Dated at Auckland this 30th day of July 2008.
The Common Seal of the Takeovers Panel was affixed in the presence of:
D O Jones,
Statement of reasons
This notice applies to acts and omissions occurring on or after 4 July 2008 and expires on 31 December 2008.
The Takeovers Panel has granted exemptions to—
Mountain Road Limited (Mountain Road) from rule 7(d) of the Takeovers Code (the Code) in respect of the requirements for the notice of meeting under rule 16(b); and
A2 Corporation Limited (A2) from rule 16(b) of the Code.
A2 proposes to make a renounceable pro rata 3 for 4 rights issue of between 113 315 640 and 117 995 640 ordinary shares to its existing shareholders for an issue price of 10 cents per share, payable in full on application.
It is proposed that the issue of shares will be underwritten by Mountain Road, which currently holds approximately 54% of the voting rights in A2.
It is likely that the percentage of voting rights in A2 held by Mountain Road will increase through underwriting the issue.
If Mountain Road were required to take up the maximum number of shares that it could be required to subscribe for under the underwriting agreement, its percentage of voting rights would increase to 73.89%.
A2 intends to obtain shareholder approval, in accordance with the Code, for the potential allotment of shares to Mountain Road under the underwriting agreement. However, A2 cannot comply with rule 16(b) of the Code before completion of the issue, because it cannot state in the notice of the meeting—
These details would be known only after the issue had been completed and all allotments made.
The Panel considered that it was appropriate to grant the exemptions, and that the exemptions are consistent with the objectives of the Code, for the following reasons:
it is impossible for the actual number of voting securities to be allotted and the relevant percentages required by rule 16(b) of the Code to be stated in the notice of meeting, as these numbers and percentages are dependent on the number of securities subscribed for under the issue:
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to Mountain Road as a result of the issue and the underwriting agreement:
if the non-associated shareholders approve the potential maximum allotment of voting securities to Mountain Road, then, by implication, the shareholders also approve any lesser percentage of voting rights that may be allotted as a result of the issue and the underwriting agreement.