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Independent Adviser(s): KPMG Corporate Finance (Rule 18)
Company Meeting Date: 29/08/2002
On 8 April 2002, Designer Textiles (NZ) Limited (“DTL”) issued a buy-back notice and announced that it would acquire shares over the next 12 months at up to $1 per share (“the proposed buyback”).
As a result of a proposed 5% share buyback, two trusts (the Avonbank Trust and the Belvoir Trust) (“the trusts”) associated with Mr GAC Gould would increase their combined shareholding in DTL from 24.87% to 26.17%. Additionally, approval was required for the proposed transfer of the shares held by the trusts to Gould Holdings Limited (“GHL”), a company controlled by Mr Gould. GHL at the time did not hold any shares in DTL.
The Panel declined an exemption sought by GHL from compliance with the fundamental rule on the basis that the transaction could be approved by shareholders and that the Panel did not have a clear view of the motivation behind the proposed transaction. Accordingly, both transactions required compliance with rule 7(c).
The Panel did however grant an exemption from rule 15(b). As the number of acceptances of the proposed buyback would not be known, it was not possible to state in the notice of meeting the precise percentage of DTL’s shares held by the trusts which would be acquired by GHL.
On 29 August 2002, DTL shareholders approved the two resolutions permitting Mr Gould to retain the increased shareholding resulting from the share buyback as well as to the transfer of the shares held by the trusts to GHL.
KPMG Corporate Finance prepared a rule 18 independent adviser’s report on the merits of the proposed buyback and acquisition.