Dated at Wellington this 5th day of August 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 or omissions occurring on or after 13 July 2008 and expires on 31 August 2010.
The Takeovers Panel (the Panel) has granted exemptions for—
Utilico Limited, H.R.L. Morrison & Co Group Limited, Hugh Richmond Lloyd Morrison and John Bentley Morrison as trustees of the HRL Morrison Family Trust, JML Trustee Company Limited as trustee of the JML Trust, and Duncan Saville (the associated shareholders), from rule 6(1) of the Takeovers Code (the Code), in respect of any increase to their voting control resulting from an acquisition by Infratil Limited (Infratil) of its own voting securities (buyback):
the associated shareholders, from rule 7(d) of the Code, to the extent that rule 7(d) requires the notice of meeting to be in accordance with rule 16(b) of the Code in respect of any increase in the percentage of voting rights held in Infratil as a result of the exercise of certain Infratil Limited warrants (warrants) held by them:
Infratil from rule 16(b) of the Code in respect of the notice of meeting.
The associated shareholders currently exercise voting control of approximately 28% of Infratil Limited. The associated shareholders may be associates for the purposes of the Code. Any increase to an associated shareholder’s voting control may therefore trigger rule 6(1) of the Code and need to be effected using one of the exceptions contained in rule 7 of the Code, or with the benefit of an exemption granted by the Panel, or both.
The associated shareholders hold approximately 30 million warrants. Any exercise of warrants by an associated shareholder will result in an allotment increasing that associated shareholder’s voting control.
Infratil and the associated shareholders intend to seek shareholder approval under rule 7(d) of the Code at Infratil’s 2008 annual general meeting for allotments resulting from the exercise of their warrants. Rule 7(d) requires that the notice of meeting makes the disclosures specified by rule 16(b) of the Code. However, the rule 16(b) disclosures cannot be made because of uncertainties in the number of warrants that will ultimately be exercised by the associated shareholders and the total number of voting securities on issue immediately following the exercise of those warrants.
Infratil has been conducting a buyback programme for many years. Any buyback by Infratil from a shareholder will result in an increase to the voting control of every other shareholder. The associated shareholders intend to seek the approval of non-associated shareholders of Infratil for buybacks that increase the associated shareholders’ voting control. Shareholder approval cannot be sought under clause 4 of the Takeovers Code (Class Exemptions) Notice (No 2) 2001 because the terms of that notice do not allow account to be taken of the potential increases to voting control resulting from the exercise of the warrants held by the associated shareholders.
The Panel considers that it is appropriate and consistent with the objectives of the Code to grant the exemptions because—
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 extent to which the warrants are ultimately exercised by the associated shareholders and whether there is a change to the number of voting securities on issue in Infratil before the expiry date of the warrants:
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to the associated shareholders as a result of the exercise of their warrants and the buybacks by Infratil:
if the non-associated shareholders approve the potential maximum voting control achievable by the associated shareholders as a result of buybacks and the exercise of warrants held by the associated shareholders, then, by implication, approval has also been granted for any lesser level of voting control:
the issue of the warrants was pursuant to a registered prospectus and is an acknowledged method of providing incentives to shareholders to participate and contribute to a company's growth as well as providing a company with a means of raising equity capital in New Zealand, and the Panel should facilitate these arrangements by granting appropriate exemptions where necessary:
the exemption from rule 6(1) of the Code closely mirrors the shareholder approval mechanism, which is an exception to the fundamental rule, set out in rules 7(c) and 15 of the Code.