Dated at Auckland this 28th day of October 2008.
The Common Seal of the Takeovers Panel was affixed in the presence of:
Statement of reasons
This notice applies to acts or omissions occurring on or after 22 October 2008 and expires on 5 February 2011.
The Takeovers Panel (the Panel) has granted exemptions for—
K One W One Limited (K One W One), TMT Ventures Limited (TMT), and VIF/TMT Ventures Limited (VIF/TMT) 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) of the Code in respect of any increase in the percentage of voting rights held in Phitek Systems Limited (Phitek) under a proposed rights issue and the exercise of any resulting options; and
Phitek from rule 16(b) of the Code in respect of the notice of meeting.
K One W One holds shares representing more than 20% of the voting rights in Phitek. TMT and VIF/TMT are both wholly owned subsidiaries of TMT Management Limited and hold, in aggregate, more than 20% of the voting rights in Phitek. Custodial Services Limited holds shares in Phitek representing approximately 3% of the voting rights in Phitek.
TMT, VIF/TMT, and Direct Management Investments Limited propose to acquire Phitek shares held by Custodial Services Limited. These acquisitions would increase the voting control of TMT, VIF/TMT, and Direct Management Investments Limited and are caught by rule 6(1) of the Code. Shareholder approval under rule 7(c) of the Code is to be sought for the acquisitions at a meeting of shareholders.
Phitek proposes to undertake a pro-rata non-renounceable rights issue. Under the rights issue Phitek shareholders may apply to the company to take up more than their pro-rata entitlement. Phitek may accept such applications in its discretion. K One W One, TMT, and VIF/TMT have expressed their intention to take up at least their pro-rata entitlements. The allotments to K One W One, TMT, and VIF/TMT under the rights issue may result in 1 or more of those persons increasing their voting control and being caught by rule 6(1) of the Code. Shareholder approval under rule 7(d) of the Code is to be sought for the allotments to K One W One, TMT, and VIF/TMT under the rights issue. 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 level of participation in the rights issue by Phitek shareholders.
For every 2 shares allotted to a Phitek shareholder under the rights issue, that shareholder will also receive 1 option. Accordingly, K One W One, TMT, and VIF/TMT will be allotted options under the rights issue. Any exercise of those options by K One W One, TMT, or VIF/TMT will result in an allotment increasing that person’s voting control in Phitek that may be caught by rule 6(1) of the Code. Shareholder approval under rule 7(d) of the Code is to be sought for the allotments to each of K One W One, TMT, and VIF/TMT resulting from the exercise of options by them. However, the rule 16(b) disclosures cannot be made because of uncertainties in the number of options that will be allotted to each of K One W One, TMT, and VIF/TMT and the extent to which those options will ultimately be exercised.
The Panel has granted these exemptions on the condition that the maximum percentage to which any of K One W One, TMT, and TMT/VIF could increase their voting control is disclosed in the notice of meeting.
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 since these numbers and percentages are dependent on a number of factors that will not be known with certainty until after the notice of meeting is prepared:
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to K One W One, TMT, and VIF/TMT as a result of the rights issue and the exercise of options:
if the non-associated shareholders approve the potential maximum allotment of voting securities to K One W One, TMT, and VIF/TMT, then, by implication, the shareholders also approve any lesser percentage of voting rights that may be allotted to K One W One, TMT, and VIF/TMT under the rights issue and the exercise of options:
the rights issue will be conducted 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.