Ann: WAV/RULE: AUG: AUG - Waiver from NZX Main Bo

• Release Date: 28/03/14 17:48
• Summary: WAV/RULE: AUG: AUG - Waiver from NZX Main Board Listing Rule 7.3.5(e)(iii)
• Price Sensitive: No
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					AUG
28/03/2014 15:48
WAV/RULE

REL: 1548 HRS Augusta Capital Limited

WAV/RULE: AUG: AUG - Waiver from NZX Main Board Listing Rule 7.3.5(e)(iii)

NZX Regulation Decision
Augusta Capital Limited ("AUG")
Application for a waiver from NZX Main Board Listing Rule 7.3.5(e)(iii)

28 March 2014

Background
Decision
1. On the conditions set out in paragraph 2 below, NZX Regulation ("NZXR")
grants Augusta Capital Limited ("Augusta") a waiver from the requirement of
NZX Main Board Listing Rule ("Rule") 7.3.5(e)(iii) so that Augusta may issue
Earn Out Shares to Kawaroa and the Hinton Interests in accordance with Rule
7.3.5.

2. The waiver in paragraph 1 above is provided on the conditions that:

a. All Augusta directors voting in favour of the Proposed Transaction certify
to NZXR, in a form acceptable to NZXR, at the time of entry into the Proposed
Transaction that:
i. the terms of the Proposed Transaction have been set on an arm's length
commercial basis and are fair and reasonable to Augusta and its shareholders;
and
ii. the Proposed Transaction is in the best interests of Augusta.

b. At the time of an issue of Earn Out Shares to Kawaroa and the Hinton
Interests, all Directors voting in favour of the resolution to issue the Earn
Out Shares sign a certificate that the issue of Earn Out Shares is in the
bests interests of Augusta and fair to Augusta shareholders not receiving
shares.

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. Rule 7.3.5(e) requires the issue of Equity Securities, to Directors of the
Issuer, Associated Persons of a Director of the Issuer, or Employees of the
Issuer under Rule 7.3.5 be made on the same terms as those offered to others
participating in the issue.

b. The policy behind Rule 7.3.5(e) is to ensure that Directors of the Issuer,
Associated Persons of a Director of the Issuer, or Employees of the Issuer do
not participate in an issue of Equity Securities on terms that are more
favourable than the terms that apply to any third parties participating in
the offer, without shareholder approval.

c. The policy behind Rule 7.3.5(e) will not be compromised because at the
time the terms of the issue of the Earn Out Shares are negotiated and agreed,
Augusta, Kawaroa and the Hinton Interests are arms' length unrelated parties.
Mr Barnett and Mr Hinton only become Employees (and Mr Barnett will only
become a Director) of Augusta after entry into the Proposed Transaction, at
which time the terms of the issue of the Earn Out Shares will be agreed.
Therefore Kawaroa and the Hinton Interests are not in a position to influence
the terms of the Earn Out Shares, other than in respect of arms' length
commercial negotiations. The certification required at paragraph 2(a) will
provide comfort this is the case.

d. The issue of the Earn Out Shares is unlikely to result in any person or
group of Associated Persons materially increasing their ability to exercise
or direct the control of Augusta. NZXR notes Rule 7.5, which relates to
issues of Equity Securities affecting control of an Issuer, will continue to
apply.

e. NZXR has previously granted waivers from Rule 7.3.5(e) in circumstances
where it has been satisfied that the relationship between the Issuer and the
Employee and/or Director has been immaterial or plainly unlikely to have
influenced the promotion of the proposal.

Appendix One

1. August Capital Limited ("Augusta") is a Listed Issuer with Equity
Securities Quoted on the NZX Main Board.

2. Augusta, through a wholly owned subsidiary Augusta Funds Management
Limited, proposes to acquire all of the shares in KCL Property Limited (the
"Proposed Transaction").

3. The structure of the Proposed Transaction is:

a. Augusta will purchase all of the shares of KCL Property Limited from its
shareholders being:
i. Cheryl Macaulay, Paul Macaulay and Timpany Walton Trustees 2010 Limited
(the "Macaulay Interests");
ii. Kawaroa Consultancy Limited ("Kawaroa"); and
iii. Phillip Hinton, Robyn Hinton and Stephen Eichstaedt (the "Hinton
Interests").

b. The Macaulay Interests will receive cash consideration for their shares on
completion of the Proposed Transaction.

c. Kawaroa and the Hinton Interests will receive a mixture of cash and
Augusta ordinary shares on completion of the Proposed Transaction. In
addition, they will also be able to receive further Augusta shares if certain
earn out requirements are met (the "Earn Out").

d. The structure of the Earn Out is:
i. for each of the first two years following completion of the Proposed
Transaction, the level of certain non-recurring revenue (the "Non-Recurring
Revenue") will be determined; and
ii. Kawaroa and the Hinton Interests may be issued up to a total of $3
million of Augusta shares at an issue price of 80 cents ("Earn Out Shares"),
subject to the amount of Non-Recurring Revenue that is achieved during the
first and second years following completion of the Proposed Transaction.

4. Kawaroa is ultimately beneficially owned by Bryce Barnett and interests
associated with him.

5. Phillip Hinton and Bryce Barnett will be appointed as senior managers of
Augusta after completion of the Proposed Transaction.

6. It is also proposed that Bryce Barnett be appointed as a director of
Augusta, subject to identifying and appointing a suitable third independent
director for Augusta.

7. Rule 7.3.5(e) precludes Augusta issuing the Earn Out Shares without
gaining shareholder approval as both Mr Hinton and Mr Barnett will be
Employees, and Mr Barnett may be a Director, of Augusta at the time the Earn
Out Shares are issued. Augusta has therefore applied for a waiver from Rule
7.3.5(e)(iii) so that pursuant to the Earn Out, Augusta may issue Earn Out
Shares (if required) to Kawaroa and the Hinton Interests in accordance with
Rule 7.3.5.

NZX Main Board Listing Rule 7.3.5

"An Issuer may issue Equity Securities if the total number of Equity
Securities issued, and all other Equity Securities of the same Class issued
pursuant to this Rule 7.3.5 during the shorter of the period of 12 months
preceding the date of the issue and the period from the date on which the
Issuer was Listed to the date of the issue, will not exceed the aggregate of:

(a) 20% of the total number of Equity Securities of that Class on issue at
the commencement of that period; and
(b) 20% of the number of the Equity Securities of that Class issued during
that period pursuant to any of Rule 7.3.1(a), Rule 7.3.4, Rule 7.3.6 and Rule
7.3.10; and
(c) any Equity Securities of that Class issued pursuant to this Rule 7.3.5
during that period, the issue of which has been ratified by an Ordinary
Resolution of the Issuer; and less
(d) 20% of the number of Equity Securities of that Class which have been
acquired or redeemed by the Issuer during that Main Board/Debt Market Listing
Rules period (other than Equity Securities held as Treasury Stock); and
Provided that for the purposes of this Rule 7.3.5:
(e) Employees of the Issuer, Directors of the Issuer or Associated Persons of
a Director of the Issuer may only participate in an issue made under this
Rule if:
(i) all Directors voting in favour of the resolution to issue the Equity
Securities sign a certificate that the participation of Employees and/or
Directors and/or Associated Persons of a Director, as the case may be, in the
issue is in the best interests of the Issuer and fair to holders of Equity
Securities who are not receiving or are not associated with those parties
receiving, Equity Securities under the issue; and
(ii) the terms of the issue to all persons in an offer under this Rule are
the same; and
(iii) the level of participation of any Director, Associated Person of a
Director or Employee is determined according to criteria applying to all
persons participating in the issue; ..."
End CA:00248877 For:AUG    Type:WAV/RULE   Time:2014-03-28 15:48:38