Dated at Wellington this 12th day of October 2009.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
This notice comes into force on its notification in the Gazette and expires on 30 November 2010.
This notice exempts Babcock & Brown Infrastructure Limited (BBIL) and Babcock & Brown Investor Services Limited (BBIS), subject to conditions, from sections 33(3), 34(2)(a), 37A(1)(a), and 51 to 54 of the Securities Act 1978 (the Act) and regulation 5(1)(a) and (c) of the Securities Regulations 2009 (the Regulations) in respect of certain stapled securities (stapled securities). The stapled securities result from the conversion on 17 November 2009 of subordinated prime adjusting reset convertible securities (bonds) issued by BBI Networks (New Zealand) Limited (BBINNZ).
The bonds were issued by BBINNZ under a trust deed dated 7 September 2004 (the trust deed). That deed was entered into between BBINNZ as issuer, The New Zealand Guardian Trust Company Limited as trustee, BBIL, and BBIS as responsible entity of the Babcock & Brown Infrastructure Trust (the trust).
Bond holders have a right to convert the bonds held into stapled securities that comprise shares in BBIL and units in the trust.
The Securities Commission considers that it is appropriate to grant the exemptions from sections 34(2)(a) and 37A(1)(a) of the Act, and from regulation 5(1)(a) and (c) of the Regulations, for the following reasons:
the simplified disclosure prospectus regime in the Regulations was included to enable listed issuers that are subject to continuous disclosure obligations to offer securities to the public using a single offer document by way of a simplified disclosure prospectus:
the simplified disclosure prospectus schedules relate only to offers of equity securities, debt securities, and units in unit trusts. Securities of the same class as the stapled securities are listed on the New Zealand Stock Exchange but, because the stapled securities include participatory securities, BBIL and BBIS are unable to take advantage of the simplified disclosure prospectus regime:
the exemptions enable the allotment of stapled securities to take place on conversion of the bonds on 17 November 2009 under a prospectus that complies with the requirements for a simplified disclosure prospectus (modified as necessary, given that the securities include participatory securities):
allowing the use of a prospectus that is similar to a simplified disclosure prospectus in respect of these securities is consistent with the policy of the Regulations in respect of offers that can be made using a simplified disclosure prospectus:
allowing the allotment of stapled securities to be made using a prospectus that is similar to a simplified disclosure prospectus will ensure that bond holders have available to them all material information necessary on which to make an informed decision in relation to the conversion of their bonds. The conditions also require bond holders to be provided with the latest audited financial statements of BBIL and the trust for the financial year ended 30 June 2009:
the conditions of the exemptions provide that, if the prospectus needs to be amended before allotment of the stapled securities, bond holders must receive a copy of the amendment before subscribing for the stapled securities:
the conditions of the exemptions allow bond holders who have given their conversion request before 22 October 2009 to withdraw their request by notice in writing to BBINNZ before 5 pm on 13 November 2009.
The Securities Commission considers that it is appropriate to grant the exemptions from sections 51 to 54 of the Act because these exemptions provide relief from certain requirements of the Act concerning the keeping of registers and accounting records and the sending of certificates to security holders in respect of the stapled securities in recognition of the requirements on issuers under Australian law.
The Securities Commission considers that it is appropriate to grant the exemption from section 33(3) of the Act because Australian law requires a registered managed investment scheme to have a responsible entity. This regulatory arrangement has been recognised in the Securities (Mutual Recognition of Securities Offerings—Australia) Regulations 2008 and also in the Securities Act (Australian Registered Managed Investment Schemes) Exemption Notice 2008.