KEY POINTS:
Biotechnology investor Wool Equities has been found to have breached a listing rule during a 2004 transaction involving contract wool researcher Canesis.
The stock exchange (NZX) today said it had concluded that Wool Equities had failed to get shareholder approval before the transaction.
Wool Equities had entered into a series of linked or related transactions where the gross value was more than half its average market capitalisation without the prior approval.
Under the terms of a negotiated settlement between Wool Equities and NZX, Wool Equities "acknowledges and accepts that it may have committed a breach of NZAX Listing Rule 9.1.1 in proceeding with the 2004 Canesis transaction without obtaining prior shareholder approval".
Wool Equities was to pay to NZX $15,000, the approximate cost of the investigation into the alleged breach, as well as actual costs incurred approving the settlement agreement, NZX said.
In reaching the settlement, NZX said, it acknowledged Wool Equities had disclosed all the details of the 2004 Canesis transaction to NZX at the time it applied for a waiver relating to related party aspects of the deal.
But Wool Equities had not asked NZX to consider, and therefore NZX did not consider, the application of Rule 9.1.1.
At the time of the Canesis transaction, Wool Equities provided certificates from its independent directors certifying that, among other matters, the Canesis transaction was negotiated on an arms length and commercial basis, and was in the best interests of shareholders.
In October 2004, Wool Equities approved and participated in a capital reduction by Canesis, in which it was a minority shareholder.
That involved capital being returned on a pro rata basis to Canesis' two shareholders, Wool Equities and Wool Research Organisation of New Zealand (WRONZ). Wool Equities received $2.7 million.
At the same time, Wool Equities advanced about $2.3 million to Canesis by way of a shareholder loan. The balance of about $400,000 was received by Wool Equities in cash.
Following the capital reduction, Wool Equities bought 3.8 million shares in Canesis from WRONZ for $1.295 per share, paying a total of $4.97 million.
Last November Wool Equities announced the sale for $6.5m of its then 75 per cent shareholding in Canesis to Agresearch.
Wool Equities shares closed at 75c on Friday, having ranged between 50c and $1.50 in the past year.
- NZPA
