Ann: WAV/RULE: TRP: TRP - Ruling and Waivers from

• Release Date: 20/08/12 14:12
• Summary: WAV/RULE: TRP: TRP - Ruling and Waivers from NZDX Listing Rules
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TRP
20/08/2012 12:12
WAV/RULE

REL: 1212 HRS Transpower New Zealand Limited

WAV/RULE: TRP: TRP - Ruling and Waivers from NZDX Listing Rules

NZX Market Supervision Decision
Transpower New Zealand Limited
Application for Ruling and Waivers from NZDX Listing Rules 5.2.3 and 11.1.1

Background

1. Transpower New Zealand Limited ("TRP") is a Listed Issuer with fixed rate
bonds Quoted on the NZDX ("TRP010").

2. TRP intends to make an offer of a second tranche of fixed rate bonds to be
Quoted on the NZDX ("Bonds"). The Bonds will be offered pursuant to a
registered simplified disclosure prospectus ("Prospectus") and a pricing
supplement ("Pricing Supplement").

3. The terms and conditions of the Bonds will be contained in the master
trust deed between TRP and The New Zealand Guardian Trust Company Limited
("Trustee"), dated 18 March 2011 ("Master Trust Deed"), as amended and
restated from time to time, and the supplemental trust deed in relation to
the Bonds to be entered into by TRP and the Trustee ("Supplemental Trust
Deed").

Application One - Ruling

4. TRP has approached NZXMS seeking a ruling that, for the purposes of the
NZSX/NZDX Listing Rules ("Rules"), the Offering Document in respect of the
Bonds is to constitute the TRP Prospectus as supplemented by the Pricing
Supplement.

5. Rule 7.1.1 provides that, if an Issuer has an investment statement, the
Offering Document is that investment statement. In other circumstances, the
Offering Document is to be a Profile.

6. As TRP is not required to have an investment statement for the purposes of
the Securities Act 1978 ("Securities Act"), because of its reliance on the
simplified disclosure prospectus regime, in relation to the offer of Bonds,
the Offering Document is to be the Profile. Rule 7.1.3 provides that the
Profile is to contain all information required by the Securities Act and
regulations made under that Act, as well as all information required by the
Rules.

7. TRP wishes to meet the requirements of the Rules by including the
information required by the Rules, which is not contained in the TRP
Prospectus, in the Pricing Supplement.

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

(a) As the Prospectus provides the flexibility for TRP to issue multiple
tranches of bonds on terms which may vary between tranches, certain terms
will be set out in the Pricing Supplement for the relevant bonds. In
particular, as not every tranche will be quoted on the NZDX, information
relating to listing and quotation, and the requirements of the Rules, in
respect of a tranche of bonds, if relevant, will be set out in the relevant
pricing supplement. Accordingly, the Prospectus as supplemented by the
Pricing Supplement is the appropriate document to be the Offering Document;
and

(b) It will be apparent to the market that the Prospectus as supplemented by
the Pricing Supplement is the Offering Document as they will be announced
together following the registration of the Prospectus with the Registrar of
Financial Service Providers.

Application One - Rules

9. Rule 1.6.1 defines an Offering Document as:

"an Investment Statement or a Profile."

10. Rule 7.1.1 provides:

"If the Issuer or applicant is required (or but for an exemption granted by
the Securities Commission under section 5 of the Securities Act 1978, would
have been required) to register a Prospectus under the Securities Act 1978,
the Offering Document shall be if the Issuer or applicant has an Investment
Statement, an Investment Statement. In other circumstances, the Offering
Document shall be a Profile."

11. Rule 7.1.3 provides:

"Every Profile shall:

(a) comply with, and contain all information required to be contained in a
registered prospectus under, the Securities Act 1978 and regulations made
under that Act...; and

(b) contain all other information required by the Rules; ..."

Application One - Decision

12. On the basis that the information provided by TRP to NZXMS is complete
and accurate in all material respects, NZXMS rules that, for the purposes of
the Rules, the Offering Document in respect of the Bonds shall be the
Prospectus as supplemented by the Pricing Supplement on the conditions that:

(a) the Prospectus and Pricing Supplement are released together; and

(b) NZXMS reviews and approves the Prospectus and the Pricing Supplement.

Application One - Reasons

13. In coming to the decision to rule that the Offering Document for the
Bonds shall be the Prospectus as supplemented by the Pricing Supplement,
NZXMS has considered the following matters:

(a) such a ruling allows TRP to meet the requirements of the Rules whilst
retaining the flexibility to issue multiple tranches of bonds, including
tranches that will not be Quoted, under the Prospectus;

(b) the information required by the Rules relating to listing and quotation
will be clearly set out in the Pricing Supplement for the Bonds;

(c) it could be confusing for investors if the Prospectus is required to
contain the information required by the Rules relating to listing and
quotation as that information will not be relevant for investors of unquoted
bonds;

(d) NZXMS will have the opportunity to review and approve each of the
Prospectus and the Pricing Supplement; and

(e) it will be apparent to the market that the Prospectus as supplemented by
the Pricing Supplement is the Offering Document for the Bonds as they will be
announced together following the registration of the Prospectus with the
Registrar of Financial Service Providers.

Application Two - Waiver from Rule 5.2.3

14. TRP has applied to NZX Market Supervision ("NZXMS") seeking a waiver from
Rule 5.2.3, which requires a Class of Securities to be 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 ("Spread Requirements").

15. In support of its application, TRP submits that:

(a) debt securities are not subject to the same degree of trading activity as
equity securities;

(b) in respect of debt instruments, it is the quality of the issuer and the
rate of return which fundamentally drives price;

(c) the Bonds are likely to be allotted to NZX Participants (as well as
institutional investors), and it is therefore anticipated that the Spread
Requirements of Rule 5.2.3 will be met over time, particularly once the Bonds
are Quoted;

(d) TRP expects that it will take approximately one year from the date of
Quotation of the Bonds for the Spread Requirements to be met;

(e) If a waiver is granted, TRP will disclose the existence of the waiver in
the Pricing Supplement for the offer of the Bonds. This will ensure that
prospective Bondholders are aware that the Bonds are unlikely to meet the
Spread Requirements and that, as a result, the Bonds may have reduced
liquidity;

(f) any lack of initial liquidity will not disadvantage Bondholders because:

(i) the Bonds are expected to be rated AA- by Standard & Poor's and A1
Moody's; and

(ii) it is likely that a small investor may not trade the Bonds, but will
hold the Bonds in order to earn interest over the term of the investment;

(g) Footnote 1 to Rule 5.2.3 states that NZX will readily consider a waiver
from the requirements of Rule 5.2.3 in the case of Debt Securities if NZX is
satisfied that the lack of initial liquidity would not be of a disadvantage
to holders; and

(h) NZX has previously granted waivers from Rule 5.2.3 with respect to offers
of Debt Securities, including to TRP in respect of its TRP010s on 28 February
2012. Other similar waivers were also granted to:

(i) Fonterra Co-operative Group Limited in respect of its bonds on 17 March
2010; and

(ii) Auckland International Airport Limited in respect of its offers of bonds
on 9 July 2004, 14 October 2005 and 16 March 2007.

Application Two - Rule

16. Rule 5.2.3 provides:

  "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."

17. The footnote to Rule 5.2.3 provides:

  "NZX will readily consider a waiver from the requirements of Rule 5.2.3:

  (a) in the case of Debt Securities or Convertible Equity Securities if NZX
is satisfied that the lack of initial liquidity would not be of a
disadvantage to holders... ."

Application Two - Decision

18. Subject to paragraph 19 below, and on the basis that the information
provided by TRP is complete and accurate in all material respects, NZXMS
grants TRP a waiver from Rule 5.2.3 for a period of one year from the
Quotation date of the Bonds, to allow TRP to have fewer than 500 Bondholders
who are Members of the Public.

19. The waiver contained in paragraph 18 is granted on the following
conditions:

(a) TRP must clearly and prominently disclose this waiver decision and its
implications in the Pricing Supplement for the offer of the Bonds;

(b) TRP must disclose liquidity as a risk in the Prospectus; and

(c) the waiver, its conditions and its effects must be disclosed in the half
year and annual reports for the year that the waiver is relied upon.

Application Two - Reasons

20. In coming to the decision to grant TRP a waiver from Rule 5.2.3, NZXMS
has considered the following matters:

(a) TRP has advised that it expects the Bonds to meet the Spread Requirements
in a period of approximately one year from the Quotation date of the Bonds;

(b) the condition, contained in paragraph 19(a) above, that TRP must disclose
the waiver decision and its implications in the Pricing Supplement for the
offer of the Bonds will ensure that prospective Bondholders are aware that
the Bonds may not satisfy the Spread Requirements and that, as a result, the
Bonds may have reduced liquidity;

(c) debt securities are not subject to the same degree of trading activity as
equity securities; and

(d) there is precedent for temporary waivers being granted in the past in
similar circumstances.

Application Three - Waiver from Rule 11.1.1

21. TRP has also applied to NZXMS seeking a waiver from Rule 11.1.1, which
provides that subject to any legislation and Rules 11.1.4 and 11.1.5, no
Issuer shall impose, in its Constitution or otherwise, any restriction on the
right of a holder of a Quoted Security to transfer that Security, or any
restriction upon registration of a properly completed transfer of Quoted
Securities.

22. TRP wishes to include in the Supplemental Trust Deed for the Bonds, and
may wish to include in any other subsequent supplemental trust deeds issued
pursuant to the Master Trust Deed for bonds in respect of which an
application for quotation on the NZDX has been made, terms which will:

(a) prohibit transfers if they result in the transferor or the transferee
holding less than $5,000 (if not zero) in principal amount in the Bonds
(which is the Minimum Holding for the Bonds); and

(b) require that Bonds be transferred in minimum amounts of $1,000 and
multiples thereof (together, "Transfer Restrictions").

23. In support of its application, TRP submits that:

(a) Rule 11.1.4(b) permits an Issuer to decline or accept to register a
transfer of Bonds if such registration, together with the registration of any
further transfer or transfers then held by the Issuer and awaiting
registration, would result in the proposed transferee (but not the
transferor) holding Bonds of less than the Minimum Holding. There appears to
be no reason for this distinction;

(b) it would be unduly burdensome for TRP to be required to allow holders of
Bonds to hold a parcel of less than the Minimum Holding or to permit
transfers of less than $1,000 or multiples thereof as this is likely to
increase its compliance costs;

(c) minimum transfers of $1,000 is a commonly used threshold across all debt
securities;

(d) the minimum amount of the Bonds that investors may subscribe for pursuant
to the Prospectus is $5,000 and TRP will only allot further Bonds in
multiples of $1,000; and

(e) NZXMS has previously granted waivers from Rule 11.1.1 in respect of
issues of debt securities, including to TRP in respect of its TRP010s on 28
February 2012. Other similar waivers were granted to:

(i) Z Energy Limited on 17 June 2011; and

(ii) Fonterra Co-operative Group Limited on 17 March 2010.

Application Three - Rules

24. Rule 11.1.1 provides:

"Subject to the provisions of any legislation, and to Rules 11.1.4 and
11.1.5, no Issuer shall impose, in its Constitution or otherwise, any
restriction on the right of a holder of a Quoted Security to transfer that
Security, or any restriction upon registration of a properly completed
transfer of Quoted Securities."

25. Rule 11.1.4 provides:

  "An Issuer may decline to accept or register:

... (b) a transfer of Securities, if such registration, together with the
registration of any further transfer or transfers then held by the Issuer and
awaiting registration, would result in the proposed transferee holding
Securities of less than the Minimum Holding."

Application Three - Decision

26. Subject to paragraph 27 below, and on the basis that the information
provided to NZXMS is full and accurate in all material respects, NZXMS grants
TRP a waiver from Rule 11.1.1 to allow TRP to include Transfer Restrictions
in the Supplemental Trust Deed for the Bonds, and any other supplemental
trust deed issued pursuant to the Master Trust Deed, prohibiting transfers
that:

(a) are of an amount of Bonds that is not a multiple of $1,000; or

(b) would result in the transferor holding an aggregate principal amount of
Bonds of less than $5,000 (if not zero) following that transfer and any other
transfers awaiting registration.

27. The waiver contained in paragraph 26 above is granted on the conditions
that TRP clearly and prominently disclose:

(a) the Transfer Restrictions in the Prospectus and Pricing Supplement for
the offer of the Bonds and for the offer of any other bonds to be issued
pursuant to the Master Trust Deed and in respect of which an application for
quotation on the NZDX has been made; and

(b) this waiver decision and its implications in the Pricing Supplement for
the offer of the Bonds and for the offer of any other bonds to be issued
pursuant to the Master Trust Deed and in respect of which an application for
quotation on the NZDX has been made.

Application Three - Reasons

28. In coming to the decision to grant a waiver from Rule 11.1.1, NZXMS has
considered that:

(a) NZXMS will have the opportunity to review and approve the Prospectus and
Pricing Supplement relating to the Bonds so as to ensure that the level of
disclosure to prospective Bondholders of the Transfer Restrictions is
sufficient that they will be aware of the terms of the Bonds and can
therefore make informed investment decisions;

(b) The restriction will alleviate the cost and administrative burden
incurred in situations where there are many holdings of a smaller size or
there is trading of Bond holdings of less than $1,000; and

(c) There is precedent for this decision.

Confidentiality

29. TRP has requested that NZX keep these waivers confidential until the
Prospectus is registered with the Registrar of Financial Service Providers.

30. In accordance with Footnote 1 to NZDX Listing Rule 1.11.2, NZXMS grants
TRP's request.

ENDS.
End CA:00226183 For:TRP    Type:WAV/RULE   Time:2012-08-20 12:12:30