WDT
15/04/2015 08:56
WAV/RULE
NOT PRICE SENSITIVE
REL: 0856 HRS Wellington Drive Technologies Limited
WAV/RULE: WDT: Waiver from NZX Main Board Listing Rule 9.2.1
NZX Regulation Decision
Wellington Drive Technologies Limited (WDT)
Application for a waiver from - NZX Main Board Listing Rule 9.2.1
15 April 2015
Background
Decision
1. Subject to the conditions set out in paragraph 2 below, and on the basis
that the information provided by Wellington Drive Technologies ("WDT") is
complete and accurate in all material respects, NZX Regulation ("NZXR")
grants WDT a waiver from NZX Main Board Listing Rule ("Rule") 9.2.1 so that
WDT is not required to seek shareholder approval for the Offer as a result of
SuperLife participating in the Underwriting Arrangements.
2. The waiver in paragraph 1 above is provided on the conditions that:
a. the Directors of WDT certify to NZX that:
i. they are not Interested (in terms of Rule 3.4.3) in the Underwriting
Arrangements;
ii. WDT will receive fair value from the Offer and the Underwriting
Arrangements;
iii. the terms of the Underwriting Arrangements have been negotiated, agreed
and entered into on an arm's length and commercial basis, and are fair to,
and in the best interests of, WDT and WDT shareholders that are not
associated with SuperLife; and
iv. WDT was not influenced in its decision to enter into the Offer and
Underwriting Arrangements by the interests of SuperLife;
b. with the exception of the Underwriting Arrangements, SuperLife will
participate in the Offer on terms identical to those offered to all other WDT
shareholders; and
c. this waiver, its conditions and effects are disclosed in the offer
document for the Offer and WDT's half-year and annual reports for the year in
which the Offer takes place.
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 regulate transactions where a Related
Party to a Material Transaction may gain favourable consideration due to its
relationship with the Issuer. NZXR may waive the requirement to obtain
approval of a Material Transaction if it is satisfied that the involvement of
any Related Party is plainly unlikely to have influenced the promotion of, or
the decision to enter into, the transaction. The granting of this waiver will
not offend the policy behind Rule 9.2.1;
b. All WDT shareholders have the opportunity to participate in the Offer.
SuperLife will only underwrite the Offer (and therefore participate on
different terms from other shareholders) if shareholder approval is obtained.
The ability of SuperLife to acquire greater that its pro rata entitlement
under the Offer through the Underwriting Arrangements is conditional on, and
subject to, shareholder approval being obtained at WDT's AGM after the offer
closes. If shareholder approval is not obtained the shortfall shares will not
be issued to SuperLife and the underwriting fee will not be paid;
c. The conditions of the waiver provide comfort that the Underwriting
Arrangements have been negotiated, agreed and entered into on an arms' length
commercial basis and WDT was not influenced in its decision to enter into the
Offer and Underwriting Arrangements by the interests of SuperLife;
d. The Underwriting Fee would fall within the exception in Listing Rule
9.2.4(g), being a transaction by itself of less than a $250,000 aggregate
gross cost to WDT. It is because the Underwriting Arrangements form part of a
related series of transactions with the Offer that shareholder approval under
Rule 9.2.1 is required;
e. WDT has advised, and NZXR has no reason not to accept, that due to WDT's
size and development stage, it is not practical to seek a third party
underwriter in the form of an investment bank. Rather, the most logical and
appropriate parties to support its capital raising initiatives are its
existing shareholders; and
f. There is precedent for this decision, including the waiver granted to
Wellington Drive Technologies on 10 March 2014.
Appendix One
1. Wellington Drive Technologies Limited ("WDT") is a Listed Issuer with
ordinary shares Quoted on the NZX Main Board.
2. WDT proposes to undertake a capital raising of approximately $3.1 million,
by way of a pro-rata renounceable rights offer to shareholders of five
ordinary shares for every six ordinary shares held ("Offer").
3. SuperLife Limited ("SuperLife") is WDT's largest shareholder, with a
relevant interest in 19.8% in all of WDT's ordinary shares on issue.
SuperLife is a Related Party of WDT under Rule 9.2.3(b).
4. Pursuant to an underwriting agreement ("Underwriting Agreement"),
SuperLife has agreed to support the Offer by:
a. providing a commitment to take up its full entitlement under the Offer;
and
b. underwriting any shortfall that may occur if other WDT shareholders do not
take up their full entitlements under the Offer,
(together, the "Underwriting Arrangements").
5. SuperLife will not receive a fee for committing to take up its full
entitlement. WDT will pay a fee of no more than $100,000 to SuperLife for
underwriting the Offer ("Underwriting Fee"). The Underwriting Fee is below
the $250,000 threshold in Rule 9.2.4(g).
6. The issue of ordinary shares to SuperLife pursuant to the underwriting
commitment under the Underwriting Agreement is conditional upon WDT receiving
shareholder approval by way of ordinary resolution for the purposes of the
Takeovers Code and Rules 7.3.1(a), 7.5.1 and 9.2.1. This approval will be
sought at WDT's annual shareholders' meeting which will be held after the
Offer closes. The Underwriting Fee will not be payable if that shareholder
approval is not obtained.
7. The Offer is a Material Transaction for the purposes of Rule 9.2.1 because
it is a transaction whereby WDT will issue equity securities having a market
value in excess of 10% of WDT's Average Market Capitalisation. The Offer and
the Underwriting Arrangements form a series of related transactions for the
purposes of Rule 9.2.1.
Appendix Two
Rule 3.4 Proceeding and Powers of Directors
Rule 3.4.3 Subject to Rule 3.4.4, a Director shall not vote on a Board
resolution in respect of any matter in which that Director is interested, nor
shall the Director be counted in the quorum for the purposes of consideration
of that matter. For this purpose, the term "interested" bears the meaning
assigned to that term in section 139 of the Companies Act 1993, on the basis
that if an Issuer is not a company registered under that Act, the reference
to the "company" in that section shall read as a reference to the Issuer.
Rule 9.2 Transactions with Related Parties
Rule 9.2.1 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 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 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 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.
Rule 9.2.4 Rule 9.2.1 shall not apply to:
[...]
(g) a Material Transaction with a total value that (or, in the case of a
Material Transaction referred to in Rule 9.2.2(e), the actual gross cost to
the Issuer in any financial year that), does not exceed $250,000; or
...
End CA:00263110 For:WDT Type:WAV/RULE Time:2015-04-15 08:56:34
