Ann: MEETING: GFL: Special Meeting

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GFL
23/10/2012 17:04
MEETING

REL: 1704 HRS GFNZ Group Limited

MEETING: GFL: Special Meeting

GFNZ GROUP LIMITED
Notice of Special Meeting

Notice is given that a special meeting of shareholders of GFNZ Group Limited
(Geneva) will be held at Amway of New Zealand, 6a Pacific Rise, Mt
Wellington, Auckland on Tuesday 6 November 2012 commencing at 2pm.

SPECIAL BUSINESS

1 Approval of Rights Issue
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution of Geneva:
"In accordance with Listing Rules 7.3.1 and 7.5, to approve the issue of up
to 56,174,657 new ordinary shares at 2.75 cents per share, and the grant of
up to 37,449,771 options to acquire further new ordinary shares in the
future, each pursuant to a non-renounceable rights issue and on the terms as
more particularly described in the explanatory notes to, and Simplified
Disclosure Prospectus accompanying, this notice of meeting (the Rights
Issue)."
2 Approval of underwriting agreement with Federal Pacific Group Limited
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution of Geneva:
"In accordance with Listing Rules 7.5 and 9.2.1 and Rule 7(d) of the
Takeovers Code, to ratify, confirm and approve entry into, and performance
of, the underwriting agreement dated 20 July 2012 as amended between Federal
Pacific Group Limited (FedPac) and Geneva in relation to the Rights Issue as
described in the Simplified Disclosure Prospectus accompanying this notice of
meeting and to approve the issue of shares to FedPac under the underwriting
agreement and on exercise of the options issued to FedPac pursuant to the
Rights Issue and the underwriting agreement."
3 Approval of director's investment in Professional Investor Scheme
To consider and, if thought fit, to pass the following resolution as an
ordinary resolution of Geneva:
"In accordance with Listing Rule 9.2.1, to approve the non-executive
directors of Geneva and any Associated Person (as defined in the Listing
Rules) of a non-executive director (but excluding David O'Connell and any of
his Associated Persons) investing in the Professional Investor Scheme on
terms as more particularly described under "Proposed terms of investment" in
the explanatory notes to this notice of meeting."

EXPLANATORY NOTES
Majority required
The resolutions required for agenda items 1, 2 and 3 are ordinary
resolutions.  Ordinary resolutions will be passed if greater than 50% of the
votes that are cast by shareholders entitled to vote on the resolution and
voting, vote in favour of the resolution.
Quorum
The shareholder's meeting will proceed if at least 5 shareholders having the
right to vote at the meeting are present in person or by proxy.
Exercise of votes
On a show of hands, each shareholder has one vote.  On a poll, each
shareholder has one vote for each share held.
Voting of jointly held shares
If your shares are jointly held, only the vote of the shareholder whose name
appears first in the register of shareholders will be counted to the
exclusion of the other joint holder.
Voting by corporations
In order to vote at the meeting (other than by proxy), a corporation that is
a holder of shares must appoint a person to act as its representative.
Proxies and Representatives
You may exercise your right to vote at the meeting either by being present in
person or by appointing a proxy to attend and vote in your place. A proxy
need not be a shareholder of Geneva.  You may appoint the chairperson of the
meeting to be your proxy.  If you do not indicate how the chairperson will
vote, the chairperson will vote in favour of the resolutions.  A body
corporate shareholder may appoint a representative to attend the meeting on
its behalf.
A proxy form is enclosed with this notice of meeting.  If you wish to vote by
proxy you must complete the form and send it to Link Market Services Limited,
so as to ensure that it is received by 5 pm, on Sunday. 4 November 2012.
Details of where to send the completed proxy form are set out in the voting
instructions attached to this notice of meeting.
Voting Restrictions
Under NZAX Listing Rule 9.3, Federal Pacific Group Nominees Limited and any
shareholder of Geneva associated with it, is not permitted to vote their
existing shares in Geneva on resolutions 1 and 2.  Additionally rule 17 of
the Takeovers Code also prohibits Federal Pacific Group Nominees Limited and
any shareholder of Geneva associated with it, from voting their existing
shares in Geneva on resolution 2.
Under NZAX Listing Rule 9.3, each of Geneva's non-executive directors, and
any shareholder of Geneva associated with them, is not permitted to vote
their existing shares in Geneva on resolution 3.
Disqualified persons may not act as a discretionary proxy but may vote in
accordance with express instructions of a shareholder who is not disqualified
from voting.
Voting and Subscription by other Associated Parties.
The directors have advised Geneva that they and their associated parties
intend to vote in favour of Resolutions 1 and 2 and may subscribe for their
respective entitlements under the Rights Issue.

Listing Rules, Companies Act and Takeovers Code
Geneva is listed on the NZAX market operated by NZX Limited, and must comply
with the NZAX Listing Rules and the Takeovers Code.  In addition, various
provisions of the NZAX Listing Rules are incorporated in Geneva's
Constitution.  The Companies Act, the Takeovers Code, Geneva's Constitution
and the NZAX Listing Rules contain specific requirements which are relevant
to the proposed resolutions set out in this notice of meeting. These
requirements are addressed in these Explanatory Notes.
What happens if either Resolution 1 or 2 is not passed?
If Resolution 1 is not passed, there will not be a Rights Issue and
Resolution 2 will not be put to the vote.  If Resolution 1 is passed but
Resolution 2 is not passed, the Rights Issue will proceed but will not be
underwritten.

Resolution 1 - Approval of the Rights Issue

Reason for the Rights Issue
In February 2012, Geneva issued 44,939,000 shares to Federal Pacific Group
Limited (FedPac).  At the time the directors announced that Geneva would make
a rights issue to shareholders which would enable all shareholders to acquire
additional shares in Geneva at the same price as the shares were issued to
FedPac.

Subsequently FedPac offered to underwrite the rights issue and Geneva
accepted that offer.  This assured Geneva that it would receive $1,544,800
from the Rights Issue which will assist with funding Geneva's business and
repayment of its Moratorium debenture stock as outlined in the Simplified
Disclosure Prospectus enclosed with this notice of meeting.

Main Terms of the Rights Issue
The main terms of the Rights Issue are as follows:
o Geneva will issue up to 56,174,657 shares at 2.75 cents per share (payable
in full in cash on application);
o the Rights Issue is scheduled to open on 23 October 2012 and to remain open
until 12 November 2012;
o the Rights Issue is subject to the approval of the shareholders by ordinary
resolution (this Resolution 1);
o the shareholders are offered 1 new share for every 4 shares held at 19
October 2012 (the Record Date) (with fractions rounded down);
o Geneva will issue up to 37,449,771 options (Options) to subscribers of the
new shares (no payment is made for the Options);
o for every three new shares subscribed for, Geneva will issue two Options
(with fractions rounded down);
o each Option will entitle the holder to subscribe for one new share in
approximately 3 years at 8 cents per share;
o the new shares issued under the Rights Issue and on exercise of the Options
will rank equally in all respects, including as to dividends and voting, with
the existing shares;
o Rights are non-renounceable, which means that shareholders may not sell or
transfer any of their Rights;
o shareholders can apply for more than their entitlement.  In the event that
more shares are subscribed for than are available under the Rights Issue, the
directors will scale applications, first, after allocating entitlements, and
thereafter in a manner the directors determine is equitable.
For example, if a shareholder currently holds 1000 shares, the shareholder
will be entitled to subscribe for 250 new shares under the Rights Issue for a
total price of $6.87.  If the shareholder does subscribe for those shares,
the shareholder will receive 166 Options entitling the shareholder to
subscribe for 166 new shares in approximately 3 years' time for a total price
of $13.28.  Thus if the shareholder subscribes for its full entitlement of
250 shares and exercises all its Options, the shareholder will receive an
additional 416 shares for the payment of an aggregate price of $20.15.
There has only been one sale of the Shares sold on the NZAX during the 6
weeks ending on 5 October 2012.  This sale was on 18 September 2012 and the
sale price was 2.5 cents per Share.  The Option exercise price of 8 cents per
share is 5.5 cents more than that sale price.
Accompanying this notice of meeting is a Simplified Disclosure Prospectus
detailing the terms of the Rights Issue and a Rights Entitlement and
Acceptance Form setting out the number of Rights to which each shareholder is
entitled, determined in accordance with the number of shares held on the
Record Date.
Requirements for Resolution 1
Resolution 1 is required by NZAX Listing Rule 7.3.1 which provides that
Geneva cannot issue shares unless the precise terms and conditions of the
issue are approved by an ordinary resolution of shareholders or the issue is
specifically permitted by another Listing Rule.  No other Listing Rule
permits a pro rata rights issue to all shareholders where the issue is
non-renounceable.
Additionally Resolution 1 is required by NZAX Listing Rule 7.5 for the
reasons stated below under "Requirements for Resolution 2".
Resolution 2 - Approval of underwriting agreement with Federal Pacific Group
Limited

The underwriter for the Rights Issue is Federal Pacific Group Limited
(FedPac), a shareholder in Geneva which currently holds 19.99% of the shares
in Geneva.  It is likely that the percentage of shares held by FedPac will
increase as a result of its underwriting of the Rights Issue.
Shareholder approval by ordinary resolution is sought in accordance with the
Takeovers Code and the Listing Rules of NZX Limited for Geneva to enter into
the underwriting agreement with FedPac, and for the allotment of shares to
FedPac under the Rights Issue and the potential allotment of shares to FedPac
under underwriting agreement, which may result in FedPac holding or
controlling in excess of 20% of the voting rights of Geneva.
Principal terms of the underwriting agreement
FedPac has agreed to underwrite the Rights Issue on the following basis:
o FedPac will accept its full rights entitlement of 11,234,750 new shares on
the basis of FedPac's current holding of 44,939,000 shares;
o FedPac will subscribe for, at the issue price of 2.75 cents per share and
in cleared funds on the first business day after the Closing Date and receipt
of written notification of the shortfall or 30 November 2012 (whichever is
later), any shortfall in the issue below 56,174,885 shares (which includes
FedPac's entitlement of 11,234,750 new shares);
o Geneva will pay an underwriting fee to FedPac of $15,488 being equal to 1%
of the total issue price of the shares offered under the Rights Issue;
o FedPac's underwriting commitment is conditional on:
o the shareholders approving the terms of the Rights Issue and the issue of
shares pursuant to the Rights Issue and any regulatory or stock exchange
approvals necessary for the Rights Issue being obtained on terms reasonably
acceptable to FedPac;
o the Rights Issue being completed not later than 30 November 2012;
o NZX accepting the new shares for quotation;
o NZX not suspending the quotation of shares during the offer period;
o the directors of Geneva not withdrawing or terminating the Rights Issue;
o the Simplified Disclosure Prospectus not being or becoming false or
misleading in a material particular by reason of failing to refer, or give
proper emphasis, to adverse circumstances whether occurring before or after
the date of the Prospectus, and no material adverse change occurring in the
position or prospects of Geneva; and
o None of the following occurring after 20 July 2012 but before the Rights
Issue is completed:
o an event or series of events occurs, or FedPac first becomes aware of any
matter or information which it could not reasonably have been aware of before
the date of the underwriting agreement, which in the reasonable opinion of
FedPac:
(i) has, or is likely to have, or once publicly disclosed, will have a
material adverse effect on Geneva or a Geneva group company or on its
business or prospects;
(ii) has given rise to or is likely to give rise to a contravention by FedPac
of, or FedPac being involved in a contravention of, the Securities Act, the
Listing Rules, the Takeover Code or any other applicable law or regulation;
or
(iii) there is a general moratorium on commercial banking activities and
financing activities in Australia, New Zealand, the United States of America
or the United Kingdom declared by the relevant central banking authority in
any of those countries, or there is a material disruption in commercial
banking or security settlements or clearance services in any of those
countries;
o trading in all securities quoted or listed on the NZAX being suspended or
limited in a material respect for at least 2 days on which that exchange is
open for trading except when such trading is suspended or limited by a
technical glitch; or
o any adoption by the Reserve Bank of New Zealand or the Reserve Bank of
Australia of a significant change in any policy or direction in respect of
which there has not been a detailed announcement prior to the date of the
underwriting agreement which will or may have a material adverse effect on
the New Zealand economy.
If any condition listed above is not fulfilled, or ceases to be fulfilled, or
Geneva breaches any provision of the underwriting agreement, or any warranty
given by Geneva in the underwriting agreement is incorrect, FedPac may
terminate the underwriting agreement by written notice to Geneva.
Requirements for Resolution 2
Resolution 2 is required by:
o NZAX Listing Rule 9.2.1, which provides that an issuer such as Geneva
cannot enter into a "Material Transaction" if a "Related Party" such as
FedPac is or is likely to become a direct or indirect party to the Material
Transaction, unless the Material Transaction has first been approved by an
ordinary resolution of the shareholders of Geneva. The underwriting agreement
constitutes a Material Transaction with a Related Party if Geneva issues
shares having a market value in excess of 10% of the Average Market
Capitalisation (as that terms is defined in the NZAX Listing Rules) to FedPac
under its underwriting agreement;
o NZAX Listing Rule 7.5 which states that an issuer such as Geneva cannot
issue securities if there is a significant likelihood that the issue will
result in any person, such as FedPac, materially increasing its ability to
exercise effective control of the issuer, where that person is already
entitled to exercise not less than 1% of the total votes attaching to the
issuer's securities, unless the precise terms and conditions of the issue
have first been approved by an ordinary resolution of the shareholders of the
issuer; and
o Rule 7(d) of the Takeovers Code which allows a person such as FedPac to
take an allotment of voting securities which increases their voting rights in
a code company, such as Geneva, only if the allotment of voting securities is
approved by an ordinary resolution of the shareholders of Geneva.
Takeovers Code Exemption
It is likely that FedPac will be required to take up further shares under the
underwriting agreement resulting in FedPac holding or controlling in excess
of 20% of the voting rights of Geneva, thereby materially increasing its
ability to exercise effective control of Geneva.  Rule 16(b) of the Takeovers
Code requires disclosure of the number of shares which FedPac will acquire
under the underwriting agreement.
However it is not possible to state:
o the precise number of shares that will be allotted to FedPac under the
underwriting agreement; or
o the exact percentage of voting rights that will be held or controlled by
FedPac after the allotment of those shares to it until the offer closes and
the Options held by it are either exercised or expire,
because the number of shares which will be allotted to FedPac will depend on
the number of shares other shareholders of Geneva subscribe for and whether
FedPac exercises its Options in accordance with their terms.
Accordingly Geneva will rely on the exemption in clause 10A of the Takeovers
Code (Class Exemptions) Notice (No 2) 2001 (the Exemption Notice).
Particulars of voting securities that may be allotted to FedPac
The number of shares which will be allotted to FedPac will depend on the
number of shares applied for by other shareholders under the Rights Issue.
The maximum number of shares and the maximum percentage shareholding that
FedPac may hold have been calculated as at the date of this notice of meeting
(known as the "calculation date" in the Exemption Notice) based on the the
number of Geneva shares on issue at the date of this notice of meeting and
assuming:
o none of the other shareholders take up any of their entitlement under the
Rights Issue and therefore FedPac subscribes for all 56,174,657 shares;
o FedPac exercises all of its Options on the Option Expiry Date; and
o there is no change to the total number of Geneva's shares from the number
of shares on issue at the date of this notice of meeting other than as a
result of the Rights Issue and subsequent exercise of the Options.
Under these assumptions the number of shares issued to or held by FedPac and
the proportion that those shares bear to the total shares on issue
immediately after the Rights Issue and then immediately after the Option
Expiry Date are as follows:
After the Rights Issue
(i) The maximum number of shares that can be issued to FedPac under the
Rights Issue and its underwriting agreement is 51,174,657 shares.
(ii) 51,174,657 shares is 20% of the shares on issue after the Rights Issue.
(iii) Together with the 44,939,000 shares FedPac already holds, the maximum
number of shares which FedPac could hold after the Rights Issue is
101,113,567 shares which is 36% of the shares which would be on issue after
the Rights Issue.
(iv) The maximum percentage of the shares on issue after the Rights Issue
which could be held by FedPac excluding its exempt associates (of which there
are none at the date of this notice of meeting) is also 36%.
(v) The maximum percentage of the shares on issue after the Rights Issue
which could be held by FedPac and its associates (of which there are none at
the date of this notice of meeting) is also 36%.
After the Option Expiry Date
(i) The maximum number of shares that can be issued to FedPac on exercise of
its Options is 37,449,771 shares.
(ii) 37,449,771 shares is 11.76% of the shares on issue after exercise of the
Options.
(iii) Together with the maximum number of 101,113,567 shares which FedPac
could hold after the Rights Issue, the maximum number of shares which FedPac
could hold after exercise of the Options is 138,563,428 shares which is 43.6%
of the shares which would be on issue after exercise of the Options.
(iv) The maximum percentage of the shares on issue after exercise of the
Options which could be held by FedPac excluding its exempt associates (of
which there are none at the date of this notice of meeting) is also 43.6%.
(v) The maximum percentage of the shares on issue after exercise of the
Options which could be held by FedPac and its associates (of which there are
none at the date of this notice of meeting) is also 43.6%.
Takeovers Code - Rule 16
Pursuant to rule 16 of the Takeovers Code (with sub-paragraphs below
corresponding to sub-paragraphs in rule 16), Geneva advises as follows:
(a) FedPac (through its nominee Federal Pacific Nominees Limited) is the
proposed allottee of shares carrying voting rights, which may be issued to it
under the Rights Issue and the underwriting agreement;
(b) the particulars of the voting securities to be issued, as modified by the
exemption in clause 10A of the Exemption Notice, are set out above;
(c) not applicable (as the voting securities to be allotted are not
securities of a body corporate other than a code company);
(d) the issue price:
(i) for the shares under the Rights Issue is 2.75 cents per share, payable in
full on application; and
(ii) for shares acquired under the underwriting agreement, is 2.75 cents per
share, payable on the first business day after the closing date of the Rights
Issue and notification of the shortfall;
(e) the potential allotment of shares to FedPac arises from its commitment
under the underwriting agreement. Geneva's reasons for the Rights Issue are
described above;
(f) the allotments of shares to FedPac under the Rights Issue, if approved,
will be permitted under rule 7(d) of the Takeovers Code as an exception to
rule 6 of the Takeovers Code.  The directors note that the disclosures made
in this notice of meeting have been modified in reliance on the exemption set
out in clause 10A of the Exemption Notice;
(g) Geneva has been advised by FedPac that, except for under the underwriting
agreement, no agreements or arrangements have been, or are intended to be,
entered into between FedPac and any other person relating to:
o the allotment, holding or control of the ordinary shares to be allotted to
FedPac; or
o the exercise of voting rights in Geneva.
(h) this notice of meeting is accompanied by an independent adviser report
from Armillary Private Capital on the merits of the proposed allotment of
voting securities to FedPac. The report states that the Rights Issue and
underwrite has merit for Geneva's shareholders not associated with FedPac.
(i) the directors of Geneva recommend approval of the proposed allotment of
voting securities to FedPac on the grounds that the Fedpac underwrite will
ensure that new equity of $1,544,800 is received which is an increase of
14.7% of Geneva's current equity and thus a significant strengthening of
Geneva's financial position.
Resolution 3 - Approval of directors' investment in Professional Investor
Scheme

Geneva has established a professional investor scheme under a Deed Poll dated
4 April 2012 (as amended) (the Deed Poll) whereby professional investors will
provide funding to Geneva by purchasing a share in specified loans owned by
Geneva.  Participation in the scheme is only available to professional
investors.  The key elements of this scheme are described on page 23 of the
Simplified Disclosure Prospectus accompanying this notice of meeting.  Brief
details are as follows:

(i) Geneva will sell a share (likely to be 80%) in certain performing loans
to professional investors.  Geneva will receive the sale price of 80% share
in cash and will retain ownership of the other 20% share.

(ii) The loans sold into the scheme will continue to be managed and collected
by Geneva.  All payments made by borrowers under the loans during each month
must be applied by Geneva at the end of the month in accordance with the
agreed order of payment.  In essence this order of payments allows Geneva to
receive a monthly collection fee and then requires Geneva to pay all further
cash to the professional investors until all their principal with interest at
an agreed rate, is repaid in full.  Once the investors are repaid in full,
Geneva will receive all further cash received from the loans.  If there is a
shortfall in the amount owed to the investors, Geneva will not have any
obligation to make good the shortfall.

(iii) Unless Geneva's banker and its trustee agree otherwise, the maximum
aggregate amount of receivables sold under all transactions under the scheme
cannot exceed $7.5 million, allowing Geneva to raise a maximum funding amount
of $6 million (on a 80/20 basis), and interest payable to investors must not
exceed 11.25% per annum.

(iv) Each transaction under the scheme cannot be longer than 4 years and must
provide for repayment of principal and interest to the professional investor
either by monthly instalments of interest only (but limited to a 24 month
period) or by instalments of principal and interest or a combination of both.

Geneva's non-executive directors (being David Smale, Robin King and Peter
Francis) have indicated their willingness to invest in the Professional
Investor Scheme.  They will invest as a group with other unrelated
professional investors and will receive the same return as the unrelated
professional investors.  This will ensure that the terms of the transaction
are commercial arms-length terms.

The board hold the view that the non-executive directors' participation in
the Professional Investor Scheme is positive for all Geneva's stakeholders
because raising new funding is essential to Geneva's future and non-executive
directors investing their personal funds on the same terms as other investors
gives other investors confidence in the performance of the scheme and
increases the likelihood of this funding initiative being successful.

One or more of the non-executive directors may invest in the Professional
Investor Scheme through an Associated Person such as a family trust or an
investment company controlled by the non-executive director.  Accordingly
Resolution 3 allows a non-executive director to invest in that way.

Proposed terms of investment
The board are seeking shareholders' approval for non-executive directors and
their Associated Persons to participate in the scheme on the following terms
applying to each transaction to which a non-executive director or directors
or Associated Person are a party:

1 The non-executive director or directors or Associated Person must invest
jointly with other unrelated professional investors on the basis that the
terms of investment are the same for all investors and that the other
unrelated professional investors provide at least 30% of the investment
amount.
2 The share of the loans purchased from Geneva by the investors must be not
less than 80%.
3 The interest rate payable to the investors must not exceed 11.25% per annum
(non-compounding).
4 The period of the transaction must comply with paragraph (iv) above.
5 The transaction must comply with all other terms of the Deed Poll.
Requirements for Resolution 3
Resolution 3 is required by NZAX Listing Rule 9.2.1 which provides that
Geneva cannot enter into a Material Transaction with a Related Party unless
the investment is approved by an ordinary resolution of shareholders.
A Material Transaction in the context of the Professional Investor Scheme is
a transaction where the value of the loans sold exceeds 10% of Geneva's
Average Market Capitalisation.
For a particular transaction under the Professional Investor Scheme to be
viable for Geneva, the book value of loans sold needs to be more than $1m.
Geneva's Average Market Capitalisation is currently approximately $5.6m.
Thus any transaction will exceed 10% of Geneva's Average Market
Capitalisation and will therefore be a Material Transaction
All Geneva's non-executive directors are Related Parties.  Any Associated
Person of a non-executive director will also be a Related Party.  Accordingly
investment by any non-executive director or an Associated Person of a
non-executive directorin the Professional Investor Scheme will constitute a
Material Transaction with a Related Party requiring shareholder approval.

Dated 19 October 2012

By order of the Board

MANAGING DIRECTOR

INVITATION:  At the conclusion of the meeting, afternoon tea will be served.
End CA:00228769 For:GFL    Type:MEETING    Time:2012-10-23 17:04:48