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Summary of

Securities Act (Powerco Limited) Exemption Notice 2004

2004/13

Gazetted on 23 February 2004
Expires on 30 June 2004

Effect of the Exemption
Powerco Limited's (Powerco) offer of guaranteed bonds is exempted from the requirements to:

• include in the registered prospectus a five year financial statement in summary form for the borrowing group and the business acquired by the group within the two years preceding the date of registration of the prospectus;
• disclose certain commercially sensitive provisions from certain material contracts that are required to be filed at the Companies Office;
• disclose the restrictions on the ability of Powerco to borrow arising from the request to exclude commercially sensitive provisions in two of the material contracts;
• make available a complete copy of each of the material contracts to be made available for public inspection; and
• disclose the names of the investors who are a party to some of the material contracts.

Background
Powerco was created in September 2000 by an amalgamation between "the former Powerco" and CentralPower Group Limited. In November 2002 Powerco purchased the electricity and gas distribution network business and assets of UnitedNetworks Limited.

Powerco intends to offer guaranteed bonds to institutional and retail investors in New Zealand.

The exemption
Powerco is exempted, subject to conditions, from regulation 7(1)(a) of the Regulations and clauses 7(3), 8(2)(c), 9(b), 33(b)and 13(2) of the Second Schedule to the Regulations.

Conditions
The exemptions from regulation 7(1)(a) and from clause 33(b) of the Second Schedule are subject to the conditions that the prospectus contains or is accompanied by

• the specified material contracts without the excluded provisions;
• a statement by the directors that non-disclosure of the excluded provisions does not make the prospectus or investment statement misleading in any material particular by failing to refer to give proper emphasis to any adverse circumstances; and
• the times and places in New Zealand where the material contracts may be inspected on request and without fee;
• a statement that the financial covenants in each Note Purchase Agreement and in the Standard Terms Agreement may be amended without the consent of the security holders or the trustee and that in the directors' opinion these financial covenants are not material information which investors should rely on when considering whether or not to apply for the securities;
• a statement that certain provisions of specified material contracts have not been filed with the Registrar of Companies; and
• a statement of the general nature of those provisions.

The exemption from clause 8(2)(c) is subject to the condition that the registered prospectus contains updated pro forma financial information that was used in a registered prospectus issued by Powerco in October 2002.

Reasons
Powerco was not able to provide the financial information required by clause 7(3) and clause 8(2)(c) of the Second Schedule to the Regulations and the alternative financial information required by the conditions of the exemption was the best available alternative financial information for potential subscribers.

The exemption allowing commercially sensitive information from material contracts to be deleted met the criteria in the Commission's policy, that is:

• that disclosure of the information would be seriously detrimental to the issuer; and
• that the detriment to the issuer from disclosing the information would outweigh the benefit from publishing the information.