CRP
14/04/2015 08:30
GENERAL
PRICE SENSITIVE
REL: 0830 HRS Chatham Rock Phosphate Limited
GENERAL: CRP: Notice of Offer of Same Class Financial Products for Issue
Notice of Offer of Same Class Financial Products for Issue
Chatham Rock Phosphate Limited (Chatham Rock) intends to undertake a pro-rata
1 for 1 renounceable rights offer for new ordinary shares in Chatham Rock
(New Shares) to Chatham Rock's eligible shareholders (those on the share
register on the record date of 5pm, 10 April 2015) (the Offer).
Pursuant to clause 17(1)(a) of Schedule 1 of the Financial Markets Conduct
(Phase 1) Regulations 2014 (Regulations) and clause 19 of Schedule 1 of the
Financial Markets Conduct Act 2013 (FMCA), Chatham Rock advises that:
1. The Offer is being made in reliance upon the exclusion in clause 19 of
Schedule 1 of the FMCA and Chatham Rock is giving this notice (Cleansing
Notice) under clause 17(1)(a) of Schedule 1 of the Regulations.
2. As at the date of this Cleansing Notice, Chatham Rock is in compliance
with:
(a) the continuous disclosure obligations that apply to it in relation to
Chatham Rock listed securities; and
(b) its "financial reporting obligations" within the meaning set out in
clause 17(4)
of Schedule 1 of the Regulations.
3. As at the date of this Cleansing Notice, there is no information that is
"excluded information" within the meaning set out in clause 17(4) of Schedule
1 of the Regulations, other than:
(a) Chatham Rock is currently disputing approximately $605,000 of costs
levied against it by the Environmental Protection Authority (EPA) in relation
to its recently concluded marine consent application process. At the outset
of the application process, a budget for these costs was developed by the
EPA. This budget has been exceeded and Chatham Rock's view is that it did not
write a blank cheque to the EPA for costs. Chatham Rock is concerned there is
a lack of financial discipline when allocating EPA costs to an external
party's account. Included in the disputed costs are costs associated with the
two EPA staff reports that the EPA prepared. Chatham Rock's view is there was
no legislative basis for these reports being prepared and certainly not at
Chatham Rock's cost. Chatham Rock is currently undertaking a detailed review
of all costs levied by the EPA at a line by line level and requesting
supporting information to define the exact quantum at issue. This process is
currently stalled, as the EPA is treating requests for supporting information
to its costs as a request under the Official Information Act 1982, and is
indicating that it might seek to charge Chatham Rock further costs for
substantiating its own costs; and
(b) Chatham Rock was invoiced $475,000 (including GST) in December 2013 by
New Zealand Petroleum and Minerals (NZPAM) for its annual Mining Permit fee
for the seven months to 30 June 2014. This fee was paid in full. An
unintended consequence of the Mining Permit's governing statutes and
regulations is that the formula used to calculate this fee was determined on
a permit area basis without reference to the value of the actual resource. As
Chatham Rock's Mining Permit relates to a large off-shore area (rather than
in a concentrated on-shore area) it resulted in a significantly higher mining
fee being charged to Chatham Rock than would be reasonably expected. This was
remedied by a change to the relevant laws late last year and the annual fee
is now only 10% of that levied previously. The fact the legislation was
amended demonstrates the gross unfairness that Chatham Rock was charged such
a high fee in the first place. Chatham Rock is in discussions with NZPAM and
seeking a 90% refund of the fee paid in respect of the period to 30 June
2014. There is no guarantee that Chatham Rock will receive a partial refund
of this fee; however, Chatham Rock is considering all available options to
obtain a partial refund.
4. The potential effects that the Offer and the issue of New Shares will have
on the "control" (within the meaning of clause 48 of Schedule 1 of the FMCA)
of Chatham Rock and the consequences of those effects are as follows:
(a) As at the date of this Cleansing Notice, the substantial security holders
in Chatham Rock are Subsea Investments II LLC, Boskalis Offshore Subsea
Contracting B.V., Wouter van Woudenberg and Aorere Resources Limited.
(b) If all eligible shareholders take up their pro-rata entitlements to New
Shares under the Offer, their percentage shareholding in Chatham Rock will
remain the same and there will be no effect on the control of Chatham Rock
(provided that the entitlements of any ineligible shareholders are taken up
by parties not having the pre-Offer capacity to exercise "control").
(c) In some cases, shareholders with registered addresses outside of New
Zealand and Australia may not be eligible to participate in the Offer (and
their percentage shareholding will be diluted as a result of the issue of New
Shares), due to the legal requirements of the relevant jurisdiction being
unduly onerous for Chatham Rock to make the Offer in that jurisdiction (as
provided for in NZAX Listing Rule 7.4.3(h)). However, Chatham Rock does not
anticipate that the combined percentage interest of any ineligible
shareholders is likely to be sufficiently significant for its dilution to
have a material effect on the control of Chatham Rock if all eligible
shareholders take up their entitlements.
(d) If some eligible shareholders do not take up their full entitlement, such
shareholders' percentage shareholding will be reduced (relative to those who
did take up their full entitlement), and Chatham Rock will be entitled to
allocate that Shortfall to other parties who have taken up their full
entitlement under the oversubscription facility.
(e) In addition, if there is a Shortfall under the Offer (following any
applications for additional New Shares, as described above), Chatham Rock
will be entitled to place the Shortfall to any persons (subject to complying
with applicable legislative instruments and the NZX Listing Rules) within
three (3) months of the Offer closing.
(f) Accordingly, the Offer is not expected to have any material effect or
consequence on the control of Chatham Rock, if Eligible Shareholders largely
take up their Entitlements. Eligible Shareholders who do not take up their
Entitlements will, if all Shortfall is allotted, have their percentage
shareholding diluted by 50%.
A copy of the Offer Document accompanies this announcement.
On behalf of the Board,
Chris Castle
Chief Executive Officer
Email: [email protected]
End CA:00263042 For:CRP Type:GENERAL Time:2015-04-14 08:30:36
