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Summary of

SECURITIES ACT (FRUCOR BEVERAGES GROUP LIMITED) EXEMPTION NOTICE 2000

SR 2000/73

Gazetted on 19 May 2000

Expires on 31 December 2000

Frucor Beverages Group Limited (Frucor), the shareholders in Frucor named in Schedule 1 of the Notice, and every promoter of the offer, are exempted from:

• sections 33(1) and 37A of the Act in respect of an offer of shares in Frucor made to persons outside New Zealand;

• regulations 3(1) and 7A(1) in so far as those provisions require the registered prospectus or investment statement to contain information about the selling shareholders as issuers of the Frucor shares;

• regulation 7(1)(a) in so far as it requires a prospectus for the offer of Frucor shares to be accompanied by copies of certain material contracts listed in Schedule 2 of the Notice;

• clauses 1(4) and 10(1)(c) of the First Schedule;

• clauses 13(a)(ii) and (iii) and 13(b) of the First Schedule in so far as those clauses require disclosure of information about the shares to be offered under Frucor's employee share savings plan; and

• clause 39(b) of the First Schedule in respect of Frucor shares in so far as it applies to the material contracts listed in Schedule 2 of the Notice.

Conditions

The exemption from regulations 3(1) and 7A(1) is subject to the condition that all money paid by any person for Frucor shares is held by Frucor on trust until the shares are transferred to that person.

The exemption from regulation 7(1)(a) is subject to the conditions that:

• the prospectus must be accompanied by copies of the material contracts excluding the commercially sensitive provisions referred to in the second column of Schedule 2; and

• the prospectus must contain a description of the provisions of one of the contracts relating to the term of that contract and the rights of either party to terminate it; and

• any information relating to any of the excluded provisions that is disclosed in any country outside New Zealand in which the shares are offered must also be contained in the prospectus.

  The exemption from clause 1(4) of the First Schedule is subject to the condition that the registered prospectus:

• describes the procedure for, and the factors that may be taken into account in, fixing the price for the shares;

• states when the price is expected to be fixed and how an investor may ascertain the price;

• describes how money paid for the shares will be held by the offeror;

• describes how the shares will be allocated to applicants;

• states the price range within which the directors expect the final price for the shares to be set and includes a warning that the final price may be outside that range;

• describes the procedure for allocating shares to institutional investors and other applicants;

• describes how over subscriptions will be treated and the procedure for refunds; and

• states that an application has been made to the New Zealand Stock Exchange for permission to list the shares.

The exemption from clause 10(1)(c) of First Schedule is subject to the conditions that:

• the prospectus contains a prospective statement of cash flows for the company and its subsidiaries for:
  • the 12 months to 30 June 2000; and
  • the 12 months to 30 June 2001; and

• the prospective statements of cash flows comply with clause 10(2)(b) of the First Schedule.

  The exemption from clauses 13(a)(ii) and (iii) and 13(b) of the First Schedule is subject to the condition that any shares under the employee share savings plan are issued before 31 December 2000, and that the prospectus contains:

• a description of the terms on which shares are issued under the plan including the procedure for setting the subscription price;

• a statement of the likely maximum number of shares to be issued under the plan; and

• a statement of the likely proportions in which the shares will be allotted to principal officers and employees of the company.

  The exemption from clause 39(b) of the First Schedule is subject to the condition that the prospectus states the times and places where copies of the material contracts, excluding the commercially sensitive clauses listed in the second column of Schedule 2, may be inspected by a person who asks to do so and pays the required fee.

Effects of the exemption

The exemption is in respect of an initial public offer of shares in Frucor. The shares to be offered are held by the shareholders in Frucor named in Schedule 1 of the Notice (i.e. they are previously allotted securities).

The exemptions from sections 33(1) and 37A of the Act in respect of offers outside New Zealand overcome any possible extra territorial effects of the Securities Act.

Under the exemption from Regulations 3(1) and 7A(1) certain information about the selling shareholders is not required in the registered prospectus and investment statement, so long as subscription monies are held in trust until the shares have been transferred to the subscriber. This exemption is not intended to affect the selling shareholders' liability as issuers under the Act.

The exemptions from Regulation 7(1)(a) and clause 39(b) of the First Schedule to the Regulations allow certain commercially sensitive clauses to be omitted from the disclosure copies of the material contracts identified in the Notice.

The exemption from clause 1(4) of the First Schedule enables the offer to proceed on an open-priced basis.

The exemption from clause 10(1)(c) of the First Schedule means that the prospective statement of cash flows required by that clause will cover the same period as Frucor's financial year.

Under the exemption from clauses 13(a)(ii) and (iii) and 13(b) of the First Schedule certain specific information about Frucor's proposed employee share purchase plan need not be disclosed in the prospectus, provided that certain general information about the plan is disclosed in the prospectus.

Reasons

In general the exemptions are either of a technical nature or fit within current policy for exemptions of this type.

Sections 33(1) and 37A: This exemption is consistent with current policy. The Commission accepts that where there is an offer of securities both to the public in New Zealand and to persons overseas, the Securities Act and Regulations apply to all shares offered and allotted. In this sense the law may be said to have an extraterritorial effect.

Regulations 3(1) and 7(A)(1): This exemption is consistent with current policy. Where Part II of the Securities Act applies to an offer of previously allotted securities to the public both the person offering the securities and the original allotter of the securities have a responsibility for the offer as issuers. Information about the offeror may not be useful to the investor particularly if the subscription money is held in trust until the shares are allotted. It may also be confusing.

Clause 1(4) of the First Schedule: Where a book building process is used to set the price of shares, the Commission continues to consider exemptions from Clause 1(4) of the First Schedule on a case by case basis. Factors taken into account include whether the offer is multi-jurisdictional (because open pricing is often driven by other jurisdictions) and of a character to warrant an open price offer in New Zealand. The Commission considered that the open pricing exemption was justifiable in this case.

Regulation 7(1)(a) and clause 39(b) of the First Schedule: The exempted provisions of the material contracts are commercially sensitive and the public interest in the availability of the information was thought to be outweighed by the commercial requirement for protecting that information from potential competitors. The Commission observed that these provisions were extensive, and approved the exemption on the basis of the particular circumstances of the competitive environment in which Frucor operates.

Clause 10(1)(c) of the First Schedule: This exemption is consistent with current policy. Aligning the forecast period with Frucor's balance date may enable investors to more readily compare the forecasts in the prospectus with actual performance. Also, the year referred to in clause 10(1)(c) is included within the two periods for which Frucor will provide prospective statements of cash flows, as a condition of the exemption.

Clause 13(a)(ii) and (iii) and 13(b) of the First Schedule: This exemption is within current policy. The prescribed information is not available because the precise terms of the employee purchase plan cannot be determined until a later date. The exemption is subject to conditions.

See also
Exemption Policy Note
Applications to Exclude Commercially Sensitive Information from Material Contracts