Ann: WAV/RULE: ARG: ARG - Waiver from NZSX Listin

• Release Date: 01/07/13 17:41
• Summary: WAV/RULE: ARG: ARG - Waiver from NZSX Listing Rule 9.2.1
• Price Sensitive: No
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ARG
01/07/2013 15:41
WAV/RULE

REL: 1541 HRS Argosy Property Limited

WAV/RULE: ARG: ARG - Waiver from NZSX Listing Rule 9.2.1

NZX Regulation Decision
Argosy Property Limited ("ARG")
Application for Waiver from NZSX Listing Rule 9.2.1

Background
1. Argosy Property Limited ("ARG") is a Listed Issuer with ordinary shares
("Shares") quoted on the NZX Main Board.

2. ARG is considering undertaking a capital raising by way of a pro-rata
renounceable rights offer in accordance with NZSX Listing Rule ("Rule")
7.3.4(a) (the "Rights Offer"). The maximum amount ARG would seek to raise
will not exceed $86.9 million, representing approximately 12.3% of ARG's
current average market capitalisation of $703 million ("AMC").

3. The Rights Offer will be open to all ARG shareholders with a registered
address in New Zealand on the record date for the Rights Offer. ARG intends
to offer the new shares attributable to rights not taken up in the Rights
Offer in a shortfall bookbuild to be undertaken in accordance with Rules
7.3.4(d) and 7.3.4(h) ("Shortfall Bookbuild" and, together with the Rights
Offer, the "Offer"). First NZ Capital ("FNZ") will conduct the Shortfall
Bookbuild as lead manager of the Offer.

4. The Shortfall Bookbuild will be offered to persons who:

(a) If resident in New Zealand:

(i) Are persons whose principal business is investment of money or who, in
the course of and for the purposes of their business, habitually invest
money; or

(ii) Apply to participate in the Shortfall Bookbuild through an NZX Primary
Market Participant; or

(b) If resident outside New Zealand, are persons to whom an offer of New
Shares can be made under all applicable laws, without the need for any
registration, lodgement or facility.

(together, the "Eligible Bookbuild Investors").

5. It is intended that the Offer will be underwritten by FNZ with whom ARG
will enter an underwriting agreement ("Underwriting Agreement"). Pursuant to
the Underwriting Agreement FNZ will subscribe for any shares not subscribed
for under the Offer, at the application price under the Rights Offer. FNZ may
wish to enter into sub-underwriting arrangements.

6. MFL Mutual Fund Limited ("MFL") has a shareholding of 11.23% of the shares
in ARG and will be eligible to participate in the Rights Offer and Shortfall
Bookbuild. It is possible that FNZ may seek to enter sub-underwriting
arrangements with MFL.

7. MFL is a Related Party of ARG within the meaning of Rule 9.2.3(b) because
it is the holder of a Relevant Interest in more than 10% of ARG's issued
share capital (as at 14 June MFL held 11.23%).

8. The Offer will constitute a Material Transaction within the meaning of
Rule 9.2.2(b) because taken as a whole, the Offer (and any sub-underwriting
arrangements - being one of a related series of transactions of which the
Material Transaction forms part) involves ARG issuing securities having a
market value in excess of 10% of ARG's AMC.

9. Rule 9.2.1 prohibits an Issuer from entering into a Material Transaction
if a Related Party is, or is likely to become, a direct or indirect party to
the Material Transaction, or to at least one of a related series of
transactions of which the Material Transaction forms part, unless the
Material Transaction is approved by an ordinary resolution of the Issuer.

10. In the absence of a waiver, ARG will be required to obtain shareholder
approval for the Offer under Rule 9.2.1 to the extent that MFL:

(a) Participates in the Shortfall Bookbuild; and/or

(b) Acts as a sub-underwriter of the Offer.

Application

11. ARG has applied to NZX Regulation ("NZXR") for a waiver from the
requirement in Rule 9.2.1 to obtain shareholder approval to the Offer to the
extent that MFL participates in the Shortfall Bookbuild.

12. ARG has also applied to NZXR for a waiver from the requirement in Rule
9.2.1 to obtain shareholder approval to the Offer to the extent that MFL acts
as a sub-underwriter of the Offer.

13. In support of its application ARG submits as follows:

(a) The purpose of the prohibitions in Rule 9.2 are to ensure that undue
influence is not exercised by a majority shareholder or other related parties
to cause a transfer of value to the related person without scrutiny by and
approval of the minorities;

(b) As stated in footnote 1 to Rule 9.2.1, NZX may waive the requirement to
obtain the approval of a resolution for the purposes of Rule 9.2.1 if it is
satisfied that the personal connections with, or involvement or personal
interest of a Related Party are immaterial or plainly unlikely to have
influenced the promotion of the proposal to enter into the transaction or its
terms and conditions; and

(c) The NZX Policy Statement 'Policy on applications for waivers in
associated party transactions' (dated 31 March 1993, Restated September 2005)
("NZX Policy Statement") states that any waiver application from NZSX Listing
Rule 9.2 needs to provide adequate reasons why NZX should grant the waiver.
For example, NZX will usually require comfort, including disinterested
Director certification, that the Material Transaction was for fair value and
the decision to enter the Material Transaction was made independently without
undue influence by the Associated Persons.

14. ARG submits that the policy grounds behind Rule 9.2.1, as set out above
in paragraph 13(a) will not be offended by the granting of the waiver:

(a) In respect of MFL's participation in the Shortfall Bookbuild, because:

(i) Except for Mr Mark Cross who is also a Director of MFL ("Interested
Director"), the ARG Directors are not associated with MFL. If the waiver is
granted, the Board will continue to discuss and consider the Offer, but the
Interested Director will not participate in further discussions around, or
vote on, any Board decision in respect of the Shortfall Bookbuild.
Accordingly, MFL will not exercise any influence (let alone undue influence)
in respect of ARG's decision to proceed with the Shortfall Bookbuild or the
terms thereof;

(ii) MFL will be invited to participate in the Shortfall Bookbuild on the
same terms and conditions and for the same consideration per share as every
other Eligible Bookbuild Investor who participates in the Shortfall Bookbuild
and therefore will not be favoured; and

(iii) The Shortfall Bookbuild is not designed to transfer value to MFL. MFL
will not be paid any fee or made any payment by Argosy in connection with the
Shortfall Bookbuild. Any fee that MFL may receive for any role as
sub-underwriter of the Offer is discussed below, but in any event will be a
term of the sub-underwriting arrangement with FNZ, to which ARG is not a
party and has no involvement;

(b) In respect of MFL acting as sub-underwriter because:

(i) Argosy will not be a party to the sub-underwriting arrangements, and so
MFL will have no opportunity to exercise undue influence over ARG or gain
favourable consideration through those arrangements. The sub-underwriting
arrangements will be entered into between FNZ and any sub-underwriters and it
is FNZ (not ARG) that will determine the acceptability of the terms of, and
fees payable (if any), under those arrangements. Any fees payable to a
sub-underwriter will be payable by FNZ, not ARG;

(ii) The terms of the Underwriting Agreement will be negotiated on an arm's
length and commercial basis and the underwriting fee payable by ARG will be
set by reference to market rates. MFL will have no involvement in the
negotiation of the Underwriting Agreement;

(iii) MFL has no representation on the ARG Board (apart from the Interested
Director who will not participate in discussions around, or vote on, any
Board decision in relation to the Underwriting Agreement). As such, MFL will
not be in any position to influence the Argosy Board's decision to enter into
the Underwriting Agreement; and

(iv) The decision of the ARG Board to enter into the Underwriting Agreement
will not be influenced by the terms of any sub-underwriting arrangement with
MFL.

15. ARG submits that the criteria in Footnote 1 to Rule 9.2.1, as set out
above in paragraph 13(b) are satisfied and that there is unlikely to be any
influence brought to bear by MFL to secure an undue advantage:

(a) In respect of MFL's participation in the Shortfall Bookbuild because:

(i) The Shortfall Bookbuild will be undertaken on terms set by ARG, at a
price and at levels of subscription by Eligible Bookbuild Investors
determined by a book build process conducted by FNZ. In the event of
oversubscriptions, any decision as to allocation and scaling will be
determined by the ARG Board (excluding the Interested Director) in agreement
with FNZ;

(ii) Identical terms will be offered to all the Eligible Bookbuild Investors
(both Related Parties and non-Related Parties) who participate in the
Shortfall Bookbuild. There will be no opportunity for MFL to participate in
the Shortfall Bookbuild other than on an arm's length basis;

(iii) ARG has not discussed the Offer with MFL and accordingly has no view as
to whether or not MFL will wish to participate in the Shortfall Bookbuild.
The waiver is being sought in the event that MFL does choose to participate;
and

(iv) In addition, the Interested Director will abstain from Board decisions,
and will not participate in Board discussion, around the Shortfall Bookbuild;
and

(b) In respect of MFL acting as sub-underwriter because:

(i) The terms of the Underwriting Agreement between FNZ and ARG, in
particular the fees paid, will be negotiated and set on an arm's length
commercial basis. ARG will not be a party to any sub-underwriting
arrangements or be involved in, or will otherwise influence, the negotiations
between FNZ and any sub-underwriters;

(ii) All sub-underwriting arrangements will be entered into between FNZ and
the relevant sub-underwriters and it will be those parties who will determine
the terms of, and fees payable, under those arrangements. Fees payable to any
sub-underwriters will be payable by FNZ, and not ARG. Any sub-underwriting
arrangement that may be ultimately entered into between FNZ and MFL will be
on the same terms as the underwriting agreements between FNZ and other
sub-underwriters (if any) who are not Related Parties; and

(iii) Further, ARG has not discussed the Offer with MFL and therefore has no
view as to whether or not MFL will wish to sub-underwrite the Offer. The
waiver is being sought in the event that MFL does wish to sub-underwrite the
Offer.

16. ARG has also submitted that the conditions contained below in paragraph
21 and paragraph 22 establish appropriate and sufficient shareholder
protections that are consistent with the NZX Policy Statement as set out in
paragraph 13(c) above.

Rules

17. Rule 9.2.1 provides:
 "An Issuer shall not enter into a Material Transaction if a Related Party
is, or is likely to become:

(a) a direct or indirect party to the Material Transaction, or to at least
one of a related series of transactions of which the Material Transaction
forms part; or
...
 unless that Material Transaction is approved by an Ordinary Resolution of
the Issuer."

18. Footnote 1 to Rule 9.2.1 provides:

"NZX may waive the requirement to obtain the approval of a resolution for the
purposes of Rule 9.2.1 if it is satisfied that the personal connections with,
or involvement or personal interest of a Related Party are immaterial or
plainly unlikely to have influenced the promotion of the proposal to enter
into the transaction or its terms and conditions."

19. Rule 9.2.2 provides:

"For the purposes of Rule 9.2.1, "Material Transaction" means a transaction
or a related series of transactions whereby an Issuer:
 ...
(b) issues its own Securities or acquires its own Equity Securities having a
market value in excess of 10% of the Average Market Capitalisation of that
Issuer, save in the case of an issue pursuant to Rule 7.3.5 where only the
market value of those Securities being issued to the Related Party or to any
Employees (as defined in Rule 7.3.6) of the Issuer are to be taken into
account;
..."

20. Rule 9.2.3 provides:

"For the purposes of Rule 9.2.1, "Related Party" means a person who is at the
time of a Material Transaction, or was at any time within six months before a
Material Transaction:
 ...
(b) the holder of a Relevant Interest in 10% or more of a Class of Equity
Securities of the Issuer carrying Votes"

Decision

21. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants ARG a waiver from Rule 9.2.1 so that
ARG is not required to seek shareholder approval for the Offer to the extent
that MFL participates in the Shortfall Bookbuild subject to the following
conditions:

(a) The Directors of ARG, other than the Interested Director, certify to NZXR
that:

(i) they are not Interested (in terms of Rule 3.4.3) in the Shortfall
Bookbuild;

(ii) the entry into, and performance by ARG of obligations under, the
Shortfall Bookbuild is fair and reasonable to all ARG shareholders and is in
the best interests of ARG;

(iii) ARG will receive fair value under the Shortfall Bookbuild;

(iv) the decision to proceed with the Shortfall Bookbuild was approved by the
Directors other than the Interested Director; and

(v) the Interested Director abstained from, and did not participate in
discussion in respect of, Board decisions to proceed with, or relating to the
terms of, the Shortfall Bookbuild;

(b) The Interested Director must abstain from, and not participate in
discussion in respect of, Board decisions to proceed with, or relating to the
terms of, the Shortfall Bookbuild;

(c) The terms and conditions on which MFL participates in the Shortfall
Bookbuild are identical to those offered to the other Eligible Bookbuild
Investors participating in the Shortfall Bookbuild (save as to allocation in
the event of oversubscription, which will be determined by the Directors of
ARG (other than the Interested Director) in agreement with FNZ);

(d) The waiver, its conditions and its effects are disclosed in the half-year
and annual reports for the year in which the Shortfall Bookbuild takes place.

22. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants ARG a waiver from Rule 9.2.1 so that
ARG is not required to seek shareholder approval for the Offer to the extent
that MFL acts as sub-underwriter of the Offer subject to the following
conditions:

(a) The Directors of ARG, other than the Interested Director, certify to NZXR
that:

(i) they are not Interested (in terms of Rule 3.4.3) in the Underwriting
Agreement;

(ii) the entry into, and performance, by ARG of obligations under the
Underwriting Agreement is fair and reasonable to all ARG shareholders and is
in the best interests of ARG;

(iii) ARG will pay and receive (as the case may be) fair value under the
Underwriting Agreement;

(iv) the decision to proceed with the Underwriting Agreement was approved by
the Directors other than the Interested Director; and

(v) the Interested Director abstained from, and did not participate in
discussion in respect of, Board decisions to proceed with, or relating to the
terms of, the Underwriting Agreement;

(b) The Interested Director abstains from, and does not participate in
discussion in respect of Board decisions to proceed with, or relating to the
terms of, the Underwriting Agreement;

(c) FNZ as underwriter, certify to NZXR that that the terms of any
sub-underwriting agreement with MFL will be negotiated on an arm's length and
commercial basis between themselves and MFL, and there will be no material
differences between the terms of that sub-underwriting agreement and the
terms of sub-underwriting agreements with other sub-underwriters (if any) who
are not Related Parties;

(d) The waiver, its conditions and its effects are disclosed in the half-year
and annual reports for the year in which MFL acts as sub-underwriter of the
Offer.

Reasons

23. In coming to the decision to grant the waivers in respect of Rule 9.2.1,
NZXR has considered that:

(a) The purpose of the prohibition in Rule 9.2.1 is to ensure that undue
influence is not exercised by a Related Party to cause a transfer of value to
a Related Party or to cause entry into transactions on terms that are
unfairly favourable to that Related Party without scrutiny. The granting of
the waivers in paragraphs 21 and 22 will not offend the policy behind Rule
9.2.1;

(b) MFL and the Interested Director have not participated in the Shortfall
Bookbuild negotiations, price setting or formulation of the terms of the
Shortfall Bookbuild;

(c) In this instance it is unlikely that MFL could have influenced ARG's
decision to undertake the Offer and enter the Underwriting Agreement. NZXR
has no reason not to accept that:

(i) The terms and conditions on which Shares are to be offered to MFL under
the Shortfall Bookbuild are identical to those offered to other Eligible
Bookbuild Investors participating in the Shortfall Bookbuild (save as to
allocation in the event of oversubscription, which will be determined by the
Directors of ARG (other than the Interested Director) in agreement with FNZ)
and have been set at arms' length;

(ii) MFL's role as sub-underwriter will be pursuant to an arm's length
commercial sub-underwriting agreement with FNZ, to which ARG is not a party;
and

(iii) The ARG Board's decision to undertake the Shortfall Bookbuild and enter
the Underwriting Agreement has not been influenced by MFL as a related party;

(d) NZXR is satisfied that there is a clear commercial rationale for the
proposed Shortfall Bookbuild and Underwriting Agreement;

(e) The conditions set out in paragraph 21 above, provide comfort that MFL
has not influenced the formulation of the terms of the Shortfall Bookbuild,
other than the extent to which MFL may participate in the competitive bid
process to determine the subscription price of the new shares under the
Shortfall Bookbuild;

(f) The conditions set out in paragraph 22 above, provide comfort that MFL
has not influenced the terms of the Underwriting Agreement; and

(g) There is precedent for the decisions including waivers granted to:

(i) Ebos Group Limited - 29 May 2013
(ii) Argosy Limited - 14 December 2012
(iii) Pyne Gould Corporation Limited - 26 July 2011

Confidentiality

24. ARG has requested that its application and the decision be kept
confidential pending finalisation of the Offer and subsequent announcement to
the market.

25. In accordance with Footnote 1 to Rule 1.11.2, NZXR grants ARG's request.

ENDS.
End CA:00238069 For:ARG    Type:WAV/RULE   Time:2013-07-01 15:41:06