Ann: WAV/RULE: TRP: TRP - Waiver from NZDX Listin

• Release Date: 19/02/13 17:42
• Summary: WAV/RULE: TRP: TRP - Waiver from NZDX Listing Rules 10.5.3 and 5.2.3
• Price Sensitive: No
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TRP
19/02/2013 15:42
WAV/RULE

REL: 1542 HRS Transpower New Zealand Limited

WAV/RULE: TRP: TRP - Waiver from NZDX Listing Rules 10.5.3 and 5.2.3

19 February 2013

NZX Regulation Decision
Transpower New Zealand Limited ("TRP")
Application for Waiver from NZDX Listing Rule 10.5.3 and extension of Waiver
from NZDX Listing Rule 5.2.3

Background

1. Transpower New Zealand Limited ("TRP") is a listed Issuer with fixed rate
bonds Quoted on the NZX Debt Market ("NZDX").
2. TRP listed its $125,000,000 fixed rate bonds maturing on 30 November 2018
on NZDX on 29 February 2012 ("TRP010 Bonds"), and its $200,000,000 fixed rate
bonds maturing on 6 September 2019 on NZDX on 7 September 2012 (together with
the TRP010 Bonds, "Bonds"). The bonds are quoted on NZDX under the codes
TRP010 and TRP020 respectively.
Application One - Waiver from NZDX Listing Rule 10.5.3

3. TRP has applied to NZX Regulation ("NZXR") seeking a waiver from NZDX
Listing Rule ("Rule") 10.5.3, which requires an Issuer provide its half-year
report to NZX and Quoted Security holders within three months of the end of
the first six months of each financial year of the Issuer.
4. In support of its application, TRP submits that:
(a) TRP is a State Owned Enterprise ("SOE"), being 100% owned by Her Majesty
the Queen in right of New Zealand.  As an SOE, TRP is subject to the
requirements of the State Owned Enterprises Act 1986 ("SOE Act").

(b) SOEs are subject to comprehensive supervisory, accountability and
disclosure obligations.  Expectations of shareholding Ministers are outlined
in the Owner's Expectations Manual ("OEM").  The OEM outlines expectations in
a number of areas including board duties, reporting requirements and
financial governance.

(c) The SOE Act requires, among other things, that TRP provide its
half-yearly report to its shareholding Ministers ("Ministers") within two
months of its financial half-year end, which in turn must be laid before the
House within a further 12 sitting days.

(d) The OEM provides that half-yearly reports should be made publicly
available only once they have been tabled in the House and its convention for
SOEs that the annual and half-yearly reports provided to Ministers in
accordance with the SOE Act is treated on a confidential basis until such
time as it is laid before the House.

(e) NZX has recognised that SOEs are subject to reporting obligations that
differ from those required of other companies. In particular, Rule 10.5.2
provides an extended timeframe within which SOEs must provide their annual
reports to NZX and Quoted Security holders.  It provides that SOEs are not
required to provide their annual reports to NZX and Quoted Security holders
until they are provided to the responsible Minister and laid before the House
(or, published in the Gazette - whichever is earlier). As an SOE, this
extended timeframe for annual reports will apply to TRP.  However, the Rules
require that TRP deliver its half-yearly report to NZX and Quoted Security
holders within the timeframe in Rule 10.5.3 (being, within three months of
the end of the first six months of each financial year).  No extended
timeframes apply to SOEs under the Rules in respect of delivery of
half-yearly reports and there is no reason to treat half-yearly reports
differently from annual reports given that both reports are required under
the SOE Act to be laid before the House, and indeed NZX has granted waivers
to this effect in the past - see paragraph (h) below.

(f) TRP wishes to avoid situations where TRP is required to deliver
half-yearly reports to the NZX and its Quoted Security holders before TRP has
delivered that report to the Ministers and before that report has been laid
before the House.

(g) TRP understands the on-going obligations to disclose Material Information
immediately to the market pursuant to Rule 10.1 and does not seek any waivers
in respect of these obligations.  Rather, TRP is seeking extensions to the
timeframe within which it must provide certain information to the market, so
those timeframes match TRP's disclosure obligations under the SOE Act. TRP
is also not seeking a waiver from Rule 10.4.  Accordingly, the most important
financial information relevant to the Bonds, being the preliminary
announcement of its half year results, will be released in accordance with
Rule 10.4.1(b).

(h) NZX has previously granted waivers from Rule 10.5.3.  For example, a
similar waiver was granted to New Zealand Post Group Finance Limited.

Application One - Rule

5. Rule 10.5.3 provides:
"Each Issuer shall within three months after the end of the first six months
of each financial year of the Issuer:
(a) deliver to NZX electronically, in the format specified by NZX from time
to time; and
(b) make available to each Quoted Security holder in accordance with Rule
10.5.4,
a half-year report. That half-year report shall be delivered to NZX before,
or at the same time as, it is made available to Quoted Security Holders in
accordance with Rule 10.5.4. That half yearly report shall include the
information and otherwise address the matters prescribed by the relevant
section of Appendix 1."
Application One - Decision

6. Subject to paragraph 7 below, and on the basis that the information
provided by TRP is complete and accurate in all material respects, NZXR
grants TRP a waiver from Rule 10.5.3.

7. The waiver contained in paragraph 6 is granted on the conditions that:
(a) TRP make an announcement, in the manner prescribed by Rule 10.2,
disclosing the date by which TRP's half-year report is expected to be
released to market as soon as this date is known; and
(b) TRP shall at the earlier of either the time at which TRP's half-year
report is laid before the House of Representatives or the time at which TRP's
half-year report ceases to be confidential,
(i) deliver to NZX electronically, in the format specified by NZX from time
to time; and
(ii) make available to each Quoted Security holder in accordance with Rule
10.5.4,
a half-year report. That half-year report shall be delivered to NZX before,
or at the same time as, it is made available to Quoted Security Holders in
accordance with Rule 10.5.4. That half-year report shall include the
information and otherwise address the matters prescribed by the relevant
section of Appendix 1.
Application One - Reasons

8. In coming to the decision to grant TRP a waiver from Rule 10.5.3, NZXR has
considered the following matters:
(a) TRP must comply with the SOE Act procedures within which the half-year
report is laid before the House of Representatives. It is preferable that
TRP's release of its half-year report coincides with the release of TRP's
half-year report under the SOE Act;
(b) NZXR has previously recognised that SOEs are subject to reporting
obligations under the SOE Act that differ from those required of other
companies. Rule 10.5.2 provides SOEs with an extended timeframe within which
SOEs must provide their annual report;

(c) It is convention for SOEs that the half-year information provided to
Ministers in accordance with the SOE Act is treated on a confidential basis
until such time as it is laid before the House of Representatives. Should
there be a breach in confidentiality before the Minister submits the
half-year report to the House of Representatives, TRP will be immediately
required to disclose the half-year report to the market;

(d) TRP remains subject to the requirement under Rule 10.1 to disclose
Material Information and the requirement under Rule 10.4 to make a
preliminary announcement.
Application Two - application for extension of Waiver from NZDX Listing Rule
5.2.3

9. TRP has also applied to NZXR seeking an extension of a waiver from Rule
5.2.3. Rule 5.2.3 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").

10. NZXR granted TRP a 12-month waiver from Rule 5.2.3 for the TRP010 Bonds
on 28 February 2012. TRP is seeking a continuous extension to the waiver from
Rule 5.2.3.

11. In support of its application, TRP submits that:
(a) TRP is of the view that, if in determining the spread of the TRP010
Bonds, it could take into account the number of holders who hold the TRP010
Bonds through nominees and custodians, it would meet the spread requirements.
 It is of the view that the spread of the TRP010 Bonds demonstrated by the
register of TRP010 Bonds does not reflect the actual spread of TRP010 Bonds.
TRP has advised that the spread of the TRP010 Bonds as at 31 December 2012
(based on registered holdings) is 133 holders and that there has been an
increase of approximately 15% since the TRP010 Bonds were listed.

(b) However, a number of the holders on the register are nominees and
custodians.  TRP has had discussions with one of its lead managers and it
understands that there are approximately 1400 underlying holders of the
TRP010 Bonds held by one custodian alone and that other nominees and
custodians on the register hold the TRP010 Bonds for a large number of
underlying holders.  These underlying holders do not appear on the register.
Accordingly, the spread of the TRP010 Bonds is much wider than demonstrated
by the register.

(c) While the number of registered holders of the TRP010 Bonds may appear to
be small, TRP is of the view that the liquidity of the TRP010 Bonds will not
be affected by that small number given the number of investors who hold the
bonds through nominees and custodians.

(d) TRP is uncertain as to when the number of holders recorded in the
register will meet the minimum spread requirements set out in Rule 5.2.3
particularly given the number of custodians.  However, it expects that the
spread of the TRP010 Bonds will continue to increase (as it has since the
bonds have been listed).

(e) Given the number of investors that hold the TRP010 Bonds through nominees
and custodians and given TRP's uncertainty as to when the number of
registered holders will meet the minimum spread requirements set out in Rule
5.2.3, TRP is seeking a permanent extension of the Spread Waiver on the
condition that the minimum spread requirements under Rule 5.2.3 are met for
the TRP010 Bonds if the underlying holders who hold the TRP010 Bonds through
nominees and custodians are taken into account.
Application Two - Rule

12. 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."
Application Two - Decision

13. Subject to paragraph 14 below, and on the basis that the information
provided by TRP is complete and accurate in all material respects, NZXR
grants TRP a waiver from Rule 5.2.3 for a period of 12-months from 28
February 2013, to allow TRP to have fewer than 500 Bondholders who are
Members of the Public.

14. The waiver contained in paragraph 13 is granted on the following
conditions:

(a) TRP clearly and prominently discloses the 12-month waiver, its
conditions, and its implications in its half-year and annual reports;

(b) TRP notifies NZXR if there are any material changes to the spread of the
TRP010 Bonds.
Application Two - Reasons

15. In coming to the decision to grant TRP a 12-month waiver from Rule 5.2.3,
NZXR has considered the following matters:

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

(b) TRP has advised that it expects the spread of TRP010 Bonds will continue
to increase;

(c) The number of underlying holders of TRP010 Bonds. NZXR is of the view
this indicates there is investor demand for the TRP010 Bonds which leads to a
degree of liquidity in the secondary market;

(d) The condition, contained in paragraph 14(a) above, that TRP must disclose
the waiver decision, its conditions, and its implications in its half-year
and annual reports, will ensure that both existing TRP010 Bond holders and
those wishing to trade in TRP010 Bonds are aware of the current spread of the
TRP010 Bonds;

(e) NZXR has granted 12-month waivers in the past but there is no precedent
for a continuous extension of a 12-month waiver;

(f) NZXR considers that a 12-month waiver is more appropriate than a
continuous waiver. NZXR is reluctant to grant continuous waivers in
circumstances where the considerations taken into account can change. The
12-month waiver gives NZXR the opportunity to reconsider the spread of the
TRP010 Bonds in 12 months if TRP considers a waiver is still required.

ENDS
End CA:00233122 For:TRP    Type:WAV/RULE   Time:2013-02-19 15:42:07