Ann: WAV/RULE: ATM: ATM - Application for waiver

• Release Date: 18/10/13 13:52
• Summary: WAV/RULE: ATM: ATM - Application for waiver from Rule 7.6.1(f)(i)
• Price Sensitive: No
• Download Document  7.52KB

					ATM
18/10/2013 11:52
WAV/RULE

REL: 1152 HRS A2 Corporation Limited

WAV/RULE: ATM: ATM - Application for waiver from Rule 7.6.1(f)(i)

Background

1. A2 Corporation Limited ("ATM") is a Listed Issuer with ordinary shares
Quoted on the NZX Main Board.

2. ATM operates an ownership based compensation scheme (the "Scheme") under
which certain key executives and senior employees of ATM are, from time to
time, offered partly paid ordinary shares in ATM ("Partly Paid Shares").

3. The Partly Paid Shares rank equally with the ordinary shares in ATM.
However, each of the Partly Paid Shares carries a fractional right to a
distribution and a fractional voting right, such fractions being equivalent
to the proportion which the amount paid up on the share is of the issue price
of the share.

4. ATM intends to offer 5,000,000 Partly Paid Shares to ATM's Managing
Director, Mr Geoffrey Babidge.

5. Under the terms of the Scheme:

(a) the Partly Paid Shares will be issued to Mr Babidge or his nominee at an
issue price of NZD$0.64. That issue price is equivalent to the average
closing price of ordinary shares in ATM during the three months prior to the
date on which the board of ATM first resolved to offer the Partly Paid Shares
to Mr Babidge;

(b) the Partly Paid Shares will paid up as to 1% of the issue price on
subscription;

(c) Mr Babidge will be entitled to pay the remainder of the issue price
before a specified date ("Share Payment Date"), which is determined having
regard to the date on which Mr Babidge ceases to be employed by, and a
director of, ATM and the circumstances in which Mr Babidge's employment
arrangements are terminated;

(d) the Partly Paid Shares cannot be transferred by Mr Babidge before a
certain date except in certain specified circumstances;

(e) Subject to applicable law, ATM's constitution and the NZSX Listing Rules
("Rules"):

i) If any of the Partly Paid Shares were not fully paid by the Share Payment
Date, ATM will be entitled to acquire such shares;

ii) Mr Babidge will have the right to require ATM to acquire the Partly Paid
Shares prior to the Share Payment Date; and

(f) The consideration payable to Mr Babidge on any such acquisition would be
all sums previously paid up on the relevant Partly Paid Shares.

6. ATM's ability to acquire any of the Partly Paid Shares which are not fully
paid by the Share Payment Date enables ATM to cancel any surplus Partly Paid
Shares.

7. NZSX Listing Rule ("Rule") 7.6.1 prohibits the acquisition of Equity
Securities by an Issuer, except in accordance with one of the exceptions in
Rule 7.6.1(a)-(j). The terms of the acquisition under the Scheme do not fit
within the exceptions in Rules 7.6.1(a)-(c), (e) and (g)-(j). Rule 7.6.1(d)
would require ATM to obtain shareholder approval under Rule 7.6.5 for the
acquisition by ATM of the Partly Paid Shares. Rule 7.6.1(f) allows ATM to
acquire Partly Paid Shares if that acquisition is effected in compliance with
section 60(1)(b)(ii) of the Companies Act 1993 and is made from any person
who is not a Director or an Associated Person of a Director of ATM and meets
the requirements under Rule 7.6.1(f)(ii).

8. As Mr Babidge is a Director of ATM and will be offered the opportunity to
participate in the Scheme, under the Rules, the acquisition of Partly Paid
Shares from him, in accordance with the terms of the Scheme, would require
Shareholder approval under Rule 7.6.5.

Application

9. ATM seeks a waiver from Rule 7.6.1(f)(i) in order to allow ATM to acquire
Partly Paid Shares from Mr Babidge in accordance with the terms of the
Scheme.

10. In support of its application, ATM submits that:

(a) In seeking the waiver ATM has had regard to the policy of Rule 7.6.1,
which is to ensure that redemptions or acquisitions are not conducted on
terms that are unfairly preferential or advantageous to certain shareholders
at the expense of remaining shareholders.

(b) The policy behind Rule 7.6.1 is not offended by any acquisition of Partly
Paid Shares by ATM.

(c) The ability of ATM to acquire the Partly Paid Shares does not:

i) prejudice other shareholders, as the net economic effect of any
acquisition would be that Mr Babidge would receive back the nominal amount he
has paid on the New Shares (being to 1% of the issue price) or any greater
sum he may have voluntarily paid up, which is unlikely; nor

ii) advantage Mr Babidge, as he will never receive more than the nominal
amount he has paid on the Partly Paid Shares.

(d) The acquisition of Partly Paid Shares by ATM is a mechanism to unwind Mr
Babidge's participation in the scheme and remove Partly Paid Shares held by
or on behalf of Mr Babidge from ATM's share register without impact on ATM's
other shareholders.  Therefore, while it is in form a repurchase mechanism,
in substance it is a termination mechanism.  It does not impact other holders
of ordinary shares and it is of no benefit or detriment to Mr Babidge.

(e) The purpose of the issue of the Partly Paid Shares is to align the
interests of Mr Babidge with the interests of ATM's shareholders.  If Mr
Babidge is successful in his role as Managing Director of ATM, any gain in
the value of Partly Paid Shares held by him or on his behalf will mirror the
gain for ATM's other shareholders.  The waiver facilitates the alignment of
the interest of Mr Babidge and shareholders.

(f) The waiver is consistent with the reasons stated by NZX Regulation
("NZXR") in previous analogous waiver decisions in respect of Rule
7.6.1(f)(i) including:

i) Allied Work Force Limited (2 November 2012)

ii) Freightways Limited (30 April 2012)

iii) Abano Healthcare Group Limited (7 October 2011)

iv) Wellington Drive Technologies Limited (24 March 2011)

Rule 7.6.1(f)(i)

11. Rule 7.6.1(f)(i) provides that:

"An issuer shall not acquire or redeem Equity securities of that Issuer other
than by way of:
...
(f) an acquisition effected in compliance with section 60(1)(b)(ii) (read
together with section 61) of the Companies Act 1993
and:

(i) is made from any person who is not a Director or an Associated Person of
a Director of the Issuer; and

Decision

12. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants ATM a waiver from Rule 7.6.1(f)(i) to
allow ATM to acquire Partly Paid Shares issued to Mr Babidge in accordance
with the terms of the Scheme.

Reasons

13. In coming to the decision to grant ATM the waiver from Rule 7.6.1(f)(i),
contained in paragraph 12 above, NZXR has considered the following matters:

(a) The policy objective of Rule 7.6.1(f)(i) is to ensure that acquisitions
are not conducted on terms that are unfairly preferential or advantageous to
certain shareholders at the expense of remaining shareholders. ATM submits
and NZXR accepts, with particular regard to paragraph 10(c) above, that this
concern does not arise in the present circumstances;

(b) Under the terms of the Scheme, the ability to acquire Partly Paid Shares
functions solely as a mechanism for unwinding participation in the Scheme.
Accordingly, there is no financial advantage or detriment to any party;

(c) There is precedent for this waiver, including those decisions listed in
paragraph 10(f) above; and

(d) Requiring ATM to seek shareholder approval at its upcoming annual general
meeting in accordance with Rule 7.6.5 would necessarily impose a time
restriction (under Rule 7.6.6) for transacting the acquisitions approved by
shareholders. In circumstances where NZX would otherwise be willing to grant
the waiver this would impose an unnecessary restriction on ATM's ability to
administer the Scheme.

ENDS.
End CA:00242567 For:ATM    Type:WAV/RULE   Time:2013-10-18 11:52:56