Ann: WAV/RULE: FSF: FCG - Application for waivers from Rules 5.2.3 and 7.11.1

• Release Date: 22/02/16 09:31
• Summary: WAV/RULE: FSF: FCG - Application for waivers from Rules 5.2.3 and 7.11.1
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					FSF
22/02/2016 09:31
WAV/RULE
NOT PRICE SENSITIVE
REL: 0931 HRS Fonterra Shareholders' Fund (NS)

WAV/RULE: FSF: FCG - Application for waivers from Rules 5.2.3 and 7.11.1

NZX Regulation Decision
Fonterra Co-operative Group Limited (FCG)
Application for waivers from NZX Debt Market Listing
Rules 5.2.3 and 7.11.1

18 February 2016

Background

1. The information on which this decision is based is set out in Appendix One
to this decision.These waivers will not apply if that information is not or
ceases to be full and accurate in all material respects.

2. The Rules to which this decision relates are set out in Appendix Two to
this decision.

3. Capitalised terms that are not defined in this decision have the meanings
given to them in
the Rules.

Waiver from Rule 5.2.3

Decision

4. Subject to the conditions in paragraph 5 below, and on the basis that the
information provided by FCG is complete and accurate in all material
respects, NZX Regulation("NZXR") grants FCG a waiver from Rule 5.2.3 in
respect of the FCG040s for a period of 6 months from Quotation Date, to the
extent that this Rule would otherwise require the FCG040s be held by at least
100 Members of the Public holding at least 25% of the
FCG040s on issue.

5. The waiver in paragraph 4 above is provided on the conditions that:

a. FCG clearly and prominently discloses this waiver, and the implications of
this waiver in the Terms Sheet for the FCG040s, and any other Offering
Document relating to an
offer of FCG040s made during the period of this waiver;

b. FCG clearly and prominently discloses this waiver, and the implications of
this waiver in any Half-Year and Annual Reports issued during the period of
this waiver;

c. FCG discloses liquidity as a risk in the Terms Sheet for the FCG040s; and

d. FCG notifies NZXR as soon as practicable if there is a material reduction
to the total number of Members of the Public holding at least a Minimum
Holding of the
FCG040s, and/or the percentage of FCG040s held by Members of the Public
holding at least a Minimum Holding.

Reasons

6. In coming to the decision to provide the waiver set out in paragraph 4
above, NZXR has considered that:

a. despite anticipating strong investor demand for the FCG040s, FCG will have
no knowledge of how the FCG040s will be allocated until after its bookbuild
process. Accordingly, FCG will be unable to confirm prior to the Offer
opening, whether the spread requirements will be met on Quotation;

b. FCG has taken steps to structure the Offer in a manner likely to increase
the chances of achieving the spread requirements on Quotation. These include
providing
for a five day offer period, ensuring that settlement of the FCG040s occurs
after the FCG020s mature to provide FCG020 bond holders sufficient
opportunity to participate, and by offering the bonds through NZX primary
market participants;

c. the conditions, contained in paragraph 5(a), 5(b) and 5(c) above, require
FCG to provide access to information about this waiver and its implications
to prospective investors as part of the Offer, as well as those wishing to
trade in the FCG040s for the period of this waiver. Investors can take this
information into account when making their investment decision;

d. the condition contained in paragraph 5(d) above requires FCG to provide
information that will allow NZXR to monitor any material reduction in the
spread of the FCG040s over the period of this waiver;

e. this waiver is granted for six months. This gives NZXR the opportunity to
reconsider the spread of the FCG040s in six months' time if FCG considers a
waiver is still
required; and

f. there is precedent for this decision.

Waiver from Rule 7.11.1

Decision

7. Subject to the conditions in paragraph 8 below, and on the basis that the
information provided by FCG is complete and accurate in all material
respects, NZXR grants FCG a
waiver from Rule 7.11.1 in respect of the FCG040s, to the extent that this
Rule would otherwise require FCG to allot the FCG040s within five business
days after the latest date
on which applications for the FCG040s close.

8. The waiver in paragraph 7 above is provided on the conditions that:

a. FCG allots the FCG040s six business days after the latest date on which
applications for the FCG040s close; and
b. FCG clearly and prominently discloses this waiver in the Terms Sheet for
the FCG040s.

Reasons

9. In coming to the decision to provide the waiver set out in paragraph 7
above, NZXR has considered that:

a. the policy of Rule 7.11.1 is to ensure that, where application monies have
been submitted, subscribers obtain the benefit of their investment without
undue delay. The
granting of this waiver will not offend the policy behind Rule 7.11.1;

b. FCG is completing the Offer around the time of the maturity date for one
of FCG's existing tranches of bonds, the FCG020s. FCG submits, and NZX has no
reason not to accept, that in order to ensure the success of the Offer, the
Offer timetable needs to be structured around that maturity date. Further,
FCG wants to have a five day Offer period to enable prospective investors
sufficient opportunity to invest in the FCG040s,
while reducing market risk by not running the Offer over a weekend;

c. FCG has advised that the Offer needs to be announced in advance of the
maturity of the FCG020s so that the FCG020 bond holders can consider
participating in the Offer, rather than reallocate the capital being returned
from the maturing FCG020s to other investments. In addition, to reduce market
risk, FCG wishes to announce the Offer not more than one week ahead of the
Offer opening. This timing, combined with the points above, means the best
week for FCG to run the Offer is the week before the FCG020s mature. In
addition, to enable the FCG020 bond holders to reallocate the capital being
returned from the maturing FCG020s to the FCG040s, the FCG040s need to be
allotted on or after the maturity date for the FCG020s. The maturity date for
the FCG020s is five business days after the Offer closes. Allotting on this
date would then
result in the maturity date for the FCG040s falling on a Saturday (4 March
2023). FCG considers that it would be preferable from an investor's
perspective for the maturity
date to fall on a weekday, which is achieved by allotting the following
business day (7 March 2016); and

d. the conditions of the waiver provide comfort that the impact on investors
will be limited to only one business day. Further, FCG will be required to
provide information on the
extended allotment period to prospective investors, for the investors to
consider before they decide to invest in the FCG040s.

Confidentiality

10. FCG has requested that this application, and any decision made in
relation to it, be kept confidential until the Terms Sheet, and the form of
notice to be provided by FCG under
clause 20(1)(a) of Schedule 8 of the Financial Markets Conduct Regulations
2014, has been released.

11. In accordance with Footnote 1 to Rule 1.11.2 NZXR grants FCG's request.

Appendix One

1. Fonterra Co-operative Group Limited ("FCG") is a Listed Issuer with bonds
Quoted on the NZX Debt Market ("NZDX"). These include the FCG020 Bonds
("FCG020s") which mature
on 4 March 2016, and the FCG030 Bonds which mature on 20 October 2021.

2. FCG intends to make a new offer of fixed-rate bonds ("FCG040s") to be
Quoted on the NZX Debt Market ("Offer").

3. The Offer will open on 22 February 2016 and close on 26 February 2016. The
lead manager for the Offer will conduct a bookbuild on or about 26 February
2016 in order to
determine the FCG040s' margin ("Bookbuild"), which will be used to determine
the FCG040s' interest rate. FCG intends to Quote the FCG040s on the NZDX on
or about 8 March 2016 ("Quotation Date").

4. FCG will release a terms sheet prior to the Offer opening, setting out the
main terms of the
FCG040s ("Terms Sheet").

5. In accordance with NZX Regulation's ("NZXR") Ruling on NZX Debt Market
Listing Rule ("Rule") 5.2.3 issued on 29 September 2015 (the "Ruling"), the
FCG040s are required to be
held by at least 100 Members of the Public holding at least 25% of the number
of Securities of that Class issued, with each Member of the Public holding at
least a Minimum Holding,
and those requirements are maintained.

6. The Offer is structured so that 100% of the FCG040s are reserved for
clients of the lead manager and co-manager of the Offer, primary market
participants, and other approved
financial intermediaries. There will be no public pool for the Offer. FCG has
therefore indicated that it is uncertain whether the FCG040s will satisfy the
spread requirements of
Rule 5.2.3, when the FCG040s are initially Quoted on the NZDX.

Appendix Two

NZX Debt Market Listing Rule 5.2.3

A Class of Securities will generally not be considered for Quotation on the
NZSX or NZDX unless those Securities are held by at least 500 Members of the
Public holding at least 25% of
the number of Securities of that Class issued, with each Member of the Public
holding at least a Minimum Holding, and those requirements are maintained, or
NZX is otherwise satisfied that the Issuer will maintain a spread of Security
holders which is sufficient to ensure that there is a
sufficiently liquid market in the Class of Securities.

Ruling on NZX Debt Market Listing Rule 5.2.3 - 29 September 2015

For the purposes of Rule 5.2.3, a Class of Debt Securities will generally not
be considered for Quotation on the NZDX unless those Securities are held by
at least 100 Members of the Public holding at least 25% of the number of
Securities of that Class issued, with each Member of the Public holding at
least a Minimum Holding, and those requirements are maintained.

NZX Debt Market Listing Rule 7.11.1

An Issuer making an issue of Securities Quoted or to be Quoted (other than
Equity Securities issued under Rule 7.3.10) shall proceed to allotment within
five Business Days after the latest date on which applications for Securities
close.
End CA:00278051 For:FSF    Type:WAV/RULE   Time:2016-02-22 09:31:31