Ann: WAV/RULE: FBU: FBU - Waiver from NZSX Listin

• Release Date: 23/10/12 18:38
• Summary: WAV/RULE: FBU: FBU - Waiver from NZSX Listing Rule 7.6.6(a)
• Price Sensitive: No
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FBU
23/10/2012 16:38
WAV/RULE

REL: 1638 HRS Fletcher Building Limited

WAV/RULE: FBU: FBU - Waiver from NZSX Listing Rule 7.6.6(a)

NZX Regulation Decision
Fletcher Building Limited
Application for Waiver from NZSX Listing Rule 7.6.6(a)

Background

1. Fletcher Building Limited ("FBU") is a Listed Issuer with ordinary shares
("Shares") quoted on the NZX Main Board.

2. In October 2008 FBU established the Fletcher Building Limited Executive
Long-Term Share Scheme ("Scheme"). FBU proposes to offer participation in the
Scheme to incoming Chief Executive Officer and Executive Director Mr Mark
Adamson ("CEO") as part of his remuneration.

3. In accordance with the terms of the Scheme:

(a) Financial assistance is provided by way of an interest free loan to
participating executives to acquire Shares at market value. These Shares are
purchased on-market by a trustee on behalf of participants. The number of
Shares subscribed for and therefore the level of assistance given is
determined in accordance with the rules of the Scheme, as set out in the
prospectus and investment statement, and in relation to each participating
executives remuneration package.

(b) Vesting of the Shares to participants under the Scheme is subject to
their continued employment over a restrictive period and the achievement by
the company of certain performance objectives (being a relative total
shareholder return hurdle and an earnings per share hurdle) ("Performance
Criteria").

(c) To the extent the Performance Criteria are met, and any conditions on the
transfer of Shares are satisfied, legal title in the Shares will be
transferred to the participant and a bonus paid to that participant (the
after tax value of which will be equal to or exceed the outstanding balance
on the loan provided to that executive).

4. NZSX Listing Rule ("Rule") 7.6.3 prohibits an Issuer from giving financial
assistance for the purpose of acquiring equity securities unless the
financial assistance complies with Rule 7.6.4 or is approved in accordance
with Rule 7.6.5.

5. Rule 7.6.5 allows an Issuer to give financial assistance under Rule
7.6.3(b) if the terms and conditions of that financial assistance have been
approved by each Class of Quoted Equity Securities of the Issuer whose rights
or entitlements are materially affected by the giving of financial
assistance.

6. Rule 7.6.6(a) requires that any proposal authorised by resolutions
pursuant to Rule 7.6.5 and transacted solely with Employees (as defined in
Rule 7.3.6) be completed within 36 months of the passing of the resolution.

7. FBU intends to seek shareholder approval at its annual meeting of
shareholders to be held on 20 November 2012 ("Annual Meeting") of the CEO's
participation in the Scheme insofar as it involves the provision of financial
assistance for the purpose of acquiring Shares (as described above).

Application

8. FBU has applied to NZX Regulation ("NZXR") seeking a waiver from the
timing requirements in Rule 7.6.6(a) to allow FBU to provide continued
financial assistance to the CEO without further shareholder approval for so
long as the CEO remains an employee of FBU and a participant in the Scheme.

9. In support of its application FBU makes the following submissions:
(a) FBU's shareholders will be asked to approve the terms of the CEO's
participation in the Scheme with full knowledge of the waiver sought.
Accordingly, they will be aware that the financial assistance may be provided
outside the 36-month period prescribed by Rule 7.6.6(a);

(b) The Companies Act 1993 affords protections to shareholders by requiring
the directors of FBU to disclose financial assistance provided to the CEO in
its annual report. FBU's subsidiary through which the assistance is provided
will also be required to pass a solvency test prior to providing any
financial assistance. This will be relevant to the extent that FBU's
circumstances have materially changed;

(c) The assistance meets the requirements of Rule 7.6.4(b) (for which
shareholder approval is not required, and which is not subject to any timing
restrictions) other than the participation of a director which is restricted
by Rule 7.6.4(b)(iii), for which a waiver could be sought. FBU considers it
should not be precluded from providing any financial assistance outside 36
months as a result of it seeking shareholder approval rather than seeking a
waiver from Rule 7.6.4(b)(iii);

(d) The assistance is not likely to disproportionately benefit persons
controlling FBU and their associates;

(e) The CEO will have no unilateral ability to alter the terms of the Scheme
and while he may make a recommendation to the Board on the design of the
Scheme and other aspects of executive remuneration, it is the Board who will
have authority to amend the terms of the Scheme; and

(f) NZXR has granted similar waivers in relation to the provision of
financial assistance for employee share plans, including to Nuplex Industries
Limited in September 2010.

Rule 7.6.6(a)

10. Rule 7.6.6(a) provides that:
"A proposal authorised by resolutions passed pursuant to Rule 7.6.5 shall be
completed:

(a) if that Proposal is transacted solely with Employees (as defined by Rule
7.3.6) within 36 months after the passing of those resolutions;

......

Decision

11. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants FBU a waiver from Rule 7.6.6(a), to the
extent necessary to allow FBU to provide financial assistance to the CEO
under the terms of the Scheme without further shareholder approvals beyond
the 36 month period prescribed by Rule 7.6.6(a). This waiver will apply to
any financial assistance provided to the CEO under the terms of the Scheme
for as long as he remains an employee of FBU and a participant of the Scheme.

12. The waiver in paragraph 11 is granted, subject to the conditions that:

(a) FBU obtains shareholder approval under 7.6.5 for the provision of
financial assistance to the CEO in connection with his participation in the
Scheme at the Annual Meeting; and

(b) The Notice of Meeting in respect of the Annual Meeting contains:

(i) The precise terms and conditions of the CEO's participation in the
Scheme; and

(ii) A description of the waiver and the implications of approving the
financial assistance being that the financial assistance may continue to be
provided to the CEO for the period in which he is a participant in the Scheme
which may be beyond 36 months.

Reasons

13. In coming to this decision, NZXR has considered the following matters: ?

(a) It is FBU's intention, and a condition of the waiver, that FBU seek
shareholder approval for the provision of financial assistance to the CEO.

(b) NZXR is satisfied as to the level of disclosure provided to shareholders
as:

(i) NZXR has had an opportunity to review the Notice of Meeting and will only
provide its approval where it is satisfied that there is appropriate
disclosure regarding the financial assistance to be provided to the CEO under
the Scheme; and

(ii) Rule 10.5.5(f) requires that ongoing disclosure of the waiver is made to
shareholders in FBU's annual reports;

(c) Rule 7.6.6(a) ensures that Issuers do not obtain approval of the
provision of financial assistance too far in advance. NZXR accepts in this
situation that:

(i) To the extent that FBU's circumstances have materially changed after 36
months from the date of the Annual Meeting; (A) shares granted under the
Scheme (including future grants) are unlikely to meet the Performance
Criteria required for the shares to vest in the CEO; and (B) if the FBU
subsidiary providing financial assistance fails to meet the solvency test it
could not provide the financial assistance under the Companies Act; and

(ii) Financial assistance not approved by shareholders, and not restricted by
the 36 month rule is already being given to participants in the Scheme (as
permitted by Rule 7.6.4), who are participating on the same terms as it is
proposed for the CEO to participate; and

(d) NZXR has granted similar waivers from Rule 7.6.6(a) for similar reasons.

Confidentiality

14. FBU has requested that its application and any decision be kept
confidential until details of the financial assistance are released to the
market.

15. In accordance with footnote 1 to Rule 1.11.2, NZXR grants FBU's request.

ENDS.
End CA:00228766 For:FBU    Type:WAV/RULE   Time:2012-10-23 16:38:24