New Talisman Gold Mines has announced New Zealand’s first rights issue offer made under the new ‘same class offer’ regime introduced on 1 April 2014 and Chapman Tripp partner, Roger Wallis, says it “certainly won’t be the last”.
Wallis led a team comprised of senior associate Jarrod Murphy and senior solicitor Adrien Hunter in advising New Talisman on the rights offer to existing shareholders in Australia and New Zealand.
The regime forms part of Phase 1 of the FMCA and allows listed issuers to issue securities of the same class as those already quoted, with minimal documentation. An equivalent regime exists in Australia and is being used for this transaction.
“The New Talisman rights issue is the first time the market has been able to observe the impact of this new provision,” Wallis tells NZ Lawyer
. “By enabling the issuer to issue securities of the same class as those already listed without a prospectus or investment statement, we’ve seen how the process can be simplified and accelerated.
Wallis believes this is the beginning of a new chapter and signals a change in the market landscape.
“This is the first of many transactions,” he says. “In time I think we will see smaller IPOs and frequent use of the same class regime to raise more capital later at (hopefully) higher valuations, or for larger parcels of existing shares to be transacted…with active involvement of the subject issuer – something the old law did not permit without a prospectus. For example, if we were advising on the News Corporation sale of 43% of SKY TV, or the Crown sale of 20% of Air NZ now the ‘same class’ regime would most likely be utilised.”
Chapman Tripp have acted for New Talisman (previously Heritage Gold) since 1997 Wallis says the firm has made a major investment understanding how the same class regime works.
“We’ve visited Australian firms to discuss how their more narrow regime works and worked with FMA and MBIE and the top tier law firms to agree positions on some boundary line issues,” he says. "We’ve also talked to most of the investment banks, a number of boards and the NZ Shareholders Association about it.”
However, despite the similarities, Wallis says the New Zealand regime is significantly more flexible.
“It is available for placements, share purchase plans, block trades or other market deals in equity,” he says. “And it has application to offers of listed debt of the same maturity or tenor as existing debt. The Australian regime is limited to rights issues or some secondary market transactions. The New Zealand regime also has more appropriate liability settings and defences. Our Australian cousins are very envious of the regime we have.”
Australian firm Gilbert and Tobin advised on the Australian law input for this transaction.