Ann: WAV/RULE: MCK: MCK- Application for a waiver from Rule 9.2.1

• Release Date: 24/12/14 09:15
• Summary: WAV/RULE: MCK: MCK- Application for a waiver from Rule 9.2.1
• Price Sensitive: No
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					MCK
24/12/2014 09:15
WAV/RULE
NOT PRICE SENSITIVE
REL: 0915 HRS Millennium & Copthorne Hotels New Zealand Limited

WAV/RULE: MCK: MCK- Application for a waiver from Rule 9.2.1

NZX Regulation Decision

Millennium & Copthorne Hotels New Zealand Limited (MCK)
Application for a waiver from - NZX Main Board Listing Rule 9.2.1

24 December 2014

Background

Decision

1.On the condition set out in paragraph 2 below, NZX Regulation ("NZXR")
grants Millennium & Copthorne Hotels New Zealand Limited ("MCK") a waiver
from Rule 9.2.1 to allow MCK to enter into the Proposed Transaction without
obtaining shareholder approval.

2.The waiver in paragraph 1 above is provided on the condition that the
Directors of MCK certify to NZXR, in a form acceptable to NZXR, that:

a.they are not interested, in terms of Rule 3.4.3, in the Proposed
Transaction;

b. MCK was not influenced in its decision to enter into the Proposed
Transaction by Tai Tak;

c. the terms and conditions of the Proposed Transaction have been negotiated,
and entered into, on an arms' length and commercial basis;

d. the terms of the Proposed Transaction are fair and reasonable to MCK and
its shareholders; and

e. entry into the Proposed Transaction by MCK is in the best interests of MCK
and its shareholders who are not related to, or Associated Persons of, Tai
Tak.

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 Rules to which this decision relates are 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 policy behind Rule 9.2.1 is to ensure that undue influence is not
exercised by a Related Party to reach a favorable outcome or transfer of
value from the Issuer to the Related Party in respect of a transaction, and
that shareholders are given an opportunity to review transactions where the
Board may have been subject to actual or perceived influence from a Related
Party. NZXR may waive the requirement to obtain approval of the Material
Transaction if it is satisfied that the involvement of any Related Parties is
unlikely to influence the promotion of, or the decision to enter into the
transaction. As MCK is the purchaser under the Proposed Transaction, the
decision to enter into the Proposed Transaction will be made by the board of
MCK. Tai Tak does not have any representatives on the board of MCK nor does
it have any ownership interest in MCK. It therefore would not have the
ability to influence MCK in relation to its decision to enter into the
Proposed Transaction or the terms and conditions MCK is willing to accept.
Accordingly, the granting of the waiver will not offend the policy behind
Rule 9.2.1.

b. NZXR considers that it is unlikely that Tai Tak could have influenced
MCK's decision to enter into the Proposed Transaction for the following
reasons:

i. the decision to enter into the Proposed Transaction will be made by the
Board of MCK, of which its Directors have no direct or indirect interest in
Tai Tak.
ii.Tai Tak has no ownership interest in, or element of control over, MCK.

c.Tai Tak is technically a Related Party of MCK under the operation of Rules
1.8.3 and 1.8.2 and 9.2.3(c). However NZXR does not consider that the
connection between Tai Tak and MCK is the type of relationship that Rule
9.2.1 is aimed at regulating.  Tai Tak is the minority shareholder in KIN
Holdings and so there does not appear to be any ability for Tai Tak to exert
influence over MCK's decisions in relation to KIN Holdings.

d.NZXR is satisfied that there will be no transfer of value from MCK to Tai
Tak as a result of the Proposed Transaction. The purchase price for the
Proposed Transaction is to be determined by reference to the net asset value
of KIN Holdings, less a discount to be agreed by the parties.  The net asset
value has been calculated based on an external valuation of KIN Holdings' key
asset, and the book value of KIN Holdings' other assets.

e. The certifications provided by the Directors of MCK provide comfort that
the terms of Proposed Transaction are fair and reasonable to, and in the best
interests of, MCK and the shareholders who are not Related Parties of Tai
Tak.

f.There is precedent for this decision.

Appendix One

1. MCK is a Listed Issuer with its shares quoted on the NZX Main Board.

2. MCK owns 61.3% of the shares in KIN Holdings Limited ("KIN Holdings"). The
remaining 38.7% of the shares in KIN Holdings are held by Tai Tak Holdings
Pte Ltd ("Tai Tak").

3. Tai Tak and MCK are parties to a shareholders' agreement relating to 100%
of the shares in KIN Holdings.

4. A proposed transaction is currently being negotiated between Tai Tak and
MCK that would allow MCK to acquire the remaining 38.7% shareholding in KIN
Holdings from Tai Tak ("Proposed Transaction").

5. MCK's Average Market Capitalisation is approximately $136 million.

6. It is intended that the purchase price for the Proposed Transaction will
be based on the net asset value of KIN Holdings as at 31 July 2014, less a
discount to be agreed to by the parties. The net asset value has been
established based on the market value of KIN Holdings' key asset as
determined by an external registered valuer, and the book value of KIN
Holdings' other assets.

7. The purchase price is expected to be approximately $30 million, being
approximately 22% of MCK's current Average Market Capitalisation.
Accordingly the Proposed Transaction is likely to constitute a Material
Transaction for the purposes of Rule 9.2.2.

8. Tai Tak is a Related Party of MCK pursuant to Rule 9.2.3(c) because:

a. Tai Tak and MCK are parties to a shareholders' agreement and act jointly
or in concert in relation to KIN Holdings; and

b. Two Directors of Tai Tak or its related companies are Directors of certain
subsidiaries of MCK, namely:

i. Mr Calvin Han Leong Ho and Mr Han Khoon Ho are Directors of KIN Holdings;
and

ii.Mr Calvin Han Leong Ho is also a Director of Kingsgate Investments Pty
Limited and Birkenhead Investments Pty Limited, wholly owned subsidiaries of
KIN Holdings.

Appendix Two

Rule 1.8.2 provides:

A person (the "first person") is associated with another person (the "second
person") if, in making a decision or exercising a power affecting an Issuer,
the first person could be influenced as a consequence of an Arrangement or
relationship existing between, or involving, the first person and the second
person.

Rule 1.8.3 provides:

Without limiting Rule 1.8.2, the first person is associated with the second
person if:

(a)  the first person is a company, and the second person is:

(i) Director of that company; or

(ii) Related Company of that company; or

(iii) Director of a Related Company of that company; or

(b) the first person is a spouse, domestic companion, child or parent of the
second person, or a nominee or trustee for any of them or for the second
person; or

(c) the first person is a Director of a company, or holds a Relevant Interest
in Securities carrying more than 10% of the Votes of a company and the first
person and the second person are parties to an Arrangement relating to the
control of, or the control or ownership of Securities in, that company, which
Arrangement affects Securities of that company carrying more than 30% of the
total Votes attaching to Securities of that company; or

(d) the first person and the second person are acting jointly or in concert;
or

(e) the first person and/or the second person propose to do, or are likely to
do, anything which will cause them to become associated in terms of
paragraphs (a) to (d) above or

Rule 1.8.2

Rule 9.2.1 provides:
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.

Rule 9.2.2 provides:

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 benefits in connection with such services) is likely to exceed an
amount equal to 1% of the Average Market Capitalisation of the Issuer; or

(f) amalgamates, except for amalgamations of a wholly owned Subsidiary with
another wholly owned Subsidiary or with the Issuer:

(g) 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 provides:

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:00259383 For:MCK    Type:WAV/RULE   Time:2014-12-24 09:15:02