Ann: WAV/RULE: MCK: MCK - Application for waiver

• Release Date: 27/09/13 17:55
• Summary: WAV/RULE: MCK: MCK - Application for waiver from NZSX Listing Rule 9.2.1
• Price Sensitive: No
• Download Document  9.65KB

					MCK
27/09/2013 15:55
WAV/RULE

REL: 1555 HRS Millennium & Copthorne Hotels New Zealand Limited

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

NZX Regulation Decision
Millennium & Copthorne Hotels New Zealand Limited Application for Waiver from
NZX Main Board Listing Rule 9.2.1.

Background

1. Millennium & Copthorne Hotels New Zealand Limited ("MCK") is a Listed
Issuer with Ordinary Shares Quoted on the NZX Main Board.

2. MCHNZ Investments Limited ("MCHNZ") is a wholly owned subsidiary of MCK.
MCHNZ holds 24.5% of the voting ordinary shares ("FS Ordinary Shares") and
32.2% of the non- voting preference shares ("FS Preference Shares") in First
Sponsor Capital Limited ("First Sponsor"). Millennium and Copthorne Hotels
plc ("M&C plc") holds 15.8% of the FS Preference Shares through a series of
wholly owned subsidiaries. Kingsgate International Pty Ltd ("KI") (61.3% of
which is owned by MCK and 39% of which is owned by Tai Tak Estates Sdn Bhd
("Tai Tak")) holds 2% of the FS Preference Shares.

3. The remaining 50% of the FS Preference Shares and 24.5% of the FS Ordinary
Shares are held by Tai Tak Asia Properties Pte Limited ("TTAP"), a wholly
owned subsidiary of Tai T ak.

4. A structure diagram of the group is attached as a schedule to this
decision.

5. One director of First Sponsor, Mr Wong Hong Ren, is also the chairman of
MCK.

6. Another director of First Sponsor, Mr Ho Han Leong Calvin, is a director
of a number of subsidiaries of MCK that are directly or indirectly partly
owned by Tai Tak and is also the managing director of Tai Tak. Mr Ho Han
Leong Calvin's directorship in the subsidiaries of MCK is to represent Tai
Tak's interest in those joint venture companies with MCK, which include KI.
Except for a number of joint venture companies and common investments with
MCK, Tai Tak is not otherwise related to MCK, MCHNZ or M&C plc.

7. First Sponsor requires funding for further expansion, in particular the
development of its properties in Chengdu, Sichuan Province, China. This new
funding is proposed to take the form of an issue of new FS Preference Shares
pro rata to First Sponsor's existing holders of FS Preference Shares (the
"Transaction").

8. KI (of which MCK owns 61.3%) may also subscribe for its pro rata
entitlement of FS Preference Shares or alternatively MCHNZ may take up some
or all of KI's entitlement.
?
9. The maximum amount of new funding the MCK group may be required to provide
to First Sponsor under the Transaction is US$34 million. US$34 million
constitutes approximately 20% of MCK's Average Market Capitalisation ("AMC")
of $NZ243 million. The acquisition would therefore be a Material Transaction
under the NZX Main Board Listing Rule 9.2.1 (the "Rules") as it is a purchase
of assets with a value in excess of 10% of MCK's AMC.

10. The other FS Preference Share holders have indicated they will provide
their respective proportionate share of the funding requested by First
Sponsor.

11. Rule 9.2.1 requires an Issuer to obtain shareholder approval to enter
into a Material Transaction with a Related Party.

12. MCK and First Sponsor are Related Parties, as MCK, First Sponsor, and a
number of MCK's subsidiaries have common directors.
Application

13. MCK seeks a waiver from the requirement in Rule 9.2.1 to obtain prior
shareholder approval in relation to the acquisition of FS Preference Shares,
to the extent that the subscription price for the new FS Preference Shares to
be issued to MCHNZ and KI together exceeds 10% of MCK's AMC.

14. In support of its application, MCK submits that:
(a) First Sponsor is neither a subsidiary nor a related company (as those
terms are defined in the Companies Act 1993) of MCK;
(b) Mr Wong Hong Ren is one of five directors of MCK. He has no material
direct or indirect economic interest in First Sponsor (other than by way of
reasonable directors' fees, if any);
(c) First Sponsor's expansion plans and its proposal for further capital were
formed independently and without influence from MCK, other than director
input at board level of First Sponsor (one M&C plc group representative (Mr
Wong Hong Ren) from a board of four directors);
(d) any negotiations between MCK and First Sponsor in relation to the
Transaction have been, and will continue to be, undertaken on an arm's length
basis. First Sponsor has no ability to influence MCK in relation to its
decision whether to enter into any agreement with First Sponsor in relation
to the Transaction or to the terms and conditions of any such agreement other
than through normal arm's length negotiations. MCK has considered, and will
continue to consider, the merits of the Transaction independently and in its
own interests. Accordingly, MCK's shareholders will be adequately protected;
(e) as First Sponsor is not exerting influence over MCK in order to ensure
the Proposed Transaction proceeds, the timing and cost implications for MCK
in requiring it to convene a shareholders meeting and to commission an
appraisal report in relation to the Transaction would prejudice shareholders
rather than protect them; and
(f) NZXR previously granted MCK a waiver from Rule 9.2.1 in 2011. The
relevant facts for the current application are in substance the same as those
of the previous waiver;
(g) as a condition to any waiver granted, the MCK board is willing to certify
to NZX that the negotiations in relation to the Transaction and the
Transaction itself:
i. are on an arm's length basis;
ii. have been considered independently of First Sponsor; and
iii. are in the interests of MCK's shareholders.

?Rules

15. 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.

16. 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 ...

?17. 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; ...

Decision

18. On the basis that the information provided to NZX Regulation ("NZXR") is
full and accurate in all material respects, NZXR grants MCK a waiver from
Rule 9.2.1, to allow MCK and KI to acquire the FS Preference Shares in the
Transaction.

19. NZXR grants the waiver in paragraph 18 on the conditions that:
a. the Directors of MCK, other than Mr Wong Hong Ren, certify to NZX that:
i. the negotiations in relation to the Transaction have been conducted on an
arm's length basis;
ii. the Transaction has been completed on an arm's length basis;
iii. the Transaction has been considered independently of First Sponsor;
iv. the Transaction is in the interests of, and fair to, MCK's shareholders.

b. Mr Wong Hong Ren will not vote on any MCK board resolutions relating to
the Transaction, nor will he be counted in the quorum for the purposes of
considering the Transaction.

Reasons

20. In granting a waiver from Rule 9.2.1, NZXR has considered the following:

?(a) Mr Wong Hong Ren is one of five directors of MCK, and, pursuant to Rule
3.4.3, will not vote on the board resolution relating to the Transaction, nor
will he be counted in the quorum for the purposes of consideration of the
Transaction. Accordingly, he will have little, if any, influence over MCK's
decision to enter into the Transaction;
(b) Mr Wong Hong Ren also has no material direct or indirect economic
interest in First Sponsor other than by way of reasonable directors' fees, if
any;
(c) Mr Ho Han Leong Calvin's directorships in the subsidiaries of MCK is to
allow him to represent Tai Tak's interests in those subsidiaries, as is
common in joint ventures; and
(d) The directors of MCK, excluding Mr Wong Hong Ren, will provide NZX with
the certification required by the condition in paragraph 19 above.

Confidentiality

21. MCK has submitted that the waiver application and the information
contained within it (including the fact that MCHNZ is considering providing
further funding to First Sponsor) are commercially sensitive. MCK has
requested that the application and any decision be kept confidential until
MCK has made an announcement regarding the Transaction, if any.

22. In accordance with Footnote 1 to Rule 1.11.2, NZXR grants MCK's request.

ENDS.
End CA:00241724 For:MCK    Type:WAV/RULE   Time:2013-09-27 15:55:22