WAV/RULE: NZXR: NZX Regulation - IFT - Waiver NZSX Listing Rule 7.3.2b)

13 Jul 2010 5:33 pm

NZXR 13/07/2010 WAV/RULE

REL: 1733 HRS NZX Regulation

WAV/RULE: NZXR: NZX Regulation - IFT - Waiver NZSX Listing Rule 7.3.2b)

28 June 2010 NZX Regulation Decision Infratil Limited Application for Waiver from NZSX Listing Rule 7.3.2(b)

Background

1. Infratil Limited ("IFT") is an Issuer with Securities quoted on the NZSX Market.

2. IFT has in place a programme whereby it raises finance on an ongoing basis through the issue of bonds ("Bond Programme").

3. Under the Bond Programme, IFT issues both Dated Infrastructure Bonds (bonds that have a maturity date) and Perpetual Infrastructure Bonds (bonds that have no maturity date) (together referred to herein as the "Bonds").

4. Among other things, the terms of the Bonds include the ability for IFT to elect to redeem the Bonds in consideration for the issue of IFT ordinary shares. As such, the Bonds are treated as both Debt and Equity Securities for the purposes of the NZSX Listing Rules ("Rules").

5. Rule 7.3.1 prevents an Issuer, except in certain qualified situations, from issuing Equity Securities unless the the precise terms and conditions of the proposed issue has first been approved by each Class of Quoted Equity Securities of the Issuer whose rights or entitlements could be affected by that issue, and that issue is completed within the time specified in Rule 7.3.2.

6. Accordingly, IFT has annually sought approval, pursuant to Rule 7.3.1, for the issue of Bonds pursuant to the Bond Programme at its annual meeting of shareholders ("AGM"), and intends to do so again in 2010.

7. Rule 7.3.2(b) however requires that any issue authorised by resolutions passed pursuant to Rule 7.3.1, that is not to be made solely to Employees (as that term is defined in Rule 7.3.6), be completed within twelve months after the passing of that resolution.

8. IFT wishes to rely on approval obtained at its AGM for the issue of any Bonds pursuant to the Bond Programme up until the date of the following AGM, irrespective of whether the date of the subsequent AGM falls within 12 months of the date on which approval was obtained, or not.

Application 9. IFT has approached NZX Regulation ("NZXR") seeking a waiver from Rule 7.3.2(b) so as to allow it to issue Bonds pursuant to the Bond Programme from the date approval is obtained pursuant to Rule 7.3.1 until the date of its next AGM.

10. In support of its application, IFT submits that:

(a) Before being changed on 1 May 2004, Rule 7.3.2(b) required the issue of Equity Securities to be completed within six months of the passing of the authorising resolution. The period is now 12 months. When it was six months, IFT sought, and was granted, waivers that permitted it to issue the Equity Securities "until 30 days after the Annual Meeting in (the following year]". (b) For each AGM from 2005 to 2009 a waiver has been sought and granted by NZX to allow the Bonds (which are treated as both Equity Securities and Debt Securities under the Rules) to be issued until 30 August the following year - that is approximately 12 months and two-three weeks from the date of the relevant AGM. This allows IFT to hold its AGM on any day in August in the following year without causing a short period during which it cannot issue Bonds. IFT remains of the view that the policy of Rule 7.3.2(b) (particularly after its change) is to permit issuers to obtain shareholder approval under Rule 7.3.1(a) that lasts from one AGM to the next. (c) The same issue arises again this year and the same waiver that has been previously sought and granted is requested again. (d) The granting of a waiver would be consistent with the policy of Rule 7.3.2(b) on the basis that:

(i) After the change to Rule 7.3.2(b) in 2004, an intention of the Rule is to permit Issuers to obtain shareholder approval that lasts from one AGM to the next; (ii)A key purpose of Rule 7.3.2(b) is to prevent an Issuer from having shareholders approve an issue of Equity Securities and then the issue being delayed by the Issuer until a favourable point in time, or in circumstances that shareholders may not have been cognisant of when the approval was issued. IFT is seeking shareholder approval to issue the Bonds and has undertaken a continuous programme of offering (or retaining the capacity to offer) Bonds for a long period of time now, which IFT believes its shareholders are highly cognisant of; and (iii) An additional two weeks from the timeframe contained in Rule 7.3.2(b) is not considered a material period of time for the offer of Bonds to be continued with.

Rule 11. Rule 7.3.1 provides that:

No Issuer shall issue any Equity Securities (including issue on Conversion of any other Security) unless: the precise terms and conditions of the specific proposal to issue those Equity Securities have been approved (subject to Rule 7.3.3) by separate resolutions (passed by a simple majority of Votes) of holders of each Class of Quoted Equity Securities of the Issuer whose rights or entitlements could be affected by that issue, and that issue is completed within the time specified in Rule 7.3.2; or the issue is made in accordance with any of Rules 7.3.4 to 7.3.11.

12. Rule 7.3.2(b) provides that:

An Issuer authorised by resolutions passed pursuant to Rule 7.3.1(a) shall be completed:

(a) if that issue is made solely to Employees (as defined in Rule 7.3.6) within 36 months after the passing of those resolutions: or

(b) in all other circumstances, within twelve months after the passing of resolutions.

Decision

13. On the basis that the information provided to NZXR is full and accurate in all material respects, NZXR grants IFT a waiver from Rule 7.3.2(b), so that any Bonds to be issued pursuant to the Bond Programme may be issued from the date authorisation is obtained pursuant to Rule 7.3.1, until 6.00pm on the date of the following AGM.

Reasons

14. In coming to the decision to grant IFT a waiver from Rule 7.3.2(b), NZXR has considered the following matters:

(a) Rule 7.3.2(b) prevents Issuers from obtaining approval to issue Equity Securities too far in advance of the issue of those Securities. The Policy considerations behind this restriction include:

(i) ensuring that the holders of Quoted Equity Securities who are affected by the issue of new Equity Securities are the same Security holders who voted on the resolution to authorise the issue; and

(i) seeking to ensure that the issue of Equity Securities occurs within such a timeframe as to, as far as possible, increase the likelihood that the circumstances of the Issuer have not materially changed from those which existed at the time approval was considered and obtained.

(b) The Bonds are proposed to be issued at a face value of $1. In the event that IFT elects to redeem the Bonds in consideration for ordinary shares, the issue price of the ordinary shares issued on any such redemption will be based on the then current market price of IFT's ordinary shares. Accordingly, Bonds issued pursuant to the Bond Programme are not susceptible to the same possible manipulation of the timing of issue, so as to obtain a favourable outcome as a result changes in the market price of ordinary shares, as other Equity Securities.

(c) IFT's Bond Programme is firmly established and understood by holders of IFT's Securities. As IFT is required to obtain approval, pursuant to Rule 7.3.1, of the proposed issue of Bonds, the existance and mechanics of the Bond Programme will be published annually (where it is in operation) and potential investors in IFT will have an opportunity to, and should be familiar with, the terms and implications of the Bond Programme prior to investing in IFT.

(d) Accordingly, NZXR is satisfied that the policy of Rule 7.3.2 will not be breached by the granting of a waiver in this case.

(e) As noted above, NZXR has granted IFT a waiver from Rule 7.3.2(b) in respect of the Bond Programme in previous years.

Confidentiality IFT has requested that this application, and the decision resulting from it, be kept confidential until IFT releases to the market the notice of meeting in which approval of the Bond Programme is sought. NZXR grants IFT's request in accordance with Rules 1.11.1 and 1.11.2 and the footnotes to those Rules. ENDS End CA:00197226 For:NZXR Type:WAV/RULE Time:2010-07-13:17:33:34

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