeem the Securities in question, or to provide financial assistance. The
resolution shall not authorise any issue, acquisition, redemption or
assistance which varies in any material respect from the description in the
notice. As a minimum, the notice or the papers accompanying it shall state or
contain so much of the following information as is applicable:
...
(h) in the case of a resolution under Rule 7.6.5 authorising the giving of
financial assistance, the amount and full terms of that assistance, and the
party or parties to whom that assistance is to be given, identifying by name
any such parties who are Directors or Associated Persons of the Issuer or any
Director."
Decision
22. Subject to the conditions contained in paragraph 23 below and on the
basis that the information provided to NZXR is full and accurate in all
material respects, NZXR grants a waiver from Rule 6.2.1(h) so that NPX is not
required to include the amount of financial assistance that may be given by
NPX to Participants pursuant to the terms of the Plan.
23. The waiver contained in paragraph 22 is granted on the following
conditions:
a. NPX obtains shareholder approval under 7.6.5 for the provision of
financial assistance to Participants in the Performance Rights Plan;
b. NPX discloses in its annual report:
(i) the terms and effect of the waiver; and
(ii) the amount of financial assistance provided to Participants for the
purpose of acquiring Restricted Shares during the reporting period.
Reasons
24. In coming to this decision, NZXR has considered the following:
a. The terms of the Plan, including the basis on which financial assistance
will be provided to Participants, will be disclosed in the notice of meeting
under which shareholder approval is sought. While the quantum of this
financial assistance will not be provided, shareholders will have an
opportunity to consider the terms on which this will be provided and the
method by which the quantum will be calculated;
b. The Vesting Share Price cannot be determined until the end of the
relevant measurement period as certain variables, such as the extent to which
Performance Rights have vested and the VWAP for NPX's ordinary shares over
the ten days prior to the end of the relevant measurement period, are only
determined at the end of the measurement period. Accordingly there is no
means by which NPX can provide this information; and
c. The Act requires the directors of NPX, immediately prior to providing
financial assistance, to determine that the provision of financial assistance
is fair and reasonable to NPX and that after the provision of financial
assistance the solvency test will be met by NPX. Shareholders will also
receive a disclosure document that sets out the full details of the financial
assistance provided.
Confidentiality
25. NPX has requested that NZX keep this waiver confidential until NPX has
released the Notice of Meeting containing the terms of the Plan to the
market.
26. In accordance with Footnote 1 to Rule 1.11.2, NZXR grants NPX's
application.
ENDS.
End CA:00242514 For:NPX Type:WAV/RULE Time:2013-10-17 15:23:09
