Dated at Auckland this 21st day of October 2009.
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 1 October 2009 and expires on 31 January 2010.
The Takeovers Panel (the Panel) has granted exemptions in respect of a proposed rights issue to be conducted by Southern Travel Holdings Limited (STH), which is to be fully underwritten by Rodney Walshe Limited (RWL).
RWL and its associates hold or control shares in STH representing 25.66% of the total STH voting securities on issue. STH proposes to raise capital by way of a pro-rata non-renounceable rights issue. The rights issue is to be fully underwritten by RWL. If the rights issue is undersubscribed and RWL is called upon to take up the shortfall under its underwriting agreement, the resulting allotment to RWL will increase its voting control in STH, when taken with its associates, above 25.66%. This will trigger rule 6 of the Takeovers Code (the Code).
Shareholder approval under rule 7(d) of the Code for such an allotment is to be sought at STH’s annual general meeting, to be held on or about 12 November 2009. Rule 7(d) requires that the notice of meeting to be sent to STH shareholders (the notice of meeting) disclose the information specified by rule 16 of the Code. The exact numbers and percentages required to be disclosed by rule 16(b) will not be known at the time that the notice of meeting is prepared, owing to uncertainties in the level of shareholder participation in the rights issue. However, potential maximum numbers and percentages will be known.
The Panel has granted the following exemptions:
an exemption for RWL from rule 7(d) of the Code in respect of any increase in its voting control in STH resulting from the allotment of voting securities to RWL under the rights issue and underwriting agreement to the extent that that rule requires the notice of meeting to contain the information specified by rule 16(b); and
an exemption for STH from rule 16(b) of the Code in respect of the notice of meeting.
The Panel has granted these exemptions on conditions that require disclosure of the potential maximum number and percentage of voting securities that could be acquired instead of the exact number and percentages required by rule 16(b).
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 shareholders of STH participate in the rights issue; and
all non-associated shareholders will have an opportunity to vote on the potential allotment of voting securities to RWL under the various arrangements; and
if the non-associated shareholders approve the potential maximum allotment of voting securities to RWL, then, by implication, the shareholders also approve the allotment of a lesser number of voting securities to RWL; and
the rights issue will be conducted under registered prospectus. The ability for a shareholder to subscribe for securities and thus provide adequate funding to ensure a company's growth is an acknowledged method of raising capital in New Zealand, and the Panel should facilitate these arrangements by granting appropriate exemptions where necessary.