IQE 0.00% 1.1¢ intueri education group limited (in liquidation)

Ann: WAV/RULE: IQE: Waiver from NZX Main Board Listing Rule 9.2.1

  1. lightbulb Created with Sketch. 2
    • Release Date: 23/03/16 09:39
    • Summary: WAV/RULE: IQE: Waiver from NZX Main Board Listing Rule 9.2.1
    • Price Sensitive: No
    • Download Document  13.08KB
    					IQE
    23/03/2016 09:39
    WAV/RULE
    NOT PRICE SENSITIVE
    REL: 0939 HRS Intueri Education Group Limited
    
    WAV/RULE: IQE: Waiver from NZX Main Board Listing Rule 9.2.1
    
    NZX Regulation Decision
    Intueri Education Group Limited (IQE)
    Application for a waiver from NZX Main Board Listing Rule 9.2.1
    
    21 March 2016
    
    Decision
    1. Subject to the conditions set out in paragraph 2 below and on the basis
    that the information provided by Intueri Education Group Limited (IQE) is
    complete and accurate in all material respects, NZX Regulation (NZXR) grants
    IQE a waiver from NZX Main Board Rule 9.2.1 (Rule) to the extent that IQE
    would be required by that Rule to seek shareholder approval to enter into the
    Earn-Out Deferment.
    2. The waiver in paragraph 1, above, is provided subject to the following
    conditions:
    (a) the Directors of IQE certify to NZX that:
    i. the terms of the Earn-Out Deferment have been and will be negotiated on an
    arm's length and commercial basis;
    ii. entry into and the terms of the Earn-Out Deferment will be in the best
    interests of IQE, and it will be fair and reasonable to IQE's
    shareholders;and
    iii. IQE has not been and will not be influenced in its decision to enter
    into the Earn-Out Deferment by the interests of the Vendors; and
    (b) the waiver, its conditions and the implications of this waiver are
    disclosed in IQE's annual report for the period that it seeks to rely on the
    waiver.
    3. The material 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
    aspects.
    4. The Rules to which this decision relates are set out in Appendix Two.
    5. Capitalised terms that are not defined in this decision have the meanings
    given to them in the Rules.
    Reasons
    6. In coming to the decision to provide the waiver set out in paragraph 1
    above, NZXR has considered that:
    (a) the policy behind Rule 9.2.1 is to regulate transactions where a Related
    Party to a Material Transaction may gain favourable consideration due to its
    relationship with the Issuer. NZXR may waive the requirement to obtain the
    approval of a resolution for the purposes of Rule 9.2.1 if it is satisfied
    that the personal connections with, or personal interests of a Related Party
    are immaterial or plainly
    unlikely to have influenced the promotion, or the decision to enter into, the
    transaction. The granting of this waiver will not offend the policy behind
    Rule 9.2.1;
    (b) IQE has submitted, and NZXR agrees, it is unlikely the Vendors could have
    influenced IQE's decision to enter into the Earn-Out Deferment for the
    following reasons:
    i. neither Ms Brookes nor Ms Walsh has ever been a Director of IQE.
    Therefore, neither of the Vendors have never been in a position to directly
    influence the decision of the IQE board;
    ii. Ms Brookes retired as a Director of OCA and entered into a period of
    maternity leave for her position as CEO for OCA on 1 January 2016. The
    negotiations for the Earn-Out Deferment began after Ms Brookes' retirement.
    Therefore, it is unlikely Ms Brookes' involvement was material or influential
    to the management of IQE, or its board, in determining to enter into the
    Earn-Out Deferment;
    iii. Ms Walsh is considered to be a Related Party, only because of her role
    as an executive officer of OCA, a subsidiary of IQE. The nature and function
    of that role means it is unlikely Ms Walsh's involvement was material or
    influential to the management of IQE, or its board, in determining to enter
    into the Earn-Out Deferment;
    iv. the Earn-Out Deferment has been proposed by IQE and IQE submits is the
    most appropriate method of accommodating the higher than expected earn-out
    payment required; and
    v. IQE has submitted, and NZXR has no reason not to accept, that the only
    transfer of value to the Vendors is through the payment of interest.
    Implementation of the Earn-Out Deferment is important for IQE's management of
    working capital in the near term. As such IQE receives a reciprocal benefit
    and was unlikely influenced into entering the Earn-Out Deferment by the
    Vendors;
    (c) the conditions of the waiver provide comfort that the terms of the
    Earn-Out Deferment will be negotiated, agreed and entered into on an arm's
    length commercial basis and will be in the best interests of IQE and its
    shareholders; and
    (d) there is precedent for the decision.
    Confidentiality
    7. IQE has requested that NZX keep this waiver confidential until the
    Earn-Out Deferment negotiations are complete, and is announced to the market.
    In accordance with Footnote 1 to Rule 1.11.2 NZXR grants IQE's request.
    
    Appendix One
    1. Intueri Education Group Limited (IQE) is a Listed Issuer with ordinary
    shares Quoted on the NZX Main Board.
    2. IQE entered into a sale and purchase agreement with Ms Cheryl Brookes and
    Ms Catherine Walsh (both acting in their individual capacities and as
    trustees for the C Walsh Investment Trust and the Brookes Investment Trust
    respectively) (the Vendors) on the 12 December 2014 (the SPA). The SPA was
    for the acquisition of the remaining ordinary shares in Online Courses
    Australia Group Pty Limited (OCA) that IQE did not already own.  The SPA was
    amended on 6 January 2015 (prior to completion of the share purchase).
    3. On completion of the SPA, OCA became a wholly-owned subsidiary of IQE.
    4. The SPA provides for an "earn-out" mechanism. The earn-out amount payable
    by IQE to the Vendors to be determined based on the performance of OCA's
    business for the financial year ended 31 December 2015.
    5. Following the completion of the year ended 31 December 2015, the earn-out
    payment required to be made by IQE is AU$19,908,998, approximately
    AU$5,000,000 higher than IQE contemplated when entering into the SPA.
    6. To assist IQE with the prudent management of its working capital
    requirements, the Vendors and IQE have agreed that a portion of the earn-out
    amount will be deferred from the date that is 5 business days after the 31
    December 2015 audit of OCA is completed, which is expected to be in late
    March or early April 2016 until 30 June 2017 (the EarnOut Deferment). The
    proposed Earn-Out Deferment has a value of AU$4,908,998, which exceeds more
    than 10% of IQE's Average Market Capitalisation.
    7. The key terms of the Earn-Out Deferment are:
    (a) interest is to be payable on the amount deferred under the Earn-Out
    Deferment at a rate of 6.95% per annum;
    (b) the repayment date is to be 30 June 2017, or earlier if elected by IQE,
    or certain events of default occur; and
    (c) security is to be granted over the assets of some of IQE's Australian
    subsidiaries and the giving of guarantees by some of IQE's Australian
    subsidiaries, in favour of the Vendors.
    8. The Vendors are related parties to the transaction pursuant to Rule 9.2.3.
    
    9. Ms Brookes was a Director and the Chief Executive (CEO) of OCA until 1
    January 2016. Effective from that date Ms Brookes resigned from her position
    as a Director of OCA, and began a period of maternity leave from her position
    as CEO.  As six months has not lapsed since Ms Brookes left her positions as
    a Director or executive officer of OCA, she is a Related Party of IQE under
    Rule 9.2.3(a).
    10. Ms Walsh is an executive officer of OCA, responsible for quality and
    compliance oversight. Pursuant to Rule 9.2.3(a), Ms Walsh is a Related Party
    of IQE.
    11. Neither of the Vendor's are, nor have ever been, a Director of IQE.
    12. The only value received by the Vendor's under the Earn-Out Deferment is
    the payment of interest on the amount of the earn-out that is deferred, and
    payment of the deferred principal amount.
    13. The Earn-Out Deferment is a Material Transaction under Rule 9.2.2 and
    therefore requires shareholder approval under Rule 9.2.1 because:
    (a) pursuant to Rule 9.2.2(c) the Earn-Out Deferment constitutes borrowings
    by IQE in excess of 10% of IQE's Average Market Capitalisation as at 11 March
    2016;
    (b) pursuant to Rule 9.2.2(d) the security to be granted over the assets of
    some of IQE's Australian subsidiaries to secure the borrowing constitutes the
    granting of security for obligations which could expose IQE to liability in
    excess of 10% of IQE's Average Market Capitalisation as at 11 March 2016; and
    
    (c) pursuant to Rule 9.2.2(d) the giving of guarantees by some of IQE's
    Australian subsidiaries constitutes the entry into of guarantees which could
    expose IQE to liability in excess of 10% of IQE's Average Market
    Capitalisation as at 11 March
    2016.
    14. IQE has applied to NZX Regulation (NZXR) for a waiver from Rule 9.2.1 to
    the extent that this Rule would otherwise require IQE to obtain shareholder
    approval to enter into the Earn-Out Deferment.
    
    Appendix Two
    Rule 9.2 Transactions with Related Parties
    Rule 9.2.1 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 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.
    Rule 9.2.2 For the purposes of Rule 9.2.1, "Material Transaction" means a
    transaction or a related series of transactions whereby an Issuer:
    (a) purchases or otherwise acquires, gains, leases (as lessor or lessee) or
    sells or otherwise disposes of, assets having an Aggregate Net Value in
    excess of 10% of the Average Market Capitalisation of the Issuer; or
    (b) issues its own Securities or acquires its own Equity Securities having a
    market value in excess of 10% of the Average Market Capitalisation of that
    Issuer, save in the case of an issue pursuant to Rule 7.3.5 where only the
    market value of those Securities being issued to the Related Party or to any
    Employees of the Issuer are to be taken into account; or
    (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
    (d) enters into any guarantee, indemnity, underwriting, or similar
    obligation, or gives any security, for or of obligations which could expose
    the Issuer to liability
    in excess of 10% of the Average Market Capitalisation of the Issuer; or
    (e) provides or obtains any services (including without limitation obtaining
    underwriting of Securities or services as an Employee) in respect of which
    the actual gross cost to the Issuer in any financial year (ignoring any
    returns or
    (f) benefits in connection with such services) is likely to exceed an amount
    equal to 1% of the Average Market Capitalisation of the Issuer; or
    (g) amalgamates, except for amalgamations of a wholly owned Subsidiary with
    another wholly owned Subsidiary or with the Issuer;
    (h) For the purposes of Rule 9.2.2(a), "Aggregate Net Value" means the net
    value of those assets calculated as the greater of the net tangible asset
    backing
    value (from the most recently published financial statements) or market value
    
    Rule 9.2.3 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 of 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 a
    status may reasonably be expected, other than as a consequence of the
    Material
    Transaction itself;
    but a person is not a Related Party of an Issuer if:
    (e) the only reason why that person would otherwise be a Related Party of the
    Issuer is that a Director or executive officer of the Issuer is also a
    Director of that person, so long as:
    i. not more than one third of the Directors of the Issuer are also Directors
    of that person; and
    ii. no Director or executive officer of the Issuer has a material direct or
    indirect economic interest in that person, other than by reason of receipt of
    reasonable Directors' fees or executive remuneration; or
    (f) that person is a Subsidiary of, incorporated joint venture of, or
    unincorporated joint venture participant with, the Issuer and:
    i. no Related Party of the Issuer has or intends to obtain a material direct
    or indirect economic interest in that Subsidiary, incorporated joint venture,
    or unincorporated joint venture participant, other than by reason of receipt
    of
    reasonable Director's fees or executive remuneration; and
    ii. the Issuer is entitled to participate, directly or indirectly, in at
    least one half of the income or profits, and the assets, of that Subsidiary,
    incorporated joint venture, or unincorporated joint venture participant.
    End CA:00279742 For:IQE    Type:WAV/RULE   Time:2016-03-23 09:39:30
    				
 
watchlist Created with Sketch. Add IQE (NZSX) to my watchlist

Currently unlisted public company.

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.