GMT
03/11/2014 15:20
WAV/RULE
REL: 1520 HRS Goodman Property Trust
WAV/RULE: GMT: GMT - Waivers from Rules 9.2.1, 4.2.2(f) and 4.2.2(g)
NZX Regulation Decision
Goodman Property Trust (GMT)
Application for waivers from NZX Main Board Listing Rules 9.2.1, 4.2.2(f) and
4.2.2(g)
31 October 2014
Application 1 - Waiver from Rule 9.2.1
Decision
1. On the condition set out in paragraph 2 below, NZX Regulation ("NZXR")
grants Goodman Property Trust ("GMT") a waiver from Rule 9.2.1 to allow GMT
to enter into the Proposed Transaction (including to enter into and complete
the Possible Future Transactions) without obtaining unit holder approval.
2. The waiver in paragraph 1 above is provided on the condition that the
Independent Directors of GNZ certify to NZXR, in a form acceptable to NZXR,
that:
a. they are not interested, in terms of Rule 3.4.3, in the Proposed
Transaction except as directors of GNZ or any subsidiary of GMT;
b. the directors of GNZ who are associated with Goodman Group did not vote on
any resolution to approve the Proposed Transaction;
c. GMT was not influenced in its decision to enter into the Proposed
Transaction by the interests of Goodman Group, the Trustees or VCCL;
d. the terms and conditions of the Proposed Transaction have been negotiated,
and entered into, on an arms' length and commercial basis;
e. the terms of the Proposed Transaction are fair and reasonable to GMT and
its unit holders; and
f. entry into the Proposed Transaction by GMT is in the best interests of GMT
and its unit holders who are not related to, or Associated Persons, of
Goodman Group, the Trustees or VCCL.
3. The information on which this decision is based is set out in Appendix One
to this decision. This waiver will not apply if that information is not or
ceases to be full and accurate in all material respects.
4.The Rules to which this decision relates are set out in Appendix Two to
this decision.
Reasons
5. In coming to the decision to provide the waiver set out in paragraph 1
above, NZXR has considered that:
a. The policy behind Rule 9.2.1 is to ensure that undue influence is not
exercised by a Related Party to reach a favourable outcome or transfer of
value from the Issuer to the Related Party in respect of a transaction, and
that unit holders are given an opportunity to review transactions where the
Board may have been subject to actual or perceived influence from a Related
Party. NZXR may waive the requirement to obtain approval of the Material
Transaction if it is satisfied that the involvement of any Related Parties is
unlikely to influence the promotion of, or the decision to enter into the
transaction. The granting of the waiver will not offend the policy behind
Rule 9.2.1.
b. The substance of the Proposed Transaction, from GMT's perspective, is the
sale of a 49% interest in the Air New Zealand and Fonterra buildings to Reco,
an unrelated party of GMT. The value of those buildings for the purposes of
the Proposed Transaction has been negotiated between GMT and Reco without any
input from Goodman Group, the Trustees or VCCL.
c. The involvement of Goodman Group in the Proposed Transaction is unlikely
to have influenced the promotion of the proposal to enter into the Proposed
Transaction or its terms and conditions. Goodman Group is only involved in
minor aspects of the wider transaction and the quantum of the fees to be paid
to Goodman Group in connection with the Proposed Transaction is well below
the Material Transaction threshold for services, being 1% of Average Market
Capitalisation, contained in Rule 9.2.2(e). The directors of GNZ associated
with Goodman Group did not vote on any resolution to approve the Proposed
Transaction. Further, NZXR is satisfied that there will be no transfer of
value from GMT to Goodman Group under the Proposed Transaction. VCCL will
enter into the Asset Management Agreement and New Services Agreement, the
terms of which have been negotiated and agreed between Reco and GPS (which
are arm's length parties). GMT will also receive a rebate of the fees equal
to 51% of the fees paid by VCCL under the Asset Management Agreement such
that GMT will not directly bear any proportion of those fees.
d. NZXR considers that it is unlikely that the Trustees could have influenced
GMT's decision to enter into the Proposed Transaction for the following
reasons:
i. the only connection between GMT and the Trustees is their involvement in
VCCL as joint venture partners. NZXR has recognised in previous waiver
decisions that connections between parties that arise due to joint venture
arrangements are often unlikely to be the type of relationship that Rule
9.2.1 aims to regulate; and
ii. the Trustees have no ownership interest in, or element of control over,
GMT.
e. NZXR is also satisfied that there will be no transfer of value from GMT to
the Trustees as a result of the Proposed Transaction. The Trustees' only
involvement in the Proposed Transaction is the sale of its interest in VCCL
to Reco and GMT. The price for that sale has been determined based on an
independent valuation and GMT will pay (per share in VCCL) the same
consideration as Reco, a party unrelated to both GMT and the Trustees.
f. VCCL is technically a Related Party of GMT under the operation of Rules
1.8.2 and 9.2.3(c). However NZXR does not consider that the connection
between VCCL and GMT is the type of relationship that Rule 9.2.1 is aimed at
regulating. GMT is a 50% shareholder in VCCL and there does not appear to be
any ability for VCCL to exert influence over GMT's decisions in relation to
VCCL.
g. The certifications provided by the Independent Directors of GNZ provide
unit holders with comfort that the Proposed Transaction has been negotiated
and entered into on an arms' length and commercial basis, is in the best
interests of GMT and its unit holders and that none of Goodman Group, the
Trustees nor VCCL influenced its decision to enter into the Proposed
Transaction.
Application 2 - Waiver from Rules 4.2.2(f) and 4.2.2(g)
Decision
6. On the condition set out in paragraph 7 below, NZXR grants GMT a waiver
from Rules 4.2.2(f) and 4.2.2(g) to allow GMT to enter into the New
Shareholder Agreement, as part of the Proposed Transaction.
7. The waiver in paragraph 6 above is provided on the following conditions:
a. the certificate described in paragraph 2 above is provided to NZXR; and
b. in approving the entry into of the New Shareholder Agreement, the
Directors of GNZ act in good faith in the best interests of GMT, and not with
the intention of restricting or preventing Transfers of Securities (as those
terms are defined under the Rules) of GMT.
8. The information on which this decision is based is set out in Appendix One
to this decision. This waiver will not apply if that information is not or
ceases to be full and accurate in all material respects.
9. The Rules to which this decision relates are set out in Appendix Two to
this decision.
Reasons
10. In coming to the decision to provide the waiver set out in paragraph 6
above, NZXR has considered that:
a. Rule 4.2.3 provides an exception from the prohibitions in Rules 4.2.2(f)
and 4.2.2(g) if the agreement is entered into with a person who is not a
Related Party, and if, in approving the entry into that agreement, the
Directors of the Issuer act in good faith in the best interest of the Issuer,
and not with the intention of restricting or preventing Transfers of
Securities of the Issuer. As discussed above in paragraph 5f, GMT is a 50%
shareholder in VCCL and there does not appear to be any ability for VCCL to
exert influence over GMT's decisions in relation to VCCL. In that respect,
the granting of this waiver will not offend the policy behind Rules 4.2.2(f)
and 4.2.2(g) and Rule 4.2.3.
b. The certifications to be provided by the Independent Directors of GNZ
provide unit holders with comfort that the entry into the Proposed
Transaction (and therefore the entry into the New Shareholder Agreement) is
in the best interest of GMT and its unit holders.
Appendix One
1. GMT is a Listed Issuer with units quoted on the NZX Main Board.
2. The manager of GMT is Goodman (NZ) Limited ("GNZ"), and the trustee is
Corporate Trust Limited. GNZ is a wholly-owned subsidiary of Goodman Group,
an international property group which is listed on ASX. Goodman Limited, the
parent company of the Goodman Group of companies ("Goodman Group"), also
holds approximately 17.6% of the units in GMT.
3. GMT, through its wholly-owned subsidiary Goodman Nominee (NZ) Limited
("Nominee"), holds 50% of the shares in Viaduct Corporate Centre Limited
("VCCL"), an incorporated joint venture which holds (through subsidiaries)
certain office premises located near Viaduct Harbour, Auckland. Nominee acts
as the agent of Goodman Property Aggregated Limited ("GPAL"), another
subsidiary of GMT.
4. 25% of the shares in VCCL are held by private individuals as trustees of
the Balfour Trust, and 25% are held by private individuals as trustees of the
Eamon Trust (together, the trustees of the Balfour Trust and the Eamon Trust
are the "Trustees"). The Trustees and Nominee are parties to a shareholder
agreement in respect of their relationship as shareholders in VCCL. GMT has
no other relationship or association with the Trustees. Goodman Property
Services (NZ) Limited ("GPS"), a wholly-owned subsidiary of Goodman Group,
and VCCL are parties to a services agreement, pursuant to which GPS provides
property management services to VCCL ("Existing Services Agreement").
5. Separately:
a. GMT, through Nominee, is the owner of the building ("Air NZ Building")
known as the "Air NZ Building" on Fanshawe Street, Auckland.
b. GMT, through Nominee, contracted in 2013 to acquire from Goodman Group a
building ("Fonterra Building") which is currently being constructed and which
will be used as Fonterra's head office, located at the corner of Fanshawe
Street and Halsey Street, Auckland.
6. A proposed transaction ("Proposed Transaction") is currently being
negotiated by GNZ concerning VCCL, the Air NZ Building and the Fonterra
Building. The Proposed Transaction provides for Reco Aotearoa Private Limited
("Reco"), an entity that is part of the GIC group of companies, to acquire a
49% shareholding in VCCL, and (through that shareholding) an interest in the
Air NZ Building and the Fonterra Building. The GIC group of companies is
wholly-owned by the Government of Singapore, consisting of a number of
investment entities/sub-groups (one of which is GIC (Realty) Private Limited)
and has interests in a wide range of investment funds worldwide.
7. The Proposed Transaction would be comprised of the following elements:
a. Nominee, GPS, GPAL, Reco, the Trustees, and two individuals (as
covenantors) related to the Trustees would enter into a sale and purchase
agreement for the sale of the Trustees' shares in VCCL. It would be subject
to a number of conditions. Reco, Goodman Limited, GPS, GNZ, Nominee and GPAL
would also enter into a framework deed, providing for the following
structuring steps to be taken, and for Goodman Group and GMT to grant VCCL a
right of first refusal over the acquisition and development of office
properties in the Auckland viaduct area.
b. On the conditions in that sale and purchase agreement being satisfied:
(i) Reco would acquire a 49% shareholding in VCCL from the Trustees, and
Nominee would acquire a 1% shareholding in VCCL from the Trustees. It is
estimated that Reco would pay approximately $48.4 million, and Nominee would
pay approximately $0.9 million, to the Trustees. Contemporaneously:
a. VCCL would borrow additional funds from its bank (if required), or where
such funding is required and not available to VCCL, Reco and Nominee would
advance the necessary funds to VCCL, and VCCL would close out its current
interest rate swaps with that bank. The additional borrowings or advances (as
applicable) are estimated at $1.5 million.
b. The Existing Services Agreement would be terminated, and a new services
agreement ("New Services Agreement") would be put in place between VCCL and
GPS.
c. VCCL would enter into an asset management agreement ("Asset Management
Agreement") with GPS. This agreement would provide for VCCL to pay an asset
management fee to GPS consisting of a base fee and a performance fee. Upon
payment of the asset management fees, GPS will directly reimburse GMT an
amount equal to 51% of the fees paid by VCCL under the Asset Management
Agreement.
d. The Existing Shareholders Agreement between the Trustees and Nominee would
terminate, and a new agreement ("New Shareholder Agreement") between Reco,
GPAL, VCCL and Nominee would be entered into.
(ii) VCCL would borrow additional funds from its bank, or where such funding
is not available to VCCL, Reco and Nominee would advance, between them, $64
million to VCCL. VCCL (through a subsidiary) would use these funds to acquire
the Air NZ Building from Nominee for a purchase price of $64 million.
(iii) VCCL (or a subsidiary) would enter into an agreement with Nominee to
acquire the Fonterra Building. VCCL would borrow additional funds from its
bank, or where such funding is not available to VCCL, Reco and Nominee would
advance, between them, $4.6 million (plus an amount equal to the interest
earned on that amount) to VCCL, which would use those funds to pay a deposit
equal to that amount to Nominee for the acquisition of the Fonterra Building.
(iv) Following completion of the construction, Nominee would settle the
acquisition of the Fonterra Building from Goodman Group, and VCCL (or a
subsidiary) would acquire the Fonterra Building from Nominee. The purchase
price for the acquisition of the Fonterra Building by VCCL (or a subsidiary)
will be $93.2 million, which may be adjusted to reflect the final size of the
Fonterra Building, and an amount calculated by reference to any fitout
installed by the tenant, up to a maximum purchase price of $106.2 million.
This acquisition would be funded by shareholder advances from Reco and
Nominee, new equity contributed by Reco and Nominee and additional borrowings
(if available) from its bank.
(v) The Trustees will reimburse GPS for the costs incurred by GPS in
facilitating the acquisition by Reco of the Trustees' shareholding (to a
maximum of $100,000).
(vi) Nominee will give warranties and indemnities concerning the Air NZ
Building and Fonterra Building to VCCL, and warranties and indemnities
concerning VCCL (including its properties and taxation) to Reco.
c. The New Shareholder Agreement will include provisions which may require
Nominee to effect certain transactions in the future as summarised below
("Possible Future Transactions"):
(i) Deadlock: If the board of VCCL fails to pass a proposed resolution
concerning a set of designated matters, then, in certain circumstances and
following a series of procedures designed to resolve the deadlock, Reco could
give notice to Nominee requiring Nominee to either acquire Reco's shares in
(and loans to) VCCL, or sell Nominee's shares in (and loans to) VCCL to Reco.
If Nominee does not make an election, it would be required to sell its
interests in VCCL to Reco. In each case, the price for the shares would be
set by Reco in its original notice (although it could not be less than net
asset value per share) and the price for the loans would be the amount
outstanding under the loans.
(ii) Drag along - VCCL: If Reco wishes to sell its shares in (and loans to)
VCCL, and Nominee does not acquire those interests under its pre-emptive
rights, or elect to "tag along" on the sale by Reco (and sell its own
interests to the same purchaser), Reco may require Nominee to sell a 1%
shareholding in VCCL (and 1% of the shareholder loans to VCCL) to the
purchaser of Reco's interests. In essence, this is to allow a purchaser from
Reco to acquire a 50% interest in VCCL. Shareholder loans would be
transferred at a price equal to the amount outstanding under the loans.
Shares would be transferred at fair value (either as agreed by Reco and
Nominee, or as determined by an independent valuer).
(iii) Drag along - subsidiary of VCCL: If Reco proposes that any building
owned by a subsidiary of VCCL be sold, or that VCCL sells all of VCCL's legal
and beneficial interest in a subsidiary (each a "Relevant Asset"), and either
(a) the parties do not agree on the terms of the disposal, or no third party
has agreed to acquire the Relevant Asset within the specified time period, or
(b) Nominee does not acquire the Relevant Asset from VCCL or the relevant
subsidiary (as applicable) under its pre-emptive rights, Reco may require
Nominee to:
i. subject to paragraph c(iii)ii. below, acquire a proportion of the Relevant
Asset from VCCL or the relevant subsidiary (as applicable) (with such
proportion being equal to the proportion of shares in VCCL held by Nominee),
with the remaining proportion of the Relevant Asset to be sold to a third
party purchaser; and
ii. procure the sale of 1% of Nominee's indirect interest in the Relevant
Asset to a third party purchaser of the Relevant Asset. In essence, this is
to allow a third party purchaser to acquire a 50% interest in the Relevant
Asset from VCCL or its the subsidiary (as applicable), with Nominee acquiring
the remaining 50% interest.
The purchase price for Reco's indirect interest (and Nominee's indirect
interest (if the drag along provision were to apply)) in the Relevant Asset
would be a single cash purchase price (ultimately applied on a pro-rata basis
between Reco and Nominee) that is not less than, and on terms and conditions
no more favourable than, those offered by Reco to Nominee under its
pre-emptive rights.
(iv) Default: If Nominee is in breach of the New Shareholder Agreement, or
certain insolvency or other events occur with respect to Nominee, Reco may
require Nominee to offer all of its shares in (and loans to) VCCL to Reco.
The purchase price would be 90% of fair value (as described above) for any
shares, and 90% of the amount outstanding for any loans.
(v) Change of control: If there is a change in control of Nominee, which
means that any of the following apply:
a. Nominee no longer being a subsidiary of GMT;
b. GNZ no longer being manager of GMT;
c. GNZ no longer being a wholly-owned subsidiary of Goodman Group;
d. any person (other than Goodman Group) having beneficial ownership of 25%
or more of the units in GMT; or
e. if Goodman Limited at the date of the New Shareholder Agreement is
controlled by a person and that person ceases to control Goodman Limited, or
Goodman Limited is not at the date of the New Shareholder Agreement
controlled by any person and Goodman Limited comes to be controlled by one
person,
Nominee is deemed to offer to sell its shares in VCCL (at fair value, as
described above) and loans to VCCL (at a price equal to the outstanding
amount to Reco).
(vi) Put option: In connection with VCCL, if Nominee or any of its employees
is attributed, as determined by a relevant court, tribunal or regulatory
authority or other applicable agency, with a violation, or failure, of any
applicable laws and regulations relating to bribery or corruption, and Reco
(acting reasonably) considers that violation or failure to be material, then
Reco may require Nominee to acquire all of Reco's shares in (and loans to)
VCCL. The loans would be transferred at a price equal to the amount
outstanding under the loans, and the shares would be transferred at fair
value (as described above).
Appendix Two
Rule 1.8.2 provides:
A person (the "first person") is associated with another person (the "second
person") if, in making a decision or exercising a power affecting an Issuer,
the first person could be influenced as a consequence of an Arrangement or
relationship existing between, or involving, the first person and the second
person.
Rule 1.8.3 provides:
Without limiting Rule 1.8.2, the first person is associated with the second
person if:
(a) the first person is a company, and the second person is:
(i) Director of that company; or
(ii) Related Company of that company; or
(iii) Director of a Related Company of that company; or
(b) the first person is a spouse, domestic companion, child or parent of the
second person, or a nominee or trustee for any of them or for the second
person; or
(c) the first person is a Director of a company, or holds a Relevant Interest
in Securities carrying more than 10% of the Votes of a company and the first
person and the second person are parties to an Arrangement relating to the
control of, or the control or ownership of Securities in, that company, which
Arrangement affects Securities of that company carrying more than 30% of the
total Votes attaching to Securities of that company; or
(d) the first person and the second person are acting jointly or in concert;
or
(e) the first person and/or the second person propose to do, or are likely to
do, anything which will cause them to become associated in terms of
paragraphs (a) to (d) above or Rule 1.8.2
Rule 4.2.1 provides:
Except as permitted or required by Rule 4.3 no Issuer may:
(a) include in its Constitution any provision; or
(b) do anything or omit to do anything;
which would have the effect of causing or permitting an outcome or condition
described in Rule 4.2.2.
Rule 4.2.2 provides:
An outcome or condition is prohibited for the purposes of Rule 4.2.1 if:
(a) registration of any transfer of a Quoted Equity Security is prevented or
restricted, or made subject to a precondition, other than as permitted by
Section 11; or
(b) the enjoyment by a new holder of any benefit or right conferred by the
Issuer on the holder of a Quoted Equity Security, is conditional on anything
other than registration of the relevant transfer; or
(c) any benefit or right conferred by the Issuer on the holder of a Quoted
Equity Security is cancelled or varied or made contingent by reason of a
Transfer of that Quoted Equity Security; or
(d) any Quoted Equity Security may be redeemed, cancelled, made forfeit,
disposed of or otherwise dealt with, by reason of a Transfer of that or any
other Quoted Equity Security without the consent of the holder, other than as
permitted by Rule 8.2 and Rule 8.5; or
(e) any benefit or right conferred by the Issuer on the holder of a Security
is enhanced, extended, or crystallises or attaches by reason of a Transfer of
a Quoted Equity Security; or
(f) any material benefit, right or asset of the Issuer terminates or is
disposed of or is made contingent or the subject of a third party option by
reason of a Transfer of a Quoted Equity Security of the Issuer; or
(g) any material liability or obligation of the Issuer crystallises or arises
or can be made due and payable before its normal maturity by a third party by
reason of a Transfer of a Quoted Equity Security of the Issuer.
Nothing in this Rule limits any rule of law, whether relating to the duties
of Directors or otherwise.
Rule 4.2.3 provides:
Notwithstanding Rule 4.2.1 an Issuer may enter into an agreement which may
have one or more of the effects specified in Rule 4.2.2(f) or Rule 4.2.2(g)
if that agreement is entered into with a person who is not a Related Party
(as defined in Rule 9.2.3) of the Issuer and if, in approving the entry into
of that agreement, the Directors of the Issuer act in good faith in the best
interests of the Issuer, and not with the intention of restricting or
preventing Transfers of Securities of the Issuer.
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
(b) in the case of a guarantee or other transaction of the nature referred to
in paragraph (d) of the definition of Material Transaction, a direct or
indirect beneficiary of such guarantee or other transaction,
unless that Material Transaction is approved by an Ordinary Resolution of the
Issuer.
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:
(a) purchases or otherwise acquires, gains, leases (as lessor or lessee) or
sells or otherwise disposes of, assets having an Aggregate Net Value in
excess of 10% of the Average Market Capitalisation of the Issuer; or
(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 of the Issuer are to be taken into account; or
(c) borrows, lends, pays, or receives, money, or incurs an obligation, of an
amount in excess of 10% of the Average Market Capitalisation of the Issuer;
or
(d) enters into any guarantee, indemnity, underwriting, or similar
obligation, or gives any security, for or of obligations which could expose
the Issuer to liability in excess of 10% of the Average Market Capitalisation
of the Issuer; or
(e) provides or obtains any services (including without limitation obtaining
underwriting of Securities or services as an Employee) in respect of which
the actual gross cost to the Issuer in any financial year (ignoring any
returns or benefits in connection with such services) is likely to exceed an
amount equal to 1% of the Average Market Capitalisation of the Issuer; or
(f) amalgamates, except for amalgamations of a wholly owned Subsidiary with
another wholly owned Subsidiary or with the Issuer:
(g) For the purposes of Rule 9.2.2(a), "Aggregate Net Value" means the net
value of those assets calculated as the greater of the net tangible asset
backing value (from the most recently published financial statements) or
market value.
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:
(a) a Director or executive officer of the Issuer or any of its Subsidiaries;
or
(b) the holder of a Relevant Interest in 10% or more of a Class of Equity
Securities of the Issuer carrying Votes; or
(c) an Associated Person of the Issuer or any of the persons referred to in
(a) or (b), other than a person who becomes an Associated Person as a
consequence of the Material Transaction itself (or an intention or proposal
to enter into the Material Transaction itself); or
(d) a person in respect of whom there are arrangements other than the
Material Transaction itself, intended to result in that person becoming a
person described in (a), (b), or (c), or of whom the attainment of such a
status may reasonably be expected, other than as a consequence of the
Material Transaction itself;
but a person is not a Related Party of an Issuer if:
(e) the only reason why that person would otherwise be a Related Party of the
Issuer is that a Director or executive officer of the Issuer is also a
Director of that person, so long as:
(i) not more than one third of the Directors of the Issuer are also Directors
of that person; and
(ii) no Director or executive officer of the Issuer has a material direct or
indirect economic interest in that person, other than by reason of receipt of
reasonable Directors' fees or executive remuneration; or
(f) that person is a Subsidiary of, incorporated joint venture of, or
unincorporated joint venture participant with, the Issuer and:
(i) no Related Party of the Issuer has or intends to obtain a material direct
or indirect economic interest in that Subsidiary, incorporated joint venture,
or unincorporated joint venture participant, other than by reason of receipt
of reasonable Director's fees or executive remuneration; and
(ii) the Issuer is entitled to participate, directly or indirectly, in at
least one half of the income or profits, and the assets, of that Subsidiary,
incorporated joint venture, or unincorporated joint venture participant.
End CA:00257156 For:GMT Type:WAV/RULE Time:2014-11-03 15:20:34
