Application for Waiver from NZSX Listing Rule 7.10.5
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Life Pharmacy Limited (LPL) | 9:04 am, Thursday 21 August 2008 | LPL | 0.460 |
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20 August 2008
NZX Regulation Decision
Life Pharmacy Limited
Application for Waiver from NZSX Listing Rule 7.10.5
Background
1. Life Pharmacy Limited ("LPL") is proposing to undertake a pro rata 3 for 2
renounceable rights issue in accordance with NZSX Listing Rule ("Rule")
7.3.4. Under the terms of the Rights Issue all existing shareholders will be
entitled to subscribe for partly paid shares ("Shares") in LPL. Shareholders
will be required to pay $0.20 on application (by 18 September 2008) and the
remaining $0.20 on 18 September 2009 ("Rights Issue"). LPL expects a maximum
number of 56,767,112 Shares may be issued under the Rights Issue.
2. In addition to allowing shareholders to participate based on their pro
rata entitlement, LPL desires to allow shareholders to apply for additional
LPL Shares that are not allocated under the initial pro rata applications.
3. Accordingly, LPL wishes to provide shareholders with an oversubscription
facility that, to the extent that the Shares are not fully subscribed by
other shareholders, will allow shareholders to subscribe for additional
Shares ("the oversubscription Facility"). LPL propose that the
Oversubscription Facility will allow shareholders to acquire up to 50,000
Shares in addition to their pro rata entitlement.
4. Pursuant to an Option Deed ("Option") between LPL and LPL Trustee Limited
("LPL Trustee") dated 18 July 2007, and approved by shareholders on 26 July
2007, LPL Trustee has a first right of
refusal ("FROR") to accept up to 50.01% of the Rights Issue (taking into
account LPL Trustee's pro rata entitlement).
5. In addition to approving the terms of the Option at the 2007 Annual
Meeting, shareholders of LPL passed a resolution for the purposes of Rule 7.5
approving certain future issues of shares to LPL Trustee should LPL Trustee
exercise its rights under the Option.
6. LPL Trustee has agreed to waive its FROR to the extent necessary to allow
other shareholders to take up their pro rata entitlement and to take up
additional Shares via the Oversubscription Facility.
Accordingly, prior to the Rights Issue, LPL will obtain written agreement
from LPL Trustee that it will:
(a) exercise its rights under the LPL Option to subscribe for the number of
Shares equal to its full pro rata entitlement under the Rights Issue;
(b) in addition, to subscribe for the lesser of:
(i) the maximum number of Shares unallocated under the Rights Issue after all
valid allotments (including under the Oversubscriptions Facility) have been
made, taking into account its exercise of rights referred to in paragraph
6(a);
(ii) such number of Shares as will result in LPL Trustee holing 50.01% of the
shares on issue in LPL immediately following such allotment to LPL Trustee
(which, for the avoidance of doubt, will take account of all shares allotted
or to be allotted under the
Rights Issue, including under the Oversubsciption Facility); and
(iii) 50.01% of the Shares on offer under the Rights Issue, taking into
account the exercise of rights referred to in paragraph 6(a); and
(c) not otherwise exercise any rights or entitlements it has in respect of
the Rights Issue.
7. In conjunction with the Rights Issue, LPL intends to implement a buyback
of shares of shareholders who hold less than a Minimum Holding following the
expiry of a three month notice period, in
accordance with LPL's constitution.
Application
8. LPL has approached NZX Regulation ("NZXR") seeking a waiver from Rule
7.10.5 to the extent necessary to enable shareholders to make applications in
excess of their pro rata entitlement in accordance with the Oversubscription
Facility. In support of its application, LPL submits that:
(a) The Oversubscription Facility will enable shareholders who currently hold
less than the Minimum Holding to top up their shareholdings without having
to buy on market and therefore provides an efficient and economic mechanism
for these shareholders to avoid having their shares bought back by LPL.
(b) The arrangement negotiated with LPL Trustee, with regards to its Option,
gives certainty to LPL that it will raise sufficient funds under the Rights
Issue. However, due to LPL Trustee waiving certain rights under the Option it
allows shareholders the ability to fully participate in the Rights Issue and
to take up additional Shares under the Oversubscription Facility in
preference to the rights that LPL Trustee would otherwise have under the
Option.
Rule 7.10.5
9. Rule 7.10.5 provides:
Entitlement: A Renounceable Right shall not entitle the holder of the Right
to apply for more than the entitlement of Securities except to enable
acquisition of the number of Securities needed to give that holder a Minimum
Holding.
Decision
10. On the basis that the information provided to NZXR is full and accurate
in all material respects, NZXR grants LPL a waiver from Rule 7.10.5 to
enable shareholders to make applications in excess of their entitlements in
accordance with the Oversubscription Facility on the following conditions:
(a) All Shareholders who apply for Shares under the Oversubscription Facility
in order to hold Shares in excess of the Minimum Holding are issued
sufficient Shares to hold more than the Minimum Holding.
(b) In the event that the number of Shares applied for by shareholders under
the Oversubscription Facility is greater than the number of Shares available,
LPL will either:
(i) scale applications down pro rata;
(ii) reduce the upper limit of Shares shareholders may apply for; or
(iii)ballot the applications until the shares contained in the
Oversubscription Facility are fully allotted.
(c) The offer documents for the Rights Issue records that a waiver from this
Rule was granted and details the conditions of the waiver.
Reasons
11. In coming to the decision to grant LPL the waiver in respect of Rule
7.10.5, NZXR has considered that:
(a) There is precedent for granting waivers from Rule 7.10.5 in the waivers
granted to SPY on 18 April 2008 and SKL on 11 February 2008.
(b) The Oversubscription Facility will enable shareholders who hold less than
the Minimum Holding to increase their holding in LPL above the Minimum
Holding.
(c) The Oversubscription Facility provides additional certainty to LPL that
the maximum possible funds will be raised.
(d) There will be no control changes occurring as a result of the
Oversubscription Facility that have not already been approved by
shareholders.
Publication
12. No application has been made with regards to the confidentiality of this
decision and the decision will be published in accordance with Rule 1.7.2.
ENDS.
