Ann: WAV/RULE: BRL: BRL - Application for Waivers

• Release Date: 12/09/13 12:09
• Summary: WAV/RULE: BRL: BRL - Application for Waivers from NZSX Listing Rules
• Price Sensitive: No
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BRL
12/09/2013 10:09
WAV/RULE

REL: 1009 HRS Bathurst Resources (New Zealand) Limited

WAV/RULE: BRL: BRL - Application for Waivers from NZSX Listing Rules

NZX Regulation Decision
Bathurst Resources (New Zealand) Limited (BRL) Application for waivers from
NZSX Listing Rules 7.1.5(c), 7.10.10 and 9.2.1

11 September 2013

Background

1. Bathurst Resources (New Zealand) Limited ("BRL") is a Listed Issuer with
ordinary shares quoted on the NZX Main Board.
2. On 3 September 2013 BRL completed a placement ("Placement") of ordinary
shares to selected New Zealand, Australian and certain other offshore
investors in accordance with NZSX Listing Rule ("Rule") 7.3.5.
3. The total number of ordinary shares issued under the Placement was
104,887,100 representing 15% of the total number of ordinary shares on issue
after the implementation of the transaction to effect the re-domiciliation of
the Bathurst group of companies to New Zealand ("Relevant Share Number")
being the number of shares relevant to Rule 7.3.5(a)(i) pursuant to paragraph
64 of the decision of NZX Regulation dated 19 June 2013.
4. BRL is now proposing to offer additional shares for subscription under a
share purchase plan ("SPP") to raise up to approximately A$5.4 million.
5. BRL wishes to offer the SPP only to those of its shareholders with
registered addresses in Australia. The limited number of BRL shareholders
having registered addresses in New Zealand ("New Zealand Shareholders") will
therefore not be able to participate.
6. BRL's reasons for not proposing to extend the SPP to New Zealand
Shareholders are as follows:
(a)  of BRL's approximately 4,500 shareholders, only 9 are New Zealand
Shareholders. New Zealand Shareholders hold approximately 51.8 million
ordinary shares in BRL, representing approximately 7.4% of BRL's ordinary
shares on issue. This amount includes a shareholding of approximately 4.9%
held by one New Zealand institutional investor. This investor was invited to
participate in the Placement but did not do so;
(b)  if the SPP were to be offered to New Zealand Shareholders, it would be
offered in reliance on the Securities Act (NZX - Share and Unit Purchase
Plans) Exemption Notice 2010 ("Exemption Notice"). The Exemption Notice would
require that the SPP booklet record where subscribers may obtain a copy of
BRL's most recent annual report. BRL has not yet published an annual report.
It will not be in a position to do so until late September 2013 and the SPP
would need to be delayed until that time if it were to be extended to New
Zealand Shareholders in compliance with the Exemption Notice. BRL does not
consider that this delay would be in the best interests of its shareholders;
(c)  if the SPP were to be offered to New Zealand Shareholders in accordance
with the Exemption Notice, the maximum value of shares which could be issued
to each subscriber would be limited to NZ$15,000. If New Zealand Shareholders
are excluded, remaining subscribers will each be able to acquire up to
A$15,000 worth of shares. BRL does not consider, particularly given the very
limited number of New Zealand Shareholders, that it is appropriate to limit
potential subscriptions under the SPP by the limit prescribed in the
Exemption Notice;
(d)  if the SPP is offered to New Zealand Shareholders, BRL will incur
additional New Zealand legal fees. Given that only 9 BRL shareholders could
possibly participate in the SPP, BRL does not consider it appropriate to
incur those fees;
(e)  the issue price for shares under the SPP will be set in Australian
currency. Clause 5(1)(e) of the Exemption Notice would (if it were applicable
to the SPP) provide that the issue price must be equal to or less than the
lower of:
(i) the issue price paid in the Placement (NZ$0.18); and
(ii) the average end of day market price of BRL shares during a specified
period that falls within the period of 30 days before the date of the SPP or
the date of issue of shares under the SPP. This amount would also be an
amount specified in New Zealand currency.
It would be possible to set an A$ issue price for the SPP which, based on
exchange rates at the date of the SPP, complied with this requirement.
However, movements in those exchange rates prior to the closing of the SPP
and the issue of shares under the SPP may result in a breach of this
requirement. This is not a risk which BRL wishes to take.
7. The number of ordinary shares to be offered under the SPP will be limited
to 5% of the Relevant Share Number, which will allow the SPP to be effected
pursuant to Rule 7.3.5(a).

Application One - Waiver sought from Rule 7.1.5(c)

8. The SPP booklet will constitute an Offering Document for the purposes of
Rule 7.1.1. Rule 7.1.5(c) requires that every Offering Document contain, in
its subscription application, a field for subscribers to insert their CSN
number (if any).
9. BRL's registrar will produce a standardised application form
("Application") for the SPP. The Application will reflect Australian
practice, and will not contain a field for subscribers to insert their CSN
number.
10. BRL has applied to NZX Regulation ("NZXR") for a waiver from the
requirements of Rule 7.1.5(c), so that the Application need not include a
field for subscribers to insert their CSN number.
11. BRL made the following submissions in support of its application for a
waiver from Rule 7.1.5(c):
(a)  The Application will provide for subscribers to insert their holder
identification number ("HIN") or shareholder registration number ("SRN") (or
will be printed to include the HIN or SRN for each shareholder), which BRL
considers is the relevant information given that the SPP will only be offered
to shareholders who have a registered address in Australia, who will (more
likely than not) trade their shares on ASX.
(b)  References to a CSN may be confusing for any Australian shareholders.
(c)  Accordingly, BRL does not consider it appropriate to amend the
Application to provide for CSNs.

Application One - Rules

12. Rule 7.1.5(c) provides that:
 "Every Offering Document shall contain:
 ...
 in its subscription application a field for subscribers to insert their CSN
number (if any)."

Application One - Decision

13. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants BRL a waiver from Rule 7.1.5 so that
the Application is not required to include a field for subscribers to insert
their CSN number.

Application One - Reasons

14. In coming to this decision, NZXR has considered the following matters:
(a)  the SPP is being offered only to those BRL shareholders who have a
registered address in Australia;
(b)  the Application will provide for subscribers to insert their HIN or SRN
(or will be printed to include the HIN or SRN for each shareholder), which
are the most relevant shareholder numbers for Australian resident
shareholders who will (more likely than not) trade their shares on ASX rather
than the NZX Main Board; and
(c)  references to a CSN may be confusing for Australian shareholders.

Application Two - Waiver sought from Rule 7.10.10

15. Rule 7.10.10 requires Issuers who are undertaking a share purchase plan,
to provide an Appendix 7 form to NZX at least 5 Business Days prior to the Ex
Date to determine entitlements. Accordingly, the Record Date in respect of
the SPP would need to be at least 7 Business Days after BRL notifies NZX of
the SPP in the form of an Appendix 7.
16. BRL has applied to NZXR for a waiver from the requirements of Rule
7.10.10 so that it may set the Record Date in respect of the SPP as the
Business Day before an Appendix 7 form relating to the SPP is announced to
NZX.
17. In accordance with ASX Listing Rule 7.40 and Appendix 7A of the ASX
Listing Rules, the Record Date for a SPP must be the business day (as that
term is defined in the ASX Listing Rules, being broadly a day on which
trading is scheduled to occur on ASX) before an issuer notifies ASX of the
SPP.
18. BRL is unable to comply with both of those requirements.
19. BRL made the following submissions in support of its application for a
waiver from Rule 7.10.10:
(a)  There is an irreconcilable conflict between the Rules and the ASX
Listing Rules which means that an Issuer that is also listed on the ASX is
not able to comply with the Record Date requirements of both exchanges.
(b)   The policy behind Rule 7.10.10 is to provide advance notice to the
market of a Rights Issue, such that it can be "priced" by the market and
market participants can determine whether to trade in or out of the relevant
securities by the Record Date. However the NZX Guidance Note relating to
share purchase plans dated 1 May 2007 recognises that:
 The Offer under a Share Purchase Plan is not pro rata and so may not be
"priced" by the market into the price of the existing shares to the same
extent as a rights issue... The market does not require, in the context of an
SPP, time to "price" any payment, distribution or right.
This is particularly true of the SPP which is expected to be of a relatively
modest size, and is not expected to have any material impact on the overall
pricing of BRL's ordinary shares.
(c)  If the Record Date for the SPP was post-announcement there would be a
possibility that the market could "game" the offer. Because share purchase
plans are not pro rata, investors can exploit a share purchase plan by
purchasing the minimum number of shares for the Record Date, subscribing at
the discounted issue price which is common in share purchase plans and then
trading out of the stock. Similarly existing investors could "split" their
investment across different entities so as to be eligible to participate in
the share purchase plan multiple times. If the Record Date is the Business
Day prior to the announcement it would not be possible to "game" the SPP in
this manner.
(d)  The concept of making the Record Date of a share purchase plan the
Business Day before the share purchase plan is announced is reflected in
proposed amendments to the Rules. NZX's Consultation Memoranda dated 30 March
2012 and 31 May 2013 propose a new Rule 7.10.9, which provides either for the
Record Date to fall on a date prior to the announcement of the share purchase
plan, or for the Appendix 7 for the share purchase plan to be released no
later than 5 Business Days before the Ex Date for the SPP. In the
Consultation Memorandum dated 30 March 2012, NZX stated that this proposed
amendment "was consistent with the objective of offers made under share
purchase plans that the loyalty of long-term shareholders may be rewarded by
the opportunity to participate in an offer made at a discount to the market
price and prevents short-term sellers from gaming the share register to take
advantage of the offer".
(e)  The SPP will only be to shareholders who have a registered address in
Australia who will (more likely than not) trade their shares on ASX.
Accordingly, BRL considers that, to the extent that a difference in the Rules
and the ASX Listing Rules is irreconcilable, the ASX Listing Rules should
take precedence for the purposes of the SPP.
(f)  NZX Regulation has previously granted an analogous waiver in respect of
Rule 7.10.10 to Heritage Gold New Zealand Limited on 4 April 2012.
(g)  It is appropriate to grant this waiver on the condition that:
(i) an Appendix 7 form for the SPP be released to NZX on the date of its
announcement; and
(ii) the Record Date for the SPP be the date prior to the announcement.

Application Two - Rules

20. Rule 7.10.10 provides that:
"Where a Rights issue is to be made by Quotation is not sought the Issuer
shall give to NZX forthwith after the decision has been made and at least 5
Business Days before the Ex Date to determine entitlements, on the form in
Appendix 7, full details of the issue, including the nature, entitlement and
timing of the issue of Rights and conversion, pricing, amounts payable and
ranking of Securities for future benefits."

Application Two - Decision

21. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants BRL a waiver from Rule 7.10.10 so that
it may set the Record Date in respect of the SPP as the Business Day before
an Appendix 7 relating to the SPP is provided to NZX.
22. The waiver in paragraph 21 is granted on the following conditions:
(a)  the Record Date for the SPP is the Business Day before the Appendix 7
relating to the SPP is provided to NZX; and
(b)  an Appendix 7 for the SPP is released to NZX on the date of the
announcement of the SPP.

Application Two - Reasons

23. In coming to this decision, NZXR has considered the following matters:
(a)  there is an irreconcilable difference between the timetabling
requirements in the Rules and the ASX Listing Rules. In the absence of a
waiver from either exchange, BRL, as an NZX Main Board Listed Issuer who is
also listed on the ASX, is unable to raise additional capital by way of a
share purchase plan;
(b)  BRL should not be disadvantaged by being precluded from raising
additional capital through a share purchase plan simply because it is listed
on both the ASX and the NZX Main Board, particularly where the SPP will only
be offered to BRL's Australian shareholders;
(c)  neither BRL nor BRL's shareholders will be disadvantaged by BRL
conducting the SPP in accordance with the ASX timetable requirements. Those
timetable requirements are not inconsistent with NZX's policy in respect of
SPPs generally, and are able to be accommodated within NZX's operational
infrastructure;
(d)  requiring the Record Date to be backdated to the Business Day before the
announcement date of a share purchase plan will not detract from the
underlying principle of the share purchase plan which is to provide long-term
shareholders with the opportunity to purchase shares at no brokerage, and
possibly at a discount to the market price, as a reward for their loyalty;
and
(e)  as set out in paragraph 19(d), NZX acknowledges the inconsistency
between the Rules and the ASX Listing Rules and proposes to amend Rule
7.10.10 to address the inconsistency.

Application Three - Waiver sought from Rule 9.2.1

24. Rule 9.2.1 requires an Issuer to seek shareholder approval by ordinary
resolution where a Related Party is, or is likely to become, a direct or
indirect party to a Material Transaction.
25. BRL's Average Market Capitalisation ("AMC") on 2 September (the date the
Placement was announced) was approximately NZ$163,922,939. BRL raised NZ$18.9
million under the Placement. Accordingly the Placement constituted a Material
Transaction in accordance with Rule 9.2.2(c) as BRL received money in excess
of 10% of BRL's AMC.
26. Forsyth Barr and the Royal Bank of Canada were appointed as Lead Managers
of the Placement ("Placement Appointment") and this appointment extends to
the SPP ("SPP Appointment"). The lead manager and arranger fees in connection
with the appointments may exceed 1% of BRL's AMC (meaning those appointments
may constitute a Material Transaction under Rule 9.2.2(e)).
27. In a decision dated 30 August 2013 NZXR granted a waiver to BRL from Rule
9.2.1 so that BRL was not required to seek shareholder approval for the
Placement or the Placement Appointment, to the extent that a Substantial
Holder (as defined in NZXR's decision dated 30 August 2013) participated in
the Placement ("Initial Waiver").
28. The SPP and the SPP Appointment (together the "SPP Transaction") are part
of a related series of transactions with the Placement and the Placement
Appointment. Therefore the SPP Transaction is one of a related series of
transactions which comprise the Material Transaction (with the Placement and
the Placement Appointment) for the purposes of Rule 9.2.1.
29. Rule 9.2.4(c) provides that Rule 9.2.1 does not apply to issues of
Securities by an Issuer under Rule 7.3.4(c). As the SPP is not being made in
accordance with Rule 7.3.4(c) the exemption in Rule 9.2.4(c) does not apply
to the SPP.
30. The Initial Waiver did not extend to participation by Related Parties in
the SPP as at the time BRL anticipated that any share purchase plan would be
made in accordance with Rule 7.3.4(c) so that Rule 9.2.1 would not apply, due
to the application of Rule 9.2.4(c).
31. In the absence of a waiver, if any Related Party of BRL is to participate
in the SPP Transaction, that person's participation in the SPP Transaction
would require approval by an ordinary resolution of the shareholders of BRL
under Rule 9.2.1.
32. BRL intends to allow all eligible Australian Shareholders to participate
in the SPP, including Directors, executive officers, Substantial Holders and
Associated Persons of those persons or BRL. Such persons are Related Parties
for the purposes of Rules 9.2.3(a), (b) and (c).
33. BRL seeks a waiver from Rule 9.2.1 so that BRL is not required to seek
shareholder approval for the SPP Transaction to the extent that Related
Parties participate in the SPP.
34. BRL made the following submissions in support of its application for a
waiver from Rule 9.2.1:
(a)  NZXR granted a waiver to BRL from Rule 9.2.1 so that BRL was not
required to seek shareholder approval for the Placement and Placement
Appointment, to the extent that a Substantial Holder participated in the
Placement (refer to paragraph 22 of Initial Waiver). If shareholder approval
was not required to the Placement and Placement Appointment to the extent
that a Substantial Holder Participated in the Placement, then shareholder
approval should not be required to the SPP Transaction as a consequence of
those transactions being considered a "related series of transactions" with
the Placement and Placement Appointment, given that the SPP will be offered
on the same terms to all BRL shareholders other than New Zealand
Shareholders.
(b)  Rule 9.2.4(c) provides that Rule 9.2.1 has no application to a share
purchase plan effected under Rule 7.3.4(c). The policy behind this Rule is
that a share purchase plan is extended on the same terms to all shareholders
(other than those excluded pursuant to Rule 7.3.4(h)), such that it cannot be
asserted that any Related Party may gain favourable consideration due to its
relationship with an Issuer. The SPP is consistent with this policy,
notwithstanding that the SPP will be made under Rule 7.3.5 and effected in
accordance with Australian law (rather than New Zealand) law and will be
offered to Australian-resident shareholders (without New Zealand Shareholders
participating), for the reasons set out in paragraph 6.

Application Three - Rules

35. Rule 9.2.1 provides that:
"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."
36. Rule 9.2.2 provides that:
"For the purposes of Rule 9.2.1, "Material Transaction" means a transaction
or a related series of transactions whereby an Issuer:
...
(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"
37. Rule 9.2.3 provides that:
"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 or 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 status may
reasonably be expected, other than as a consequence of the Material
Transaction itself;
... "
38. Rule 9.2.4(c) provides that:
"Rule 9.2.1 shall not apply to:
...
 (c) the issue of Equity Securities by an Issuer under Rule 7.3.4(c) or Rule
7.3.11(e); or"

Application Three - Decision

39. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants BRL a waiver from Rule 9.2.1 so that
BRL is not required to obtain shareholder approval for the SPP Transaction to
the extent that a Related Party of BRL participates in the SPP as a BRL
shareholder.
40. The waiver in paragraph 39 is granted on the following conditions:
(a)  BRL complies with the requirements of Rule 7.3.5 and provides NZXR with
a copy of the certificate required by Rule 7.3.5(b);
(b)  this waiver and its conditions and effects are disclosed in BRL's half
year and annual reports for the year in which the SPP takes place; and
(c)  the SPP is offered to all eligible shareholders on the same terms.

Application Three - Reasons

41. In coming to this decision, NZXR has considered the following matters:
(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 unfairly
favourable to that Related Party without scrutiny. The granting of the waiver
in paragraph 39 will not offend the policy behind Rule 9.2.1;
(b)  NZXR has no reason not to accept that the terms and conditions on which
Securities are to be offered to Directors, Substantial Holders and Associated
Persons of those persons and BRL under the SPP are identical to those offered
to others participating in the SPP and have been set at arms' length.
(c)  the waiver is consistent with the policy of Rule 9.2.4(c). It is only
because the SPP is not being offered pursuant to Rule 7.3.4(c) but is being
conducted pursuant to Rule 7.3.5 that the exemption in Rule 9.2.4(c) does not
apply. Given all eligible shareholders will participate in the SPP on the
same terms no Related Party will gain favourable consideration due to its
relationship with an Issuer;
(d)  the SPP is not likely to result in any person or group of Associated
Persons materially increasing their ability to control BRL; and
(e)  the certificates to be given by Directors under Rule 7.3.5(b) provide
comfort that the SPP is in the best interests of BRL and fair to shareholders
not participating in the SPP.
Confidentiality
42. BRL requests that this application and any decision are kept confidential
until such time as BRL advises NZX that the SPP has been announced to the
market.
43. In accordance with Footnote 1 to Rule 1.11.2, NZXR grants BRL's request.

ENDS
End CA:00241034 For:BRL    Type:WAV/RULE   Time:2013-09-12 10:09:34