NZX Regulation Decision
Christchurch City Holdings Limited (“CCH”)
Application for waiver from NZX Debt Market Listing Rule 5.2.3
14 November 2017
Waiver from Rule 5.2.3
Decision
1. Subject to the conditions set out in paragraph 2 below, and on the basis that the information provided by CCH is complete and accurate in all material respects, NZXR grants CCH a waiver from Rule 5.2.3 in respect of the 2017 Bonds for a period of six months from the Quotation Date, to the extent that this Rule requires the 2017 Bonds to meet the Spread Requirements.
2. The waiver in paragraph 1, above, is provided on the conditions that:
a. CCH clearly and prominently discloses the waiver and its implications in the Product Disclosure Statement for the 2017 Bonds and any other Offering Document relating to an offer of 2017 Bonds made during the period of this waiver;
b. CCH clearly and prominently discloses this waiver, its conditions, and its implications in its half-year report, and its annual report, for the period the waiver is relied upon;
c. CCH discloses liquidity as a risk in the Product Disclosure Statement for the 2017 Bonds; and
d. CCH notifies NZXR as soon as practicable if there is a material reduction to the total number of Members of the Public holding at least a Minimum Holding of the 2017 Bonds, and/or the percentage of 2017 Bonds held by Members of the Public holding at least a Minimum Holding.
3. The information on which this decision is based is set out in Appendix One to this decision. This waiver will not apply if that information is not or ceases to be full and accurate in all material respects.
4. The Rule to which this decision relates is set out in Appendix Two to this decision.
5. Capitalised terms which have not been defined in this decision have the meanings given to them in the Rules.
Reasons
6. In coming to the decision to provide the waiver set out in paragraph 1 above, NZXR has considered that:
a. Debt Securities are generally not subject to the same degree of trading activity as Equity Securities. NZX is satisfied that sufficient liquidity can exist in a secondary market for debt securities with a smaller number of security holders;
b. CCH has advised that it expects the spread of the 2017 Bonds will increase to meet the spread requirements of Rule 5.2.3 over time. CCH may meet the spread requirements at the time of Quotation. As the 2017 Bonds are being offered through market participants, without a public pool, CCH will only know how the 2017 Bonds will be allocated following the Bookbuild. CCH has advised that it is not in a position to confirm as at the date of this waiver that the spread requirements will be met at the time of Quotation;
c. the conditions, contained in paragraph 2(a), 2(b) and 2(c) above, require CCH to provide access to information about this waiver and its implications to prospective investors as part of the Offer, as well as those wishing to trade in the 2017 Bonds for the period of this waiver. Investors can take this information into account when making their investment decision;
d. the condition contained in paragraph 2(d) above requires CCH to provide information that will allow NZXR to monitor any material reduction in the spread of the 2017 Bonds over the period of this waiver;
e. the waiver is granted for six months. This gives NZXR the opportunity to reconsider the spread of the 2017 Bonds in six months’ time if CCH considers a waiver is still required; and
f. there is precedent for this decision.
Confidentiality
7. CCH has requested that the application for a waiver from Rule 5.2.3, and NZXR’s decision, be kept confidential until the Offer is publically announced.
8. In accordance with footnote 1 to Rule 1.11.2, NZXR grants CCH’s request.
Appendix One
1. Christchurch City Holdings Limited (CCH) intends to become Listed Issuer with Debt Securities Quoted on the NZX Debt Market (Debt Market).
2. CCH intends to make an offer of unsecured, unsubordinated, fixed rate bonds (2017 Bonds) on the Debt Market (Offer).
3. The Offer will open on or about 27 November 2017 and close on or about 29 November 2017. The joint lead managers for the Offer will conduct a bookbuild on or about 29 November 2017 in order to determine the 2017 Bonds’ margin (Bookbuild). CCH intends to Quote the 2017 Bonds on the Debt Market on or about 11 December 2017 (Quotation Date).The 2017 Bonds mature on or about 6 December 2017.
4. CCH will release a Product Disclosure Statement on or prior to the date the Offer opens, setting out the main terms of the 2017 Bonds (Product Disclosure Statement).
5. In accordance with NZX Regulation’s (NZXR) Ruling on NZX Debt Market Listing Rule (Rule) 5.2.3 issued on 29 September 2015 (the Ruling), the 2017 Bonds are required to be held by at least 100 Members of the Public holding at least 25% of the number of Securities of that Class issued, with each Member of the Public holding at least a Minimum Holding (Spread Requirements), and those Spread Requirements are maintained.
6. CCH has engaged with joint lead managers in respect of the anticipated bonds. The joint lead managers are unable to give assurances in respect of the spread of the 2017 Bonds.
7. The Offer is structured so that all of the 2017 Bonds are reserved for clients of the joint lead managers of the Offer, primary market participants and other approved financial intermediaries. There is no public pool for the Offer. CCH has sought a waiver from Rule 5.2.3 as it is uncertain whether the 2017 Bonds will satisfy the Spread Requirements, when the 2017 Bonds are initially Quoted on the Debt Market.
Appendix Two
Rule 5.2 Quotation of Securities
5.2.3 A Class of Securities will generally not be considered for Quotation on the NZSX or NZDX unless those Securities are held by at least 500 Members of the Public
holding at least 25% of the number of Securities of that Class issued, with each Member of the Public holding at least a Minimum Holding, and those requirements
are maintained, or NZX is otherwise satisfied that the Issuer will maintain a spread of Security holders which is sufficient to ensure that there is a sufficiently liquid
market in the Class of Securities.
Ruling on NZX Debt Market Listing Rule 5.2.3 – 29 September 2015
For the purposes of Rule 5.2.3, a Class of Debt Securities will generally not be considered for Quotation on the NZDX unless those Securities are held by at least 100 Members of the Public
holding at least 25% of the number of Securities of that Class issued, with each Member of the Public holding at least a Minimum Holding, and those requirements are maintained.