Ann: WAV/RULE: PGC: PGC - Waiver from NZSX Listi

• Release Date: 22/02/12 14:40
• Summary: WAV/RULE: PGC: PGC - Waiver from NZSX Listing Rule 3.3.1(c) and 3.6.2(c)
• Price Sensitive: No
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PGC
22/02/2012 12:40
WAV/RULE

REL: 1240 HRS Pyne Gould Corporation Limited

WAV/RULE: PGC: PGC -  Waiver from NZSX Listing Rule 3.3.1(c) and 3.6.2(c)

22 February 2012

NZX Market Supervision Decision
Pyne Gould Corporation Limited
Application for Waiver from NZSX Listing Rule 3.3.1(c)and 3.6.2 (c)

Background

1.Pyne Gould Corporation Limited ("PGC") is an NZSX Listed Issuer.

2.On 31 January 2012, Bruce Irvine, an Independent Director of PGC, resigned
from the Board of PGC. Mr Irvine also resigned as a member of the Audit
Committee of PGC.

3.On 15 February 2012, PGC announced that it had appointed Messrs Naylor and
Tinkler to the PGC Board and that:

"following the 30th of March and when we know the outcome of the Australian
Equity Partners Fund No 1 LP ("AEP") takeover offer we will appoint a further
Independent Director to replace Mr Irvine. We have suitable candidates in
mind but need to understand the final percentage shareholding AEP will
achieve and whether or not PGC remains listed on the NZSX."

4.Following the resignation of Mr Irvine and the appointment of Messrs Naylor
and Tinkler, the composition of the Board and Audit Committee of PGC is now
as follows:

Board
Bryan Mogridge (Chairman)
George Kerr
John Duncan
Michael Tinkler
Russell Naylor

Audit Committee
Bryan Mogridge
Russell Naylor
John Duncan

5.NZSX Listing Rule ("Rule") 3.3.1(c) requires that the Board of an Issuer
(where there are fewer than eight Directors) have a minimum of two
Independent Directors. As a result of Mr Irvine's resignation, PGC currently
only has one Independent Director, being Mr Mogridge, and therefore does not
meet the requirements of Rule 3.3.1(c).

6.Rule 3.6.2(c) requires that the Audit Committee of an Issuer be comprised
of a majority of Independent Directors.  Mr Mogridge is the only Independent
Director on the Audit Committee, therefore PGC does not meet the requirements
of Rule 3.6.2(c).

Application

7.PGC seeks temporary waivers until 30 April 2012, from Rules 3.3.1(c), and
3.6.2(c) to allow:

(a) the PGC Board to have one Independent Director, instead of the two
required by Rule 3.3.1(c); and

(b) the PGC Audit Committee to have one Independent Director, instead of
being comprised as required by Rule 3.6.2(c).

8.In support of its application, PGC submits that:

(a)although Mr Irvine had previously indicated that he wished to resign as a
director of PGC in due course, PGC was unaware of there being any urgency in
this respect, and the discussion of the proposed resignation was deferred,
following the receipt of the takeover offer from AEP.  PGC's expectation was
that Mr Irvine would remain as a Director of PGC until the end of February
2012.  As such, it was unexpected when Mr Irvine advised in mid-January 2012
that he wished to resign in the near future (culminating in the notice given
on 20 January 2012 of his resignation with effect from 31 January 2012) due
to the requirements of Mr Irvine's other directorships.  That said, at the
time, PGC nevertheless considered that it could secure a suitable replacement
Independent Director in a relatively short period of time;

(b)however, the position became more difficult when the closing date of the
takeover offer of AEP was extended.  The closing date was 31 January 2012,
but was extended (on 31 January) to 15 February, and then (on 14 February) to
30 March.  AEP currently has acceptances for more than 65% of PGC shares.  If
AEP received acceptances for more than 90% of PGC shares by 30 March 2012,
then (in accordance with the Takeovers Code) AEP will be required to acquire
all remaining PGC shares, and PGC will be delisted from the Main Board market
operated by NZX Limited ("NZSX").  Although, at the time of notice being
given of Mr Irvine's planned resignation, it was relatively clear that AEP
would not reach that level of acceptances by 31 January 2012, the extension
of the offer to 30 March 2012 means this possibility cannot be discounted.
PGC's experience is that, in the current environment, it is difficult to find
suitable Independent Directors, but this difficulty is compounded for PGC by
AEP's ongoing takeover offer, and by the possibility now that PGC may delist
from the NZSX, such that any appointment of a replacement Independent
Director may only be for a matter of a few weeks;

(c)PGC recognises that the appointment of a replacement for Mr Irvine needs
to be completed as quickly as possible.  The PGC Board has been actively
considering potential candidates, and does have a candidate in mind.
However, PGC also considers that any candidate needs sufficient time to
assess the company and the opportunity before agreeing to the appointment.
PGC's experience is that it is difficult to convince potential candidates to
undertake this due diligence in light of the matters discussed in paragraph
8(b);

(d)having regard to the matters discussed in paragraphs 8(b) and 8(c), PGC
therefore requests that it be given until 30 April 2012 to replace Mr Irvine,
which will provide PGC with one month after the closing date of AEP's
takeover to secure a replacement Independent Director. This is consistent
with the three month period that has been granted in respect of the other
waivers discussed at paragraph 8(g), in that the period expires three months
after Mr Irvine's resignation;

(e)the waivers sought are temporary in nature and would expire on the sooner
of a replacement Independent Director being appointed by the PGC Board, or on
30 April 2012;

(f)as a replacement Independent Director is expected to be appointed to the
Board no later than 30 April 2012, the Independent Director would be involved
in any Audit Committee meetings associated with the completion of PGC's
financial statements for the year ended 30 June 2012; and

(g)NZX Market Supervision ("NZXMS") has previously granted waivers in similar
circumstances, including to Dorchester Pacific Limited (6 September 2010),
Skellerup Holdings Limited (15 July 2010), New Image Group Limited (27
October 2009), and Widespread Portfolios Limited (28 November 2008).

Rules
9.Rule 3.3.1(c) provides as follows:

"the minimum number of Independent Directors shall be two, or if there are
eight or more Directors, three or one-third (rounded down to the nearest
whole number of Directors) of the total number of Directors, whichever is the
greater."

10.Rule 3.6.2(c) provides as follows:

"The Audit Committee shall:  ...

(c) have a majority of members that are Independent Directors; and ..."

Decision

11.On the basis that the information provided by PGC to NZXMS is complete and
accurate in all respects, NZXMS grants PGC a temporary waiver until 30 April
2012 from the requirements of Rules 3.3.1(c) and 3.6.2(c) on the following
conditions:

(a)that the Independent Director and chairman of PGC certify to NZXMS that he
considers that the absence of an additional Independent Director from the
Board and Audit Committee of PGC until 30 April 2012 will not prejudice
shareholders of PGC; and

(b)PGC's annual report that relates to the period for which PGC relies on
this waiver will contain a description of this waiver and disclose the period
within which PGC's Board and Audit Committee did not meet the requirements of
Rule 3.3.1(c) and 3.6.2(c).

Reasons

12.In coming to the decision to grant PGC a temporary waiver from Rules
3.3.1(c) and 3.6.2(c), NZXMS considered the following:

(a)NZXMS accepts that it is difficult for PGC to appoint an Independent
Director until the outcome of the AEP takeover is known;

(b)the AEP takeover has been extended to the maximum extent possible and
cannot be further extended beyond 30 March 2012.  Independent Directors play
a minimal role at this stage of the takeover process and NZXMS has consulted
with the Takeovers Panel regarding the waiver decision; and

(c)the conditions contained in paragraph 11 will ensure that shareholders
have oversight of PGC's non-compliance with Rules 3.3.1(c) and 3.6.2(b) and
are not unduly prejudiced by PGC's failure to comply with those Rules.

13.NZXMS reminds Issuers that in accordance with footnote 2 to Rule 1.11.4,
retrospective waivers will only be considered in exceptional circumtances
where a minor or inadvertent breach by an Issuer would incur severe
consequences for the Issuer if the application were not considered. Where an
Issuer anticipates that it will be in breach of the Rules, or it comes to an
Issuer's attention that it is currently in breach of the Rules, NZXMS reminds
Issuers that the best course of action is to discuss the situation with NZXMS
as soon as possible.
End CA:00219863 For:PGC    Type:WAV/RULE   Time:2012-02-22 12:40:21