Dated at Auckland this 17th day of July 2007.
The Common Seal of the Takeovers Panel was affixed in the presence of:
D O Jones,
Statement of reasons
This notice applies to acts or omissions occurring on or after 15 June 2007 and expires on 31 August 2009.
The Takeovers Panel (the Panel) has granted exemptions to—
LPL Trustee Limited (LPL Trustee) from rule 7(d) of the Takeovers Code (the Code) to the extent that rule 7(d) requires the notice of meeting to be in accordance with rule 16(b) and (d) of the Code in respect of any increase in the percentage of voting rights held in Life Pharmacy Limited (Life Pharmacy) as a result of the exercise of an option granted to LPL Trustee under an option deed entered into with Life Pharmacy on 18 June 2007; and
Life Pharmacy from rule 16(b) and (d) of the Code in respect of the notice of meeting.
On 18 June 2007 Life Pharmacy and LPL Trustee entered into a subscription agreement and option deed, in terms of which—
Life Pharmacy would allot 7 million voting securities to LPL Trustee for $5.25 million (the initial placement); and
LPL Trustee would be entitled to appoint 2 directors to the Life Pharmacy board; and
Life Pharmacy would grant LPL Trustee an option (the option) to subscribe for an unspecified number of additional voting securities in Life Pharmacy that would result in LPL Trustee holding or controlling up to 50.01% of the voting rights in Life Pharmacy.
The option is exercisable in stages at the discretion of LPL Trustee. The issue price for the voting securities resulting from the exercise of the option is variable. For exercises until the first anniversary of the initial placement, the issue price is $0.75 per voting security. For exercises from the first anniversary of the initial placement until the final option exercise date, the issue price is $0.825 per voting security.
At a special meeting of shareholders to be held on or about 26 July 2007, Life Pharmacy proposes to ask shareholders to approve the allotment of voting securities to LPL Trustee as a result of the exercise of the option. However, Life Pharmacy is unable to comply with rule 16(b) and (d) of the Code because Life Pharmacy is unable to specify—
the exact number of Life Pharmacy voting securities that will be allotted pursuant to the exercise of the option, because the number of voting securities that will ultimately be allotted will not be known until the final option exercise date; and
the exact percentage of the aggregate of all existing voting securities and all voting securities being allotted to LPL Trustee as a result of the exercise of the option, because that will depend on unknown variables; and
the exact percentage of all voting securities that will be held or controlled by LPL Trustee and its associates after completion of the allotment of voting securities, because that will depend on unknown variables; and
the issue price for the voting securities to be allotted and when it is payable because that will depend on when the option is exercised (if at all), which will not be known until the final option exercise date.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions to Life Pharmacy and LPL Trustee because—
it is impossible for the actual number of voting securities to be allotted and the relevant percentages required by rule16(b), and the issue price of the voting rights and when it is payable required by rule 16(d), to be stated in the notice of meeting, since these numbers and percentages are dependent on the extent to which the option is ultimately exercised and whether there is a change to the capital structure of Life Pharmacy before the expiry of the option; and
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to LPL Trustee as a result of the exercise of the option; and
if the non-associated shareholders approve the potential maximum allotment of voting securities to LPL Trustee, then, by implication, the shareholders also approve any lesser percentage of voting rights that may be acquired as a result of the exercise of the option by LPL Trustee.