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Summary of

Securities Act (AMP NZ Office Trust) Exemption Notice 2004

2004/139

Gazetted on 28 May 2004
Clauses 5 to 10 and 14 to 19 of the notice expire on 31 July 2005
The rest of the notice expires on 31 May 2009

Effects of the exemption

• mandatory convertible notes can be issued to existing AMP NZ Office Trust unit holders without the need for a separate trustee and trust deed;
• the trustee is relieved of disclosure responsibilities as the issuer of the notes on condition that the manager assumes these responsibilities;
• the prospectus and investment statement do not need to refer to the trustee as the issuer of the notes;
• the manager is able to prepare a short form prospectus for the offer of notes;
• a separate prospectus is not required for the units to be issued on conversion of the notes;
• an investment statement is not required to be issued to subscribers in whose favour an offer of notes is renounced;
• statements referring to the quoting of the notes or units or to any rule of NZX can be included in the prospectus or advertisements if they are approved by NZX;
• copies of the offer document can be distributed without the financial statements attached.

Background
AMP NZ Office Trust is a unit trust, of which Perpetual Trust Limited is the trustee, and AMP Ronin Management Limited is the manager.

AMP NZ Office Trust plans to make a pro-rata renounceable underwritten rights offer of mandatory convertible notes to existing unit holders in the trust. The notes will be quoted on NZX on allotment.

The exemption
The trustee and their representatives (but not the manager), are exempted from:

• sections 34(2)(a), 37, 37A, 38A, and 51 to 54B of the Securities Act 1978 and the Securities Regulations 1983 in respect of convertible notes.

The trustee and their representatives are exempted from:

• section 33(2) of the Securities Act 1978; and
• sections 41 and 43 of the Securities Act 1978, to the extent that those sections require a prospectus (or an amendment to a registered prospectus) for convertible notes to be signed by the trustee's directors.

The manager and their representatives are exempted from:

• section 33(2) of the Securities Act 1978 in respect of convertible notes;
• sections 41 and 43 of the Securities Act 1978, to the extent that those sections require a prospectus, or an amendment to a registered prospectus, for convertible notes to be signed by the trustee's directors;
• section 34(2)(a) of the Securities Act 1978 in respect of the registered prospectus;
• section 37A(1)(a) of the Securities Act 1978 in respect of the allotment to any subscriber for convertible notes in whose favour an offer of those notes has been renounced;
• section 37A(1)(c) of the Securities Act 1978 in respect of any units that are, or are to be, allotted under the terms of the convertible notes;
• section 54B(3)(b) of the Securities Act 1978 to the extent that it requires financial statements of the trustee as issuer of the convertible notes to be sent to any person on request;
• regulation 3(2) of the Securities Regulations 1983;
• regulation 7A of the Securities Regulations 1983, to the extent that it requires information about the trustee as issuer (or about the trustee's directors) to be included in an investment statement for the convertible notes;
• regulation 12(1) of the Securities Regulations 1983;
• regulation 23 of the Securities Regulations 1983 in respect of convertible notes and units.

Conditions
The trustee is exempted from sections 33(2), 34(2)(a), 37, 37A, 38A, 41, 43, and 51 to 54B of the Securities Act 1978, and the manager is exempted from sections 33(2), 41 and 43 of the Securities Act 1978 and regulation 3(2) of the Securities Regulations 1983 on the following conditions:

• the trustee of the trust is also the trustee for the convertible securities;
• the trust deed contains equivalent clauses to those required under the Fifth Schedule of the Securities Regulations 1983;
• the convertible notes are issued under the trust deed;
• the trust deed is lodged with the Registrar of Companies;
• the registered prospectus and investment statement state the following:
  • the effect of the trustee's exemption from section 33(2);
  • the manager will disclose the information that would otherwise be required from the trustee;
  • under the terms of the offer, the manager rather than the trustee will keep a public register of convertible notes;
  • under the terms of the offer, the manager will send note holders a written statement about the nature and ownership of the convertible notes at least every 6 months and at any time on request.

The manager is exempted from section 34(2)(a) of the Securities Act 1978 on condition that:

• the trust's most recent financial statements that comply with the Financial Reporting Act 1993 have been sent to all registered unit holders in the trust;
• the investment statement and registered prospectus advise that copies of these financial statements are available on request.

The manager is exempted from section 37A(1)(c) of the Securities Act 1978 on condition that:

• the registered prospectus details all material matters relating to the units which will be allotted on conversion of the notes;
• all holders of convertible notes are sent the following information before the notes are converted:
  • a copy of the trust's most recent audited financial statements that comply with the Financial Reporting Act 1993 and with the provisions of any other relevant enactments; and
  • interim financial statements, if more than 9 months has elapsed since the date of the last audited financial statements, together with a description of the trust;
• the notes are converted not more than 9 months after the date of these financial statements or interim financial statements.

The manager's exemption from regulation 3(2) of the Securities Regulations 1983 is also subject to the condition that the registered prospectus contains:

• the items set out in clauses 1, 4, 11, 12, 13, and 14 of the Second Schedule of the Regulations, except in relation to information about the trustee as issuer of the notes or the trustee's directors as directors of the issuer;
• the trust's most recent financial statements that comply with the Financial Reporting Act 1993, unless these have already been sent to all registered unit holders;
• information on where to obtain copies of the trust's latest financial statements free of charge;
• a statement by the directors of the manager as to whether any circumstances have arisen since the latest statement of financial position that materially affect the trust's financial position.

The manager is exempted from regulation 12(1) of the Securities Regulations 1983 on condition that:

• any statement of assets in an advertisement for the notes relates only to the trust;
• any statement of the trust's assets in an advertisement for the notes is accompanied by an equally prominent statement of its liabilities;
• any statements of the trust's financial position, financial performance or cash flows in advertisements for the notes are the same as those contained in the registered prospectus;
• any unaudited statements of the trust's financial position, financial performance or cash flows in advertisements for the notes are described as such.

The manager is exempted from regulation 23 of the Securities Regulations 1983 on condition that any statements in the registered prospectus or advertisement that refer to quoting the notes or units, or to NZX rules, have been approved by NZX.

Reasons
Securities convertible into units in a unit trust are debt securities for the purposes of the Securities Act 1978. Compliance with the Act can cause difficulties in this situation and create an extra layer of compliance activity if the unit trustee of a unit trust is required to appoint a trustee for the debt securities.

The securities to be offered in this case are mandatory convertible notes. They cannot be redeemed by subscribers except in very limited circumstances. Accordingly, subscribers for these notes appear to acquire a vested interest in the property of the trust. As such, the Commission considers that the notes confer rights falling within the definition of unit in section 2(1) of the Act. The Commission considers it preferable to grant an exemption under which the issuer's disclosure obligations are discharged by the manager of the trust, on conditions that require the unit trustee to act as trustee of the debt securities.

The exemption from disclosure on conversion is consistent with other Commission exemptions granted in respect of convertible securities and requires all matters that must be disclosed to be disclosed at the time of the offer of the convertible securities.

Strict compliance with regulation 23 of the Securities Regulations 1983 in this case could result in material information about listing of the securities not being provided to investors.

As the offer will be made only to existing unit holders it is sufficient that disclosure is by way of a short form prospectus.

Disclosure of financial information relating to the unit trust is most relevant to investors, and this is achieved by the manager in assuming the disclosure obligations of the issuer of the notes.