Ann: WAV/RULE: FCG: FSF - Application for Waiver from Listing Rule 7.12.1

• Release Date: 03/09/14 16:45
• Summary: WAV/RULE: FCG: FSF - Application for Waiver from Listing Rule 7.12.1
• Price Sensitive: No
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					FCG
03/09/2014 16:45
WAV/RULE

REL: 1645 HRS Fonterra Co-operative Group Limited

WAV/RULE: FCG: FSF - Application for Waiver from Listing Rule 7.12.1

NZX Regulation Decision

Fonterra Shareholders' Fund ("FSF")
Application for waiver from NZX Main Board Listing Rule 7.12.1

3 September 2014

Waiver from Rule 7.12.1

Decision

1. On the conditions in paragraph 2 below, NZX Regulation ("NZXR") grants FSF
a waiver from NZX Main Board Listing Rule ("Rule") 7.12.1 to the extent that
this Rule requires FSF to release to the market details of any issue,
acquisition or redemption of units in FSF related to Daily Trading (as
defined in Appendix One).

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

a. FSF must give to NZX for release to the market details of the issues,
acquisitions or redemptions related  to the Daily Trading for a calendar
month in the form as required under Rule 7.12.1, aggregating the information
for each trading day to provide monthly totals;

b. Notices required under paragraph 2a. above must be provided to NZX  no
later than on the first business day of the calendar month following the
calendar month to which the notice relates;

c. Should Daily Trading result in a Gross Movement in the number of units in
the FSF of more than 1%, either positive or negative, in one day, FSF must
give to NZX for release to the market details of that day's issues,
acquisitions or redemptions related to the Daily Trading, as would be
otherwise be required by Listing Rule 7.12.1 by no later than on the
immediately following business day;

d. Every notice made under paragraph 2a. must clearly be identified as a
monthly allotment and redemption notice and include a reference that the
notice is being made in reliance on this waiver and where a copy of the
waiver is available; and

e. A summary of the terms of this waiver and its effect are set out in each
FSF Annual Report, provided FSF relied on this waiver at any stage during the
financial period to which the relevant Annual Report relates.

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 Rule to which this decision relates is 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. The information provided under Rule 7.12.1 is generally required to inform
investors of the dilutionary effect on their quoted securities when
securities are issued, acquired or redeemed.  The structure of the FSF is
such that each unit issued by FSF relates to the economic rights of a
Fonterra share held in trust by the Fonterra Custodian on behalf of the
trustee of the FSF.  Each unit gives its holder the right to these economic
benefits.  While Daily Trading alters the number of units, Daily Trading does
not alter this one-for-one relationship between units and the economic rights
of Fonterra shares and, consequently, the Daily Trading does not have a
dilutionary effect on the value of the units.  The granting of the waiver in
paragraph 1 will therefore not offend the policy behind Rule 7.12.1;

b. This waiver is limited to Daily Trading only, and will not apply to other
issues, acquisitions or redemptions of units (for example, a bonus issue of
units as a result of a bonus issue in respect of Fonterra shares), which
could affect the value of units;

c. Currently, as a result of Daily Trading, notifications under Rule 7.12.1
are made on an almost daily basis.  Notifications under Rule 7.12.1 of events
which could have a dilutionary effect on the value of the units may not be
highlighted due to the high number of announcements and, therefore, the
policy intention of this Rule is not currently being met;

d. The average daily Gross Movement and average daily Net Movement in the
number of units as a result of Daily Trading is minimal, representing
approximately 0.1% of the total number of units currently on issue.  The
market is well aware that changes of this level can be expected due to the
structure of the FSF. Should there be a substantial movement in the number of
units on issue during one trading day the conditions of the waiver require
that a notification, as otherwise required under Rule 7.12.1, be made to the
market; and

e. FSF considers, and NZXR agrees, that the Daily Trading information
currently provided under Rule 7.12.1 is generally not of any significant
value to share or unit holders.  Further, NZXR considers that there will be
no detrimental impact on share or unit holders if they receive notifications
in relation to Daily Trading on a monthly basis.
ENDS

Appendix One - Information

1. Fonterra Shareholders Fund ("FSF") is a unit trust listed on the NZX Main
Board and on the ASX.

2. FSF forms part of the Trading Among Farmers ("TAF") arrangements
established by Fonterra Co-operative Group Limited ("Fonterra").  Through
TAF, outside investors, who are not permitted to hold shares in Fonterra, are
able to invest in units in FSF and gain access to certain economic rights the
investor would have received if they were permitted to own shares.

3. The structure of the FSF allows farmers who own shares in Fonterra to
transfer their shares to a custodian who holds certain economic rights for
those shares on trust for the trustee of the FSF.  FSF then issues an equal
number of units in respect of which economic rights are held in shares, and
those units can be traded on the NZX Main Board and ASX.  Units have the
rights to the economic rights associated with the underlying shares.  Units
are continuously allotted and redeemed, as a result of:

a. Fonterra shareholders transferring shares for the economic rights to be
held in trust for the trustee of the FSF in order to sell the units issued in
consideration on market;

b. Fonterra shareholders redeeming units and having shares transferred back
to them in consideration for the redemption; and

c. Trading conducted by an appointed "registered volume provider", whose role
is to promote liquidity of trading in units and shares, and to seek to ensure
that the traded prices of units and shares are aligned
(together known as "Daily Trading").

4. While Daily Trading alters the number of units it does not change the
one-for-one relationship between each unit and each Fonterra share in respect
of which economic rights are held on trust for the trustee of the FSF. The
trading of units as part of the Daily Trading does not therefore affect the
value of the economic rights associated with each unit.

5. The average net movement (being the total number of units issued less the
total number of units redeemed, or vice versa (the "Net Movement")) in the
number of units on issue for each trading day since the establishment of FSF
is 106,000 units.  This movement represents approximately 0.1% of the total
number of units currently on issue.  The average gross movement (being the
total number of units issued combined with the total number of units redeemed
(the "Gross Movement")) in the number of units on issue for each trading day
since the establishment of FSF is 117,000 units.  This movement represents
approximately 0.1% of the total number of units currently on issue.

6. FSF currently has an ASX waiver from a similar rule requirement to Rule
7.12.1, which allows FSF to announce every issue of securities as a result of
daily trading on a monthly basis, rather than daily (except where a
notification is made under Rule 7.12.1, in which case the same notice must be
announced on ASX).  FSF has been advised that ASX have been consulted on this
waiver application and that ASX considers this application has no impact on
the current ASX waiver.

7. As well as the Daily Trading, FSF is required to announce notices for
issues, acquisitions, or redemptions for other actions which include:

a. the issue by FSF of new units as part of the operation of a distribution
reinvestment plan;

b. any issue of units resulting from the allotment of newly-issued shares to
FSF by Fonterra;

c. any consolidation or sub-division of units on issue; and

d. any redemption of units held by Fonterra.

8. Notices must be made by FSF in accordance with Rule 7.12.1 for all actions
in paragraph 7 as well as all other issues, acquisitions and redemptions
which fall outside of Daily Trading.

Appendix Two - NZX Main Board Listing Rules

Rule 7.12.1 - Announcements

If an Issuer issues, acquires or redeems Quoted Securities, or an Issuer with
Equity Securities Quoted issues, acquires or redeems Equity Securities or
Securities Convertible into Equity Securities, then the Issuer shall give to
NZX for release to the market details of the issue, acquisition or
redemption, including:
(a) Class of Security and ISIN; and

(b) the number issued, acquired or redeemed; and

(c) the nominal value (if any) and issue price, acquisition price or
redemption price; and

(d) whether payment was in cash; and

(e) any amount paid up (if not in full); and

(f) the principal terms of the Securities (other than for Quoted Securities),
for example, the exercise price and exercise date in respect of an Option, or
the conversion price and conversion date in respect of Convertible Securities
or the ranking of the Securities in relation to other Classes of Securities;
and

(g) the percentage of the total Class of Securities issued, acquired or
redeemed; and

(h) the reason for the issue, acquisition or redemption; and

(i) the specific authority for the issue, acquisition or redemption (if any);
and

(j) any terms or details of the issue, acquisition or redemption (such as an
escrow provision); and

(k) the total number of Securities of the Class in existence after the issue,
acquisition or redemption; and

(l) in the case of an acquisition of shares by an Issuer which is a company
registered under the Companies Act 1993, whether those shares are to be held
as Treasury Stock; and

(m) the dates of issue, acquisition or redemption.

Notices required by this Rule must be given to NZX for public release
forthwith after the issue, acquisition or redemption, and in respect of an
acquisition effected by an Issuer through NZX's order matching market or
through the order matching market of a Recognised Stock Exchange, no later
than the end of the Business Day on which the acquisition took place. For the
purposes of Rule 7.12.1 the sale or transfer of Treasury Stock by an Issuer
shall be deemed to be an issue of Securities.
End CA:00254823 For:FCG    Type:WAV/RULE   Time:2014-09-03 16:45:28