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Summary of

Securities Act (Prime Infrastructure Networks (New Zealand) Limited) Exemption Notice 2004

2004/245

Gazetted on 19 August 2004
Expires on 31 August 2009

Effects of the exemption

• The Australian issuer of the stapled securities does not need to provide a separate registered prospectus or investment statement;
• a statutory supervisor and deed of participation are not needed for the stapled securities;
• the Australian issuer does not need to maintain a register of the stapled securities in New Zealand, or to issue certificates for the stapled securities.

Background
Prime Infrastructure Networks (New Zealand) Limited is making a scrip-based takeover offer for all the shares and bonds in Powerco Limited. The securities to be offered are subordinated preferred adjustable reset convertible notes, which can be converted into stapled securities in Prime Infrastructure.

Prime Infrastructure Networks (New Zealand) Limited is a subsidiary company of Australian investment vehicle, Prime Infrastructure. It comprises Prime Infrastructure Management Limited and Prime Infrastructure Trust, an Australian registered managed investment scheme. The responsible entity of the trust is Babcock and Brown Investor Services Limited.

The exemption
Prime Infrastructure Networks (New Zealand) Limited, and Babcock and Brown Investor Services Limited are exempted from section 33(3) of the Securities Act 1978 in respect of any Prime units allotted under the terms of issue of the convertible notes.

Prime Infrastructure Management Limited, Prime Infrastructure Networks (New Zealand) Limited, and Babcock and Brown Investor Services Limited are exempted, in respect of any stapled securities allocated on conversion of the notes, from:

• section 37 of the Securities Act 1978;
• section 37A of the Securities Act 1978, to the extent that they would otherwise be required to prepare an investment statement for the new stapled securities; and
• sections 51 - 54 of the Securities Act 1978.

Prime Infrastructure Management Limited, Prime Infrastructure Networks (New Zealand) Limited, and Babcock and Brown Investor Services Limited are exempted from regulation 23 of the Securities Regulations 1983 in respect of the convertible notes and any new stapled securities issued on conversion of the notes.

Conditions
The exemption from section 33(3) of the Securities Act 1978 is on condition that:

• the Registrar of Companies has received copies of the following documents:
  • Babcock and Brown's licence under the Corporations Act;
  • Prime Trust's constitutional documents;
  • evidence that Prime Trust is registered with ASIC as a managed investment scheme;
  • Prime Trust's compliance plan, required under Australian law; and
• Prime Trust remains a registered managed investment scheme until after the last allotment of the new stapled securities.

The exemptions from sections 37, 37A, and 51-54 of the Securities Act 1978 are on condition that:

• Prime Networks is a wholly owned subsidiary of Prime Management when the notes are offered and allotted and also when the new stapled securities are allotted;
• Prime Infrastructure is listed on NZX as an overseas listed issuer when the convertible notes are allotted and when the new stapled securities are allotted;
• the convertible notes remain quoted on NZDX;
• the investment statement for the notes relates to both the notes and the new stapled securities;
• the registered prospectus for the notes contains all material matters relating to the offer of new stapled securities;
• before the allotment of any new stapled securities and before the notes are converted, the following information is sent to all holders of the convertible notes:
  • a copy of the most recent audited financial statements of Prime Infrastructure;
  • interim financial statements, if more than 9 months have elapsed since the date of the last audited financial statements; and
• the notes are converted not more than 9 months after the date of these financial statements or interim financial statements.

The exemption from regulation 23 of the Securities Regulations 1983 is on condition that any statement in the registered prospectus or advertising for the notes or stapled securities which refers to listing by NZX has been approved by NZX.

Reasons
The exemption from section 33(3) of the Act recognises that Australian law requires a registered managed investment scheme to have a responsible entity and provides relief from the need for a statutory supervisor and deed of participation for the units that form part of the stapled securities.

The exemptions from sections 37 and 37A of the Act in respect of the stapled securities are consistent with the policy of the Commission in respect of convertible securities, which is to exempt issuers from the requirement to have a registered prospectus and investment statement for the allotment of the securities underlying the convertible securities provided that, at the time of the offer of the initial securities, investors are given all information material to the offer of the underlying securities.

The exemptions from sections 51 to 54 of the Act provide relief from certain requirements of the Act concerning the keeping of registers and accounting records and the sending of certificates to security holders in respect of the stapled securities in recognition of equivalent requirements on issuers under Australian law.

The intention is to list the notes and stapled securities on NZX markets if the takeover bid is successful. Strict compliance with regulation 23 of the Regulations would not permit this to be explained fully. The information is useful to investors, and the condition in clause 10 requires that the statement be approved by NZX.