Mykco (Myk) Notices of Special Meeting and Annual Meeting

Mykco Limited
Level 7, 12-26 Swanson Street,
PO Box 1314, Shortland Street,
Auckland, New Zealand. 1140.
Phone +64 9 304 0145
Fax +64 9 358 3858


Mykco (Myk) Notices of Special Meeting and Annual Meeting

Mykco ( Myk) the NZAX listed shell advise that the notices of a Special Meeting to be held
on 31 July 2018 at 1 pm and the Annual Meeting to be held on the same day at 2.15pm will
be posted to shareholders on 16
th
July 2018. Both meetings are to be held at Raffles Room,
Stamford Plaza Auckland, 22-26 Albert Street, Auckland, 1010.

MYK has obtained approval from NZX to release the Notice of Meeting and the associated
information to shareholders for a Special Meeting of Shareholders to be held on 31 July
2018. The information provided to shareholders will assist shareholders to make an
informed decision on the merits of the proposed acquisition of Corporate Holdings Ltd,
including its subsidiaries General Finance Ltd and Investment Research Group Ltd.

Mr. Brent King, Chairman of Mykco Ltd said, “This is a very important day for Mykco Ltd. We
have obtained all approvals required for this transaction except the approval from Mykco
shareholders. We will post the information to shareholders no later than Monday 16
th
July
so that shareholders can assess the merits of the transaction. The information is
comprehensive, and we are sure that shareholders will be able to form an informed view of
the proposed transaction. “

Mr King further said, “If the transaction is approved and the transaction is settled then
Mykco will change from being a shell to a company with significant assets, cash in the Bank
and positive cash flows. Mykco Ltd. will after settlement, which is expected to be completed
on 3
rd
of August, change its name to General Capital Ltd and will trade under the Ticker code
of NZ:GEN.”

Mr. King further stated “We have a very good opportunity to move Mykco from being a shell
into a full trading company. We look forward to meeting our shareholders on the 31
st
of July
to hear their views and to see if they share our view that this is an excellent opportunity for
Mykco to move into an exciting new sector. “

Mr. King reinforced that the information would be posted on Monday 16
th
July and that the
Special Meeting of shareholders would be on Tuesday 31
st
July at 1 pm. The Annual Meeting
of shareholders would also be held on the same day at 2.15pm.

For further information please contact:
Brent King
Chair
Mykco Limited
021 632 660
brent.king@irg.co.nz
12 June 2018

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Mykco Limited
Level 7, 12-26 Swanson Street,
PO Box 1314, Shortland Street,
Auckland, New Zealand. 1140.
Phone +64 9 304 0145
Fax +64 9 358 3858



16 July 2018








Dear Shareholder

We enclose a notice of special meeting (Notice of Meeting) of shareholders of Mykco
Limited (Mykco) to be held on 31 July 2018 at Raffles Room, Stamford Plaza
Auckland, 22-26 Albert Street, Auckland, 1010 starting at 1.00pm.

Resolutions

The 3 resolutions (Resolutions) being put to the meeting seek approval for:

(a) A transaction (Transaction) to acquire all the shares in Corporate Holdings Limited (CHL)
except for those Mykco already owns;
(b) A Management Agreement (Management Agreement) to be entered into with Brent
Douglas King on completion of the Transaction;
(c) An increase in the Directors’ remuneration fee pool.
All Resolutions are interdependent. This means that unless all Resolutions are approved, none of
them will be considered to have passed.

The Transaction
Resolution 1 seeks approval for the Transaction whereby Mykco:
(a) Acquires all the 6,512,000 shares in CHL except for the 100,000 shares it already owns
(Shares in CHL to be Acquired) for a total purchase price of $6,132,436.80 (Purchase
Price); and
(b) Satisfies the Purchase Price by issuing to the owners of the Shares in CHL to be Acquired
(Vendors) 104,323,240 fully paid ordinary shares in Mykco (Mykco Shares to be issued
to the Vendors).

The Transaction is in substance a merger of Mykco and CHL. It will result in the Vendors becoming
the holders of a majority of the shares in Mykco. Mykco’s existing shareholders will retain their shares
in Mykco. However, the Transaction will substantially dilute the proportion of the shares in Mykco
held by Mykco’s existing shareholders due to the issue of shares under the Transaction.

The Transaction will result in the essential nature of Mykco’s business changing, as it will result in
Mykco being the holding company for a group comprising CHL (an intermediate holding company) and
its subsidiaries:

(a) General Finance Limited (General Finance), a non-bank deposit taker, which operates as a
finance company; and
(b) Investment Research Group Limited (IRG), a corporate advisory and financial research
company, which is an NZX Sponsor and NXT Advisor and the publisher of the Investment
Yearbook.
The Notice of Meeting should be read in conjunction with the enclosed Independent Adviser Report
which assesses the merits of the Transaction, and the enclosed Disclosure Document which describes
Mykco and its subsidiaries after the Transaction (collectively Mykco Group) and the business plan to
be pursued by the Mykco Group following the Transaction.

Transaction Consideration
Mykco will satisfy the Purchase Price through the issue of the Mykco Shares to be issued to the
Vendors.

The valuations relevant to the Transaction are:

(a) The Shares in CHL to be Acquired are valued at $6,132,436.80, which is the Purchase Price.
(b) Mykco is valued at $1,152,957.
Based on these valuations, the existing shareholders of Mykco will have approximately a
15.8% shareholding interest in Mykco upon completion of the Transaction.

Each Vendor will receive 16.27 shares in Mykco for each share in CHL.

The multiplier of 16.27 represents:
(a) 95.64 cents, being the net assets per share of CHL derived from management accounts of
CHL prepared as at 31 January 2018; divided by
(b) 5.88 cents, being the net assets per share of Mykco as at 30 September 2017 based on
unaudited interim accounts of Mykco as at that date.

Benefits of the Transaction
The Board of Mykco considers that the Transaction will produce benefits to shareholders because the
Transaction:

(a) Introduces established business operations and growth prospects into a Mykco Group
(comprising Mykco, CHL, General Finance and IRG) with a focus on the finance company
sector (through General Finance) and the complimentary corporate advisory and financial
advisory sector (through IRG).
(b) Provides Mykco with new substantial shareholders who have business experience in the areas
in which Mykco (through subsidiaries) operates following the Transaction.
(c) Potentially increases liquidity by increasing the number of shareholders.

(d) Provides Mykco with a platform to seek further capital and expand the operations of its
subsidiaries.
The Board considers that the Transaction provides growth opportunities for Mykco and believes the
Transaction is in the best interests of shareholders under current circumstances.

The key positive and negative aspects of the Transaction are outlined in the Independent Adviser
Report in section 2.2 on pages 8 to 10.

If the Transaction does not proceed, Mykco would remain a listed shell company seeking suitable
investment and capital raising opportunities to cover its operating expenses. However, the costs
associated with the Transaction mean that Mykco would be unlikely to have the cash resources to
fund the costs related to any further transaction should the Transaction not be approved.

Management Agreement with Brent Douglas King

Resolution 2 seeks approval for the proposed Management Agreement between Mykco and Mr King
which would extend to Mykco and its subsidiaries but otherwise be on substantially the same terms
as and replace Mr King’s current Management Agreement with CHL and take effect on completion of
the Transaction.

Reflecting Mr King’s existing Management Agreement with CHL, the proposed Management
Agreement between Mykco (and what would be its main operating subsidiary, General Finance) and
Mr King would provide for:

(a) A salary of $120,000 per annum, reviewable annually, a vehicle allowance of $12,000 per
annum, the cost of a covered carpark, and reimbursement of petrol charges for use of a motor
vehicle;
(b) Commission payments of 10% of any fees earned by Mykco or any of its subsidiaries (except
fees earned by General Finance from its lending business);
(c) A profit share equal to 8% of any amount by which the Mykco group’s net profit after tax
exceeds a benchmark equal to the shareholders funds of the Mykco group at the
commencement of the relevant year, multiplied by the OCR plus 10% per annum.
The proposed Management Agreement will be terminable by either party on three month’s written
notice, and no moneys will be payable to Mr King on termination apart from any unpaid remuneration
accrued up to the termination date and (in the event termination is for redundancy) the agreed
redundancy payment equal to six weeks pay for the first year of service and two weeks for each
subsequent year of service.
Since the proposed Management Agreement will be an employment agreement, Mykco could only give
notice terminating the Management Agreement if it has substantive grounds to do so, ie. If there has
been misconduct or poor performance warranting termination, or redundancy, and in exercising its
right of termination Mykco would need to proceed in a manner that is procedurally fair to Mr King.

Directors’ Remuneration Fee Pool

Resolution 3 seeks approval to increase the Directors’ remuneration fee pool by $150,000 from
$150,000 to $300,000 (an explanation of Resolution 3 is set out on page 23 of the enclosed Notice of
Meeting).

Shareholder action required

All Resolutions are interdependent. This means that unless all Resolutions are approved, none of
them will be considered to have passed and Mykco will remain a listed shell. All Resolutions require
approval from Mykco’s shareholders. The Resolutions are described and the reasons for shareholder
approval being required are explained in the Explanatory Notes that form part of the enclosed Notice
of Meeting.

The Directors encourage you to carefully read the enclosed Notice of Meeting (including explanatory
notes) together with the enclosed Independent Advisors Report and Disclosure Document and
exercise your right to vote.

The enclosed shareholder voting form has detailed instructions on how shareholders may lodge their
vote or appoint a proxy to vote on their behalf if they are unable to attend the meeting.

Directors’ recommendation

Directors recommend that sharehlders vote in favour of the Resolutions. Their responses for this
recommendation are set out on pages 5 to 7 of the enclosed Notice of Meeting.

Shareholders should note that these recommendations are based on the
Directors’ having accepted the net asset value of CHL (including the underlying
asset values) as at 31 January 2018 based on unaudited management accounts
prepared and determined solely by CHL. The Directors have not commissioned
or received audit or other independent review or verification of those accounts
(or the asset valuations underlying them). Mykco has limited resources and the
Directors did not believe this was an efficient or effective use of the remaining
shareholders funds available. The Directors have accepted those accounts (and
valuations) and have concluded that they are fair and reasonable to shareholders
for the reasons set out above. Valuation and pricing involves judgement, in
respect of which views may differ. Therefore, shareholders should ensure they
make their own independent decisions, after considering all information in the
enclosed Notice of Meeting and the accompanying documents, and they should
not be guided solely by the recommendation of the Directors.

A description of the Directors’ interests in the Resolutions is set out in a table under Directors’
Recommendation on page 8 of the enclosed Notice of Meeting.

Please read all of the enclosed documentation, and consult with your financial or professional advisor
if you have any questions.

I look forward to seeing you at the meeting.


Yours faithfully





Brent King
Chair

---

Mykco Limited
Level 7, 12-26 Swanson Street,
PO Box 1314, Shortland Street,
Auckland, New Zealand. 1140.
Phone +64 9 304 0145
Fax +64 9 358 3858

6883.003_064.docx
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
1.00PM ON 31 JULY 2018
Mykco Limited (Mykco) gives you notice that a special meeting of shareholders will be
held at Raffles Room, Stamford Plaza Auckland, 22-26 Albert Street, Auckland, 1010
commencing at 1 pm on 31 July 2018.
The Contents of this Notice of Meeting Page
1. Chairman’s introduction 2
2. Resolutions 2
3. Timetable 3
4. Independent Adviser’s Report 3
5. Disclosure Document 5
6. Directors’ Remuneration 5
7. Directors’ Recommendation 5
8. NZX Accepts No Responsibility 8
9. Special Resolution 9
10. Ordinary Resolution 9
11. Minority Buy-out Rights 9
12. Proxies and Representatives 9
13. Explanatory Notes 11
14. Reasons for Directors’ Recommendation 32
15. Glossary 33
16. Admission Card/Proxy Form/Voting Paper After page 34
The Explanatory Notes which accompany this Notice of Meeting set out the details of the
transactions which are the subject of the resolutions set out below (Resolutions) and the
approvals required for the Resolutions by the shareholders of Mykco pursuant to the constitution
of Mykco, the Companies Act 1993 (Companies Act), the NZAX Listing Rules, and the Takeovers
Code Approval Order 2000 (Takeovers Code or Code).
All capitalised terms used in this Notice of Meeting are defined in the Glossary of definitions at the
end of this Notice of Meeting.

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The business of the meeting will be:
Chairman's introduction
Resolution 1: Acquisition of Corporate Holdings Limited, and Issue of Shares to the
Vendors
To consider and, if thought fit, to pass the following special resolution:
That, subject to Resolutions 2 and 3 being passed, the shareholders approve the acquisition by Mykco
Limited (Mykco) of all the shares in Corporate Holdings Limited (CHL), except for the 100,000 shares
which Mykco already owns:
(a) for a purchase price of $6,132,436.80, being the 6,412,000 shares to be purchased, multiplied
by 95.64 cents, which is the amount of the net assets per share of CHL derived from management
accounts of CHL as at 31 January 2018;
(b) to be satisfied by Mykco issuing 104,323,240 fully paid ordinary shares in Mykco at an issue price
of 5.88 cents per share, being the 6,412,000 shares to be purchased, multiplied by 16.27 (16.27
is the number of shares in Mykco to be issued for each share in CHL that is purchased, and is the
net assets per share of CHL of 95.64 cents referred to above divided by 5.88 cents which is the
net assets per share of Mykco as at 30 September 2017 based on unaudited accounts of Mykco
as at that date).
and otherwise on the terms described in the Explanatory Notes.

Brent Douglas King, Barter Investments Limited and Garth William Ward (collectively King
Associates) are prohibited by NZAX Listing Rule 9.3.1 and Rule 17 of the Takeovers Code from voting any
shares they hold on Resolution 1. Mykco shareholders not associated with Borneo Capital Limited
(Borneo) – not a shareholder in Mykco Limited (Mykco) but a shareholder in Corporate Holdings Limited
(CHL) – or the King Associates are referred to as Non-associated Shareholders. The Non-associated
Shareholders are the shareholders permitted to vote on Resolution 1. Should the above transaction proceed it
will result in Borneo controlling 26.25% of the voting rights in Mykco and the King Associates controlling 21.13%
of the voting rights in Mykco.
Resolution 2: Management Agreement with Brent Douglas King
To consider and, if thought fit, to pass the following ordinary resolution:

That, subject to Resolutions 1 and 3 being passed, Mykco Limited (Mykco) enter into a Management
Agreement with Brent Douglas King, the current Managing Director of Corporate Holdings Limited
(CHL), whereby Mr King is appointed Managing Director of Mykco and its subsidiaries, including CHL
and its subsidiaries, as from completion of Mykco’s purchase of CHL, such Agreement to extend to
Mykco and its subsidiaries but otherwise to be on substantially the same terms as and in substitution
for his existing Management Agreement with CHL, such terms being described in the Explanatory Notes.

The King Associates are prohibited by NZAX Listing Rule 9.3.1 from voting any shares they hold on
Resolution 2.

Resolution 3: Directors’ Remuneration Fee Pool

To consider and, if thought fit, to pass the following ordinary resolution:

That, subject to Resolutions 1 and 2 being passed, the total Directors’ remuneration fee pool is increased
by $150,000, from $150,000 to $300,000 per annum.

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6883.003_078.docx
Directors of Mykco and their Associated Persons (as defined in the NZAX Listing Rules) (Associated
Persons) are prohibited by NZAX Listing Rule 9.3.1 from voting any shares they hold on Resolution
3.

All Resolutions are interdependent. This means that unless all Resolutions are approved, none of them
will be considered to have passed and Mykco will remain a listed shell. The Resolutions have been
made interdependent because the directors of Mykco (Directors) consider they are a package. If
Resolution 1 above (Resolution 1) was to be passed without also passing Resolution 2 above
(Resolution 2) and Resolution 3 above (Resolution 3), Mykco would be acquiring a substantial
business without having appointed a Managing Director or having provided for the Directors and
the directors of Mykco’s new subsidiaries to be remunerated appropriately. Directors will assume
additional responsibilities as a result of Mykco acquiring CHL, which acquired General Finance
Limited (General Finance) and Investment Research Group Limited (IRG) on 19 December 2017.
Directors of Mykco’s new subsidiaries need to continue to be remunerated appropriately,
particularly the directors of General Finance, which is a non bank deposit taker, with substantial
legal obligations. Equally, the Directors consider that Resolution 2 and Resolution 3 do not need to
be passed if Resolution 1 is not passed.

Explanatory Notes on the Resolutions are set out below.
Timetable
The key dates relating to the Resolutions are:
(a) A special meeting to approve the Resolutions: 1pm on 31 July 2018
(b) Completion of the transaction whereby Mykco is to acquire all 6,512,000 shares in CHL
except for the 100,000 shares already owned by Mykco (Shares in CHL to be Acquired)
which under Resolution 1 shareholders are being asked to approve (Transaction), entry
into the Management Agreement which under Resolution 2 shareholders are being asked to
approve (Management Agreement), and the introduction of the increased Directors’
remuneration fee pool which under Resolution 3 shareholders are also being asked to
approve (Directors’ remuneration fee pool): 3 August 2018*
(c) Allotment of shares to the vendors of the shares to be acquired pursuant to the Transaction
(Vendors) to be quoted on NZAX: 3 August 2018*
* The above dates are indicative only and may change.
Independent Adviser’s Report
As the Transaction amounts to a backdoor listing, Mykco is required to obtain an independent
adviser report (Independent Adviser Report) for the purposes of NZAX Listing Rules 6.1.1 and
7.1.3 and NZXR’s Guidance Note “Backdoor and Reverse Listing Transactions”.

The Takeovers Code also requires Mykco to obtain an independent adviser's report in relation to
the Transaction, and for that report to be contained in or to accompany this Notice of Meeting.
The purpose of that report is to assess the merits of the proposed allotment of shares under
Resolution 1. Simmons Corporate Finance Limited (Independent Adviser) has prepared that
report and a copy of their report accompanies this Notice of Meeting.

In its report, the Independent Adviser provides summaries of the key positive and negative aspects
of the Transaction. In their report the Independent Adviser refers to Mykco as Mykco or the
Company and to the Transaction as the CHL Transaction (including the CHL Allotment). The
Independent Adviser’s summary includes the following statements concerning the key positive
aspects of the Transaction on pages 8 and 9:

(a) The rationale for the Transaction is sound. It achieves Mykco’s objective of backdoor listing
one or more businesses through its listed shell. Mykco will be transformed into a listed

4

6883.003_078.docx
financial services company operating a finance company and a financial advisory services
business.

(b) The terms of the CHL Transaction are reasonable.

(c) The CHL Transaction will have a significant positive impact on Mykco’s financial performance
and financial position.

(d) The main implication of the CHL Transaction Resolution not being approved by Non-associated
Shareholders is that the CHL Transaction cannot proceed. The Company will likely need to
raise additional capital in a relatively short timeframe to fund its current operating costs and to
enable it to continue to seek acquisition opportunities to effect a backdoor listing. If the
Company cannot raise sufficient capital, this may lead to the need to wind up the Company, in
which case the return to the Non-associated Shareholders may be minimal.

The Independent Adviser’s summary of the key negative aspects of the Transaction contains the
following statements on page 9:

(a) The risk profile of Mykco will change significantly from the limited risks associated with a listed
shell company to the wide range of risks associated with businesses operating in the financial
services sector.

(b) Borneo ... and the King Associates ... will both hold significant influence over the outcome of
shareholding voting and exert a high degree of influence over the Company’s board of directors
and the Company’s operations.

(c) The dilutionary impact of the CHL Transaction on the Non-associated Shareholders will result
in their proportionate shareholdings in the Company reducing by 84.2% following the CHL
Allotment.

(d) The attraction of Mykco as a takeover target may diminish.

In its report, the Independent Adviser also states on page 9: The CHL Transaction may have some
impact on the liquidity of Mykco’s ordinary shares if some of the CHL shareholders seek to trade
their Consideration Shares (being the shares in Mykco issued to them as consideration for the
Shares in CHL to be Acquired). However, the number of shares in Mykco held by the Non-
associated Shareholders will not change. It is uncertain as to what price range the shares may trade
at post the CHL Transaction.
In their report, the Independent Adviser reaches the following conclusions in relation to the
Transaction on page 10 of the Independent Adviser Report:

“In our opinion, after having regard to all relevant factors, the positive aspects of the CHL Transaction
(including the CHL Allotment) significantly outweigh the negative aspects from the perspective of the
Non-associated Shareholders”

At page 24 of the Independent Adviser Report, the Independent Adviser states:

“In our opinion, after having regard to all relevant factors, the terms of the CHL Transaction are fair
and reasonable to the Non-associated Shareholders and in the best interests of Mykco given the options
reasonably available to the Company at the current time.”

At page 7 of the Independent Adviser Report, the Independent Adviser issues the following caveat:

“Our opinion should be considered as a whole. Selecting portions of the evaluation without considering
all the factors and analyses together could create a misleading view of the process underlying the
opinion”.

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6883.003_078.docx

Disclosure Document
A Disclosure Document under NZAX Listing Rules 6.1.1 and 7.1.3 accompanies this Notice of Meeting.
It is to assist shareholders in their decision whether to approve the Transaction. The Disclosure
Document discloses particulars of the assets and business of Mykco if the Resolutions are passed and
the Transaction is completed. The Disclosure Document is forward-looking and assumes:
(a) the Resolutions contained in this Notice of Meeting have been passed; and
(b) the Transaction is completed on the basis set out in this Notice of Meeting.
Directors’ Remuneration
Prior to listing on the NZAX, Mykco approved a maximum remuneration for the Directors of
$150,000 per annum. For the 9 months to 31 December 2017, Mykco paid Directors a total aggregate
remuneration of $33,700. In contemplation of the Transaction aggregate Directors’ remuneration for
the independent Directors (Huei Min (Lyn) Lim, Simon McArley and Graeme Brown) was increased for
the period from 1 January 2018 to 31 March 2018, with the result that the total remuneration payable
to Directors for that period is $48,525. This means total Directors’ remuneration for the year-ended
31 March 2018 was $82,225. Assuming independent Directors are paid at 2017 rates after 31 March
2018, the total remuneration for Directors for the year-ended 31 March 2019 would be $65,450.

Resolution 3 seeks approval to increase the Directors’ remuneration fee pool by $150,000 from
$150,000 to $300,000. The Directors consider this appropriate to:
• provide flexibility for the Directors acting as a board (Board) to allow the interim increase in
fees paid to non-executive Directors in contemplation of the purchase of CHL to be continued;
• to provide for payment of fees to an increased pool of directors as a result of CHL and its
subsidiaries (CHL Group) becoming part of a Mykco group (Mykco Group), including in
particular to enable the independent directors of General Finance (who were required to be
appointed to comply with the requirements of the Non-bank Deposit Taker Act 2013) to
continue to be remunerated;
• to ensure optimal membership of board committees of members of the Mykco Group with the
appropriate skill set, bearing in mind that CHL’s subsidiary, General Finance, has substantial
regulatory responsibilities;
• to allow sufficient head room to cover any unforeseen costs that may arise from time to time;
and
• to allow further increases in the fees paid to non-executive directors of the Mykco Group if
the Board determines this to be appropriate.
Directors' Recommendation
Directors recommend that shareholders vote in favour of the Resolutions. The reasons
for this recommendation are:

Resolution 1 – The Transaction

1. Mykco has considered a number of different investments and capital raising opportunities over
the last 12 months.
2. While Mykco has received approaches from a number of parties, they all involved companies
that required significant capital and/or had limited revenues.
3. CHL is the only opportunity that has arisen in the last 12 months that meets Mykco’s base
requirements for an acquisition: a business that is cash flow positive, at least breaks even profit-
wise, does not require an immediate capital injection to survive, and has an established
management team.

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6883.003_078.docx
4. If the Resolutions are not passed the Transaction cannot proceed. Mykco will likely need to
raise additional capital in a relatively short timeframe to fund its current operating costs and to
enable it to continue to seek acquisition opportunities to affect a backdoor listing.
5. If Mykco cannot raise sufficient capital, this may lead to the need to wind up Mykco, in which
case the return to the Non-associated Shareholders may be minimal.
6. The Transaction would:
(a) Introduce established business operations and growth prospects into the Mykco Group
(comprising Mykco and the CHL Group) with a focus on the finance company sector
(through General Finance) and the complementary corporate advisory and financial
research sector (through IRG).
(b) Provide Mykco with new substantial shareholders who have business experience in the
areas in which Mykco (through subsidiaries) operates following the Transaction.
(c) Potentially increase liquidity by increasing the number of shareholders.
(d) Provide Mykco with a platform to seek further capital and expand the operations of its
subsidiaries.
7. The CHL shares have been priced at 95.64 cents per share for the purposes of the Transaction,
being the net asset value per share of CHL based on unaudited consolidated management
accounts of CHL as at 31 January 2018. Those accounts (and the asset values they adopt) were
determined and prepared solely by CHL. The Directors have not commissioned or received an
audit or other independent review or verification of those accounts (or the asset valuations
underlying them). Mykco has limited resources and the Directors did not believe this would be
an efficient or effective use of the remaining shareholders funds available. The Directors have
accepted those accounts (and valuations) and have concluded that they are fair and reasonable
to shareholders because:
(a) The main part of the CHL asset values are represented by the book value of the CHL
Group’s principal asset, being General Finance’s loan book.
(b) General Finance has a well-secured loan book; ie. approximately 70% of General
Finance’s loan book represents loans secured by first mortgages over residential
property which General Finance’s loan policy requires not to exceed 70% of an
independent valuation;
(c) General Finance is a public issuer governed by a Trust Deed and a statutory supervisor
and is required to have its accounts audited annually and make filings with the Reserve
Bank;
(d) CHL’s unaudited accounts for the year ended 31 March 2018 and General Finance’s
audited financial statements for the year ended 31 March 2018 have subsequently
adopted similar valuations.
(e) While the Independent Adviser’s report did not independently review these valuations,
it assessed a fair market value of the Shares in CHL to be Acquired is in the range of
$0.86 to $0.97 per share. The purchase price payable by Mykco for the Shares in CHL
to be Acquired is 95.64 cents per share which is inside the upper limit of the range
assessed by the Independent Adviser.

8. The value placed on Mykco’s shares for the purposes of the Transaction, is 5.88 cents per share.
This represents the net asset value per share of Mykco based on its accounts as at 30 September

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2017. Mykco is a publicly listed company and the value of 5.88 cents per share is a value taken
from accounts of Mykco that are required to be made publicly available. While 5.88 cents per
share represents a discount of 2% to Mykco’s share price immediately prior to the
announcement of the Transaction, it also represents a premium of 9% over the volume
weighted average price of Mykco’s shares in the 6 month period leading up to the
announcement of the Transaction.
9. Since the pricing for the Transaction was determined, CHL has continued to make profits and
Mykco has continued to incur costs that are not compensated for by equivalent revenue.
10. The Independent Adviser, has on page 10 of its Independent Adviser Report, expressed the
following opinion on the Transaction, which it refers to as the CHL Transaction:
“In our opinion, after having regard to all relevant factors, the positive aspects of the CHL
Transaction (including the CHL Allotment) significantly outweigh the negative aspects from the
perspective of the Non-associated Shareholders”
11. At page 24 of the Independent Adviser Report, the Independent Adviser states:
“In our opinion, after having regard to all relevant factors, the terms of the CHL Transaction
are fair and reasonable to the Non-associated Shareholders and in the best interests of Mykco
given the options reasonably available to the Company at the current time.”

Resolution 2 – The Management Agreement with Brent Douglas King

12. The Directors consider that the facts and circumstances described on pages 21 to 23 of this
Notice of Meeting make it appropriate and in the best interests of Mykco to appoint Mr King
as Managing Director of the Mykco Group as from Completion under a Management
Agreement that is to extend to Mykco and its subsidiaries but otherwise is to be on substantially
the same terms as, and replace, his current Management Agreement with CHL, as proposed by
Resolution 2.
Resolution 3 – Directors’ Remuneration Fee Pool

13. The Directors consider that for the reasons set out on page 23 of this Notice of Meeting it is
appropriate to increase the total fee pool as proposed by Resolution 3.

Shareholders should note that these recommendations are based on the Directors’ having
accepted the net asset value of CHL (including the underlying asset values) as at 31
January 2018 based on unaudited management accounts prepared and determined solely
by CHL. The Directors have not commissioned or received audit or other independent
review or verification of those accounts (or the asset valuations underlying them). Mykco
has limited resources and the Directors did not believe this was an efficient or effective
use of the remaining shareholders funds available. The Directors have accepted those
accounts (and valuations) and have concluded that they are fair and reasonable to
shareholders for the reasons set out above. Valuation and pricing involves judgement, in
respect of which views may differ. Therefore, shareholders should ensure they make their
own independent decisions, after considering all information in this Notice of Meeting and
the accompanying documents, and they should not be guided solely by the
recommendations of the Directors.

See also section 1.8 of the Independent Adviser Report on page 6 where the Independent Adviser states
that each shareholder’s circumstances and objectives are unique and it is not possible to report on the
merits of the issue of the Mykco shares to be issued to the Vendors and the fairness of the Transaction
in relation to each shareholder.

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Directors’ interests in the Resolutions are summarised in the following table:

Brent Douglas King 1. Brent is interested in Resolution 1 (approval of the Transaction)
because:
(a) He holds 1,280,000 shares in CHL (19.66%), and under the
Transaction is to receive 20,825,600 (16.80%) of the expanded
shares in Mykco which in addition to the 122,566 shares in
Mykco he already owns would bring his total shareholding in
Mykco to 20,948,166 shares (16.90%);
(b) He is an associate of Barter Investments Limited and Garth
William Ward, and collectively these persons hold 1,455,000
shares in CHL (22.34%), and under the Transaction these
persons are to receive (collectively) 23,672,850 (19.10%) of the
expanded shares in Mykco, which in addition to the 2,510,241
shares in Mykco they already collectively own would bring their
collective shareholding to 26,183,091 shares in Mykco
(21.13%).

2. Brent is also interested in Resolution 1 because he is also a director
of CHL and GF and is the sole director of CHL’s other subsidiary,
IRG.

3. Brent is interested in Resolution 2 (approval of the Management
Agreement) as the Management Agreement for which approval is
sought under Resolution 2 is with him.

4. Brent is interested in Resolution 3 (approval of the Directors’
remuneration fee pool) because he is a director of each of Mykco,
CHL, GF and IRG.


Rewi Hamid Bugo 1. Rewi is interested in Resolution 1 (approval of the Transaction)
because his company, Borneo Capital Limited, holds 2,000,000
shares in CHL (30.71%) and under the Transaction is to receive
32,540,000 shares in Mykco (26.25%) in exchange for its shares in
CHL.
2. Rewi is also interested in Resolution 1 because he is a director of
CHL.
3. Rewi is interested in Resolution 3 (approval of the Directors’
remuneration fee pool) because he is a director of Mykco.

Huei Min (Lyn) Lim, Simon
John McArley and Graeme
Iain Brown
1. Lyn, Simon and Graeme are each interested in Resolution 3
(approval of the Directors remuneration fee pool) as they are all
directors of Mykco.

NZX Accepts No Responsibility
This Notice of Meeting has been approved by NZX. However, NZX accepts no responsibility for
any statement made in this Notice of Meeting.
Special Resolution
Resolution 1 is a special resolution. A special resolution means a resolution passed by a majority of
75% or more of the votes of those shareholders of the company entitled to vote and voting on the
resolution in person or by proxy.

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A special resolution is required to comply with Section 129 of the Companies Act (relating to Major
Transactions) (for why Section 129 applies see the subheading Section 129 of the Companies Act
under the heading Requirement for Resolutions (Resolution 1) on page 24).
Resolution 1 is also required to be passed as an ordinary resolution to comply with NZAX Listing
Rules 7.3.1 (relating the the issue of equity securities), 7.5 (relating to the issue of securities affecting
control), 9.1.1 (relating to changes in the essential nature of an issuer’s business and also relating to
Major Transactions), 9.2.1 (relating to transactions with Related Parties) and Rule 7(d) of the Takeovers
Code. (for the reasons why this is the case, see the subheadings NZAX Listing Rule 7.3.1, NZAX
Listing Rule 7.5, NZAX Listing Rule 9.1.1, NZAX Listing Rule 9.2.1. and the Takeovers
Code under the heading Requirement for Resolutions (Resolution 1) on pages 24 to 30).
The passing of a special resolution means that the threshold for the passing of an ordinary resolution is
also passed.
Ordinary Resolution
Resolution 2 is required to be passed as an ordinary resolution to comply with NZAX Listing Rule 9.2.1
(relating to transactions with Related Parties). For the reasons why this is the case, see Requirement
for Resolutions (Resolution 2) on page 30.
Resolution 3 is required to be passed as an ordinary resolution to comply with NZAX Listing Rule 3.4
(relating to Directors’ Remuneration). For the reasons why this is the case, see Requirement for
Resolutions (Resolution 3) on pages 30 and 31.
An ordinary resolution means a resolution passed by a simple majority of the votes of those
shareholders of the company entitled to vote and voting on the resolution in person or by proxy.
Minority Buy-out Rights
If Resolution 1 is passed any shareholder who has cast all of the votes attached to shares registered in
that shareholder's name (and having the same beneficial owner) against Resolution 1, is entitled to
require Mykco to purchase those shares in accordance with section 111 of the Companies Act.
A shareholder must have cast all the votes attached to the shares registered in that shareholder’s name
and having the same beneficial owner against Resolution 1 to be entitled to require Mykco to purchase
those shares. If shareholders wish to exercise that entitlement they must contact Mykco within
10 working days of the passing of Resolution 1. If a shareholder exercises that entitlement, Mykco must
purchase that shareholder's shares unless the Court grants an exemption under section 114 of the
Companies Act. Mykco would apply for an exemption if, as a consequence of shareholders exercising
their rights, the Board formed the view that any of the grounds set out in section 114 existed.
Proxies and Representatives
Shareholders may exercise their right to vote at the meeting either by being present in person or by
appointing a proxy to attend and vote in their place. A proxy need not be a shareholder of Mykco.
Shareholders who are not entitled to vote may be appointed as proxies, but such shareholders and
their associated persons are not entitled to vote if appointed as discretionary proxies (hence
discretionary proxies cannot be conferred on Brent Douglas King, Barter Investments Limited or Garth
William Ward). If you wish, you can appoint the Chair of the Meeting as your proxy, but not as a
discretionary proxy. If the form is returned without a direction as to how the proxy shall act on a
resolution, or the intention is unclear the proxy would abstain. A body corporate shareholder may
appoint a representative to attend the meeting on its behalf. A proxy form is enclosed with this notice.
If you wish to vote by proxy you must complete the attached form and produce it to Mykco by delivering
it to Mykco's Share Registrar, Computershare Investor Services Limited, Level 2, 159 Hurstmere Road,
Takapuna, Auckland, New Zealand or by posting it to The Share Registrar, Mykco Limited, c/-
Computershare Investor Services Limited, Private Bag 92119, Auckland 1142 New Zealand (in each

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case, so as to be received no later than 48 hours before the meeting is due to begin (i.e before 1pm on
29 July 2018).
Postal voting is not available.

By order of the Board




Brent King
Chair

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EXPLANATORY NOTES


INTRODUCTION
Mykco is presently a listed shell. Mykco had net assets of $1,152,957 as at 30 September 2017 (30
September 2016: $1,112,839) and cash reserves of $346,388 at 30 September 2017 (30 September
2016: $489,516).
Subsequent to the sale of Mykco’s core business in September 2015, Mykco has considered a number
of different investment and capital raising opportunities to utilise Mykco’s NZAX listing and create value
for shareholders.

Mykco has continued to operate as a listed company on a minimal operating budget over the past
12 months. However, the Directors consider that Mykco’s current situation is not sustainable.

Moreover, Mykco is paying its own costs associated with the Transaction. These are a substantial
amount for Mykco. It is unlikely that Mykco would have the cash resources to fund the costs of any
further transaction should shareholders not pass the Resolutions.

Mykco’s costs associated with the Transaction include legal fees (including legal fees associated with
preparation of this Notice of Meeting and the Disclosure Document), independent adviser’s fees, NZX
fees, the costs of convening and holding the shareholders’ meeting and Directors’ fees.

It is envisaged that the quantum of Mykco’s costs of the Transaction will be approximately $150,000.

THE TRANSACTION

On 28 May 2018, Mykco entered into a Share Purchase Agreement (Transaction Agreement) with
all the shareholders of CHL (other than itself) to acquire all the shares in CHL (except for the
100,000 shares it already owns).

As the Transaction involves the shareholders of CHL (other than Mykco) swapping their shares for
shares in Mykco, Mykco does not need to raise any funds in order to complete the Transaction.
Dilution Effect

Resolution 1 will have the following dilutionary effect on shareholders if passed:

Shares on issue prior to the Transaction 19,616,874
Shares to be issued under the Transaction 104,323,240
Total shares on issue after the Transaction 123,940,114
Example shareholder: pre-Transaction percentage shareholding 5.10%
Example shareholder: post-Transaction percentage shareholding 0.81%

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The dilutionary effect on particular groups of shareholders is set out below:

Mykco Shareholding Levels Post the Transaction

Current CHL
Allotment
Post Transaction
No. of Shares % No. of Shares No. of Shares %
Non-
associated
Shareholders

17,106,633 87.20% - 17,106,633 13.80%
Borneo

- - 32,540,000 32,540,000 26.25%
King
Associates

2,510,241 12.80% 23,672,850 26,183,091 21.13%
Other CHL
Shareholders

- - 48,110,390 48,110,390 38.82%
Total 19,616,874 100.00% 104,323,240 123,940,114 100.00%

The Transaction will result in each shareholder’s shareholding in Mykco being materially diluted.

The number of shares the holder has in Mykco following the Transaction will remain unchanged by the
Transaction, but the percentage of shares that the shareholder holds in Mykco will be reduced because
of the dilutionary effect.

The Transaction will result in 86.2% of the shares in Mykco being held by Borneo, the King Associates
and other CHL shareholders, and 13.8% being held by Non-associated Shareholders.

Mykco’s share price may also be volatile as Mykco’s new business operations are assessed and priced
by the market.

See also sections 2.7 to 2.9 of the Independent Adviser Report on pages 15 to 18.

Relationship to Market Price
As at 28 May 2018 (being the date the Transaction was announced publicly through the NZX market)
the last reported sale price of a share in Mykco on the NZAX was 6 cents per share. The proposed
share issues under Resolution 1 will be undertaken at a price of 5.88 cents per share. This represents
a discount of 2% to the market share price on the date the Transaction was entered into and announced
publicly through the NZX market (where the market share price is Mykco’s Average Market
Capitalisation (as defined in the NZAX Listing Rules) per share on that date). See also sections 4.8 and
7.2 of the Independent Adviser Report on page 29 and pages 43 to 45.

Shareholders should note that Mykco’s share price for the purposes of the Transaction (5.88 cents per
share) is a calculation of Mykco’s net assets per share as at 30 September 2017, based on unaudited
accounts of Mykco as at that date. Directors considered that a price based on the net assets of Mykco
disclosed in its latest available accounts, was a more reliable guide to value than Mykco’s share price,
given that Mykco’s shares tend to be traded irregularly and in limited volumes due to Mykco being a
shell that does not carry on any business. While Directors consider that Mykco’s share price is not
necessarily a reliable guide to value, a current share price has nevertheless been disclosed to enable
shareholders to have maximum available information when making their decision (see also the
comments made in section 7.2 of the Independent Adviser Report on pages 43 to 45).

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When determining a price for Mykco’s shares for the purposes of the Transaction, Directors worked
from the latest publicly available financial information for Mykco, being the interim unaudited accounts
for the six months ended 30 September 2017. While Mykco’s interim accounts to 30 September 2017
are unaudited, they are nevertheless all that was required of Mykco at the time Directors priced the
Transaction.

When determining a price to be offered for the Shares in CHL to be Acquired, Directors considered
CHL’s latest available management accounts as at 31 January 2018. CHL’s main asset is General Finance,
which is a public issuer with a statutory supervisor. The majority of its loan book is secured by first
mortgages (see item 7 of the Directors’ reasons for their recommendation on page 6). The Directors
have not commissioned or received audit or other independent review or verification of the CHL
management accounts (or the asset valuations underlying them). Mykco has limited resources and the
Directors did not believe this was an efficient or effective use of the remaining shareholders’ funds
available.

Minimum Holding

The minimum holding of shares that any shareholder can hold in Mykco (Minimum Holding) is
2,000 shares as at the date of this Notice of Meeting.

Under Mykco’s constitution the Board may at any time give notice to a shareholder holding less than a
Minimum Holding of shares of any class that if at the expiration of 3 months after the date the Notice
is given, the shareholder still holds less than a Minimum Holding of shares of that class the Board may
sell those shares. Where that power of sale arises, Mykco must account to the shareholder for the net
proceeds of the sale (after the deduction of reasonable sale expenses).

Mykco Group

In the event the Transaction proceeds, Mykco would own CHL. CHL already wholly owns General
Finance and IRG. CHL, General Finance and IRG are referred to collectively as the CHL Group.
CHL acquired both General Finance and IRG on 19 December 2017.

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The following diagram shows the structure of the Mykco Group on completion of the Transaction:
Mykco Shareholding Levels Post the Transaction






















See also the table in section 1.3 of the Independent Adviser Report on page 3.

CHL paid $4,721,835 for General Finance. This compared with the net assets for General Finance of
$3,111,836 as at 19 December 2017. Hence the purchase price was $1,610,000 higher than the net
assets of General Finance. If CHL were to establish a new non-bank deposit taker there would be
significant costs such as incorporation, appointing directors and officers, adopting governance and
compliance policies, securing premises, employing staff, setting up accounting and IT systems, appointing
accountants, lawyers, auditors, and a share registrar, establishing relationships with mortgage brokers,
appointing a supervisor, preparing and filing a trust deed and product disclosure statement, obtaining a
licence from the Reserve Bank, attracting deposits and sourcing loans. These costs are not directly
incurred if CHL acquires General Finance. After completion of the acquisition of CHL the directors will
determine with the assistance of qualified advisors if any of the above costs can be quantified and should
be recorded as specific intangible assets. After providing for these specific intangible assets the balance
of the $1,610,000 payment will be accounted as goodwill.

CHL purchased the shares in General Finance with cash raised from wholesale investors.

CHL’s purchase price for IRG was $1,100,000. This compared with net assets for IRG of approximately
$110,000 at 30 September 2017. Hence the purchase price was $1,000,000 above the net assets of
IRG and reflects the value of IRG not included in net assets. The value will be attributable to its people,
its business relationships, and its operating authorities. These include the personal value of its Managing
Director, Brent King, a person with extensive experience in financial markets, its client base, its status
as an NZAX Sponsor and NXT Adviser, and the publisher of the Investment Yearbook and its ability
to leverage these to produce financial advisory income, plus income from investment banking activities
(IRG has acted as a sponsor of various listings on the NZAX). After completion of the acquisition of
CHL the directors will determine with the assistance of qualified advisors if any of the above costs and
relationships can be quantified and should be recorded as specific intangible assets. After providing for
these specific intangible assets the balance of the $1,000,000 payment will be accounted as goodwill.

The purchase price for the shares in IRG was satisfied by CHL issuing 1,000,000 shares to the vendor
of IRG (Brent Douglas King) on a one for one basis, and undertaking to pay him 100,000 Bartercard
Trade Dollars for the balance.
CHL shareholders
prior to
the Transaction
Mykco shareholders
prior to
the Transaction
Shares
held by
CHL shareholders
Shares held by Non-
associated Shareholders

Mykco Limited
86.2% 13.8%
100%
Investment Research
Group Limited
100%
General Finance
Limited
100%
Corporate Holdings
Limited
100%

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The payment in addition to the net assets of General Finance and IRG paid by CHL for General Finance
and IRG can be tested by comparing the net asset value of CHL used for the purpose of the Transaction
of $6,228,370, which values intangible assets including goodwill at book value, with a value for CHL
using another commonly applied methodology. In its Independent Adviser Report, the Independent
Adviser assesses the fair market value of the Shares in CHL to be Acquired based on a capitalisation of
earnings methodology at between $0.86 and $0.97 per share. (see page 42 of the Independent Adviser
Report). This value is comparable to the net asset value of CHL used for the purpose of the
Transaction, of $6,228,370, which includes intangible assets and goodwill.

Evaluation of the Transaction

The key positive and negative aspects of the Transaction are outlined in the Independent Adviser Report
in section 2.2 on pages 8 to 10. See also the remainder of section 2 which is on pages 7 to 22 of the
Independent Adviser Report.

For the Directors’ recommendation relating to the Transaction, the reasons for their recommendation,
and their interests in the Transaction see pages 5 to 8.

Shareholders should appreciate that they need not approve the Resolutions, even if there are
considered to be few negatives. See also sections 2.17 to 2.19 of the Independent Adviser Report on
pages 21 and 22 for further detail on shareholder options and how shareholders may choose to vote
on the Resolutions.

Summary of the Independent Adviser Report
In assessing the merits of the Transaction, shareholders should consider the summary of the positives
and negatives of the Transaction set out in the Independent Adviser Report and referred to on pages
8 to 10. Shareholders should also consider section 2 of the Independent Adviser Report on pages 7 to
22, including in particular the summary of the evaluation of the merits of the Transaction in section 2.2
on pages 8 to 10 and an evaluation of the fairness of the Transaction in section 3 on pages 23 and 24.
The impact on the control position of Mykco as a result of the Transaction is discussed in sections 2.7
and 2.8 of the Independent Adviser Report on pages 15 to 17. The implications of the Transaction not
being approved are set out in section 2.17 of the Independent Adviser Report on pages 21 and 22.

When considering the Independent Adviser Report, shareholders should also consider the Directors’
recommendation on page 5 and the comments made by Directors relating to valuation under the
heading Directors’ Recommendation on page 5 to 7.

The Independent Adviser’s opinion is to be considered as a whole. Selecting portions of the analyses
or factors considered by it, without considering all the factors and analyses together, would create a
misleading view of the process underlying the opinion. The preparation of an opinion is a complex
process and is not necessarily susceptible to partial analysis or summary. For the avoidance of doubt,
shareholders are encouraged to read the Independent Adviser Report in full.

The issue price of the Mykco shares to be issued to the Vendors under the Transaction does not
necessarily reflect what the shares will trade at on the NZAX following completion of the Transaction
(Completion).
Material Terms of the Transaction
Mykco entered into the Transaction Agreement on 28 May 2018 to purchase all the 6,512,000 shares
in CHL except for the 100,000 shares Mykco already owns.
The Transaction Agreement supersedes the potential transaction announced to the market on
31 March 2017 (with an update on 20 December 2017).

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CHL owns:
(a) General Finance, a non-bank deposit taker, which operates as a finance company; and
(b) IRG, a corporate advisory and financial research company, which is an NZX Sponsor and
NXT Adviser and the publisher of the Investment Yearbook.
The following is a summary of the material commercial terms of the Transaction Agreement. See also
section 2.1 of the Independent Adviser Report on page 7 where the Independent Adviser lists factors
which in its view an assessment of the merits of the Transaction should focus on, and section 2.2 of the
Independent Adviser Report on pages 8 to 10 where the Independent Adviser provides a summary of
the evaluation of the merits of the Transaction. See also the conclusion of the Independent Adviser in
section 2.3 of the Independent Adviser Report on page 12 where the Independent Adviser states that
it considers the rationale of the Transaction to be sound, and section 3 of the Independent Adviser
Report where the Independent Adviser concludes on page 24 that the Transaction is fair and reasonable
to the Non-associated Shareholders and in the best interests of Mykco given the options reasonably
available to Mykco at the current time.
Purchase Price
The purchase price for the Shares in CHL to be Acquired under the Transaction Agreement is
$6,132,436.80 (Purchase Price).
The Purchase Price represents 95.64 cents per CHL share, being the net assets per share for CHL
derived from management accounts of CHL prepared as at 31 January 2018.

Consideration
The Purchase Price is to be satisfied by the issue of 104,323,240 fully paid ordinary shares in Mykco
(Mykco Shares to be issued to the Vendors).

The consideration to satisfy the Purchase Price represents 16.27 shares in Mykco in exchange for each
Share in CHL to be Acquired.

The multiplier represents:
(a) 95.64 cents (see the heading Purchase Price above); divided by
(b) 5.88 cents, being the net assets per share of Mykco as at 30 September 2017 based on unaudited
interim accounts of Mykco as at that date.

95.64 cents represents total assets of $16,382,186, minus total liabilities of $10,153,816, i.e. $6,228,370
(being net assets), divided by 6,512,000 shares on issue. The accounts of CHL used to price the CHL
shares for the purposes of the Transaction include goodwill of $2,673,066 paid on the acquisitions of
General Finance and IRG.

5.88 cents represents total assets of $1,168,964 minus total liabilities of $16,007, i.e. $1,152,957 (being
net assets), divided by 19,616,874 shares on issue.

See also section 2.4 of the Independent Adviser Report on pages 12 to 14 where the Independent
Adviser states that it considers the issue price of 5.88 cents per share to be fair to the Non-associated
Shareholders.

See the heading Relationship to Market Price on page 12 for further details relating to the pricing of the
Transaction.

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Conditions

The Transaction is conditional upon the following conditions (Conditions):
(a) Consent of Supervisor: CHL and Mykco approaching and obtaining the written consent of
Covenant Trustee Services Limited (Supervisor) as supervisor of General Finance under a Trust
Deed dated 2 November 2004 (as amended), to the Transaction and to continue in their role
as supervisor of General Finance after Completion on terms that are acceptable to CHL and
Mykco (acting reasonably).
(b) Reserve Bank Consent: CHL and Mykco approaching and obtaining the written consent of the
Reserve Bank under section 43 of the Non-Bank Deposit Takers Act 2013 to the Transaction
on terms that are acceptable to CHL and Mykco (acting reasonably).
(c) Approvals: Mykco obtaining all shareholder and other approvals required to implement the
Transaction and the transactions to be entered into pursuant to the Transaction or
contemplated by the Transaction in compliance with the Companies Act 1993, NZAX Listing
Rules, the Takeovers Code and any other applicable laws and any contracts binding on Mykco
on a basis that is acceptable to CHL and Mykco (acting reasonably).
The date for satisfaction of the Conditions is 31 July 2018 or such later date as may be agreed between
the parties. If the Conditions are not satisfied by this date, then any party to the Transaction Agreement
may cancel it by written notice to the other party.
The Independent Adviser states in section 2.4 of the Independent Adviser Report on page 13 that it is
of the view that the Conditions are in line with market practice for transactions of this nature and are
not unreasonable.

Completion

Completion of the Transaction (Completion) is to take place on or before 3 Business Days after
satisfaction of the Conditions. Completion is conditional upon:
(a) Mykco remaining listed on the NZAX on Completion;
(b) General Finance’s Non-bank Deposit Taker licence remaining in full force and effect on
Completion (subject only to any amendments required by the Reserve Bank as a condition of
providing its consent, and which have been agreed by CHL and Mykco (acting reasonably));
(c) General Finance continuing to offer term deposits up to Completion under a Product
Disclosure Statement that complies with all applicable laws.
The Independent Adviser states in section 2.4 of the Independent Adviser Report on page 13 that it
does not consider any of these matters represents a major impediment to the Completion of the
Transaction.

Post Completion

Mykco does not intend to make any immediate changes to its Board following Completion, or to the
boards of CHL or any other member of the CHL Group.

Mykco intends following Completion to change its name to General Capital Limited .

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Warranties

Under the Transaction Agreement, each of the Vendors warrants to Mykco that it owns its shares in
CHL, that they are fully paid, and that on Completion they will pass to Mykco free of encumbrances
and rights of pre-emption.

Brent King, but not the other Vendors, provides additional limited warranties to Mykco, with the main
ones being a warranty as to the accuracy of the information provided prior to entering into the
Transaction Agreement and a warranty that he is not aware of any material circumstance not disclosed
to Mykco in writing that might be material to a purchaser of shares in CHL.

Mykco, in its capacity as the purchaser, and because it is issuing shares to the Vendors in exchange for
the Shares in CHL to be Acquired, also provides limited warranties to each Vendor, with the main ones
being a warranty as to the accuracy of the information provided prior to entering into the Transaction
Agreement and a warranty that it is not aware of any material circumstance not disclosed in writing to
CHL which might be material to a person to be issued shares in Mykco.

Any warranty claim must be brought within 18 months of Completion.

The maximum liability of each Vendor (except Brent King) for warranty claims is an amount equal to
the purchase price for its Shares in CHL to be Acquired.

Brent King is liable in the same way as other Vendors (with the same cap), but in relation to the
additional warranties that he (but not the other Vendors) provides, Mr King has an additional separate
maximum liability for claims which is also equal to the amount of the purchase price of his Shares in
CHL to be Acquired under the Transaction.

Hence, the maximum liability of Mr King for warranty claims is two times the amount of the purchase
price for his Shares in CHL to be Acquired.

The maximum liability of Mykco under its warranties is the amount of the purchase price it must pay
for the Shares in CHL to be Acquired.

The Independent Adviser states in section 2.4 of the Independent Adviser Report on page 14 that it is
of the view that the warranties provided under the Transaction Agreement are in line with market
practice for transactions of this nature and are not unreasonable.

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Pre and Post-Transaction Shareholders

Shareholder
Pre-
Transaction
Number of
Shares
Pre-
Transaction
Percentage
Post-
Transaction
Number of
Shares
Post-
Transaction
Percentage
Borneo Capital Limited 32,540,000 26.25%
Brent Douglas King 122,566 0.62% 20,948,166 16.90%
Barter Investments Limited 2,342,220 11.94% 3,562,470 2.87%
Garth William Ward 45,455 0.23% 1,672,455 1.35%
CFS NBDT Interest Limited
as General Partner of the
CFS Interest Limited
Partnership

16,270,000 13.13%
Industrie Properties Limited 5,808,390 4.69%
Baker Investment Trust 4,067,500 3.28%
Sinclair Investment Trust 4,067,500 3.28%
Harrigens Trustees Limited 4,067,500 3.28%
Bruce Gregory Speers 4,067,500 3.28%
John Tomson 4,067,500 3.28%
Owen Daji 4,067,500 3.28%
Sumner Family Trust 1,627,000 1.31%
CHL Shareholders prior to
the Transaction ( including
Mykco shares already
owned)
106,833,481 86.19%
Belian Holdings Limited 3,269,479 16.67% 3,269,479 2.64%
ZhenHua Qian 3,030,303 15.45% 3,030,303 2.44%
Sii Yih Ting 1,480,000 7.54% 1,480,000 1.19%
Koon Weng Lee 1,291,325 6.58% 1,291,325 1.04%
Chu Kian Then 1,008,300 5.14% 1,008,300 0.81%
Climb Securities (Singapore)
Pte Limited
579,711 2.96% 579,711 0.47%
Yada Holdings No 1 Limited 570,000 2.91% 570,000 0.46%
Liew Chin Tan 480,000 2.45% 480,000 0.39%
Lik Sean Chang 445,960 2.27% 445,960 0.36%
Lick Chien Chang 408,345 2.08% 408,345 0.33%
JP Morgan Chase Bank Na
NZ Branch
381,108 1.94% 381,108 0.31%
Awatea Investments Limited 324,136 1.65% 324,136 0.26%
Kok Seng Kung 223,850 1.14% 223,850 0.18%
Prakash Pandey 200,000 1.02% 200,000 0.16%
Kar Hoe Mah 187,578 1.00% 187,578 0.15%
Robert Peter Nicolson 180,073 0.92% 180,073 0.15%
Tiong Heng Teh 164,693 0.84% 164,693 0.13%
Hooi Lee Teoh 160,000 0.82% 160,000 0.13%
Geoffrey David Thomas 150,000 0.76% 150,000 0.12%
Other Mykco shareholders 2,571,772 13.11% 2,571,772 2.07%

Total 19,616,874 100.00% 123,940,114 100.00%

The major shareholders of Mykco on completion of the Transaction will be:

(a) Borneo Capital Limited: 26.25%;

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(b) Brent Douglas King 16.90%;
(c) CFS NBDT Interest Limited as General Partner of the CFS Interest Limited Partnership: 13.13%;
Note 1: The collective shareholding of Brent Douglas King, Barter Investments Limited and Garth
William Ward will be 21.13%.

Note 2: The collective shareholding of CFS NBDT Interest Limited and its sole shareholder and
director Marvin Yee will be 13.14%.

Change in Essential Nature of Business of Mykco
If the Transaction is approved by shareholders, Mykco’s business will change from an investment
company to a company which (through subsidiaries) operates as a finance company (General Finance)
and provides corporate advisory and financial research services (IRG).

CHL is an intermediate holding company.

General Finance is a non-bank deposit taker that operates as a finance company.

IRG is a corporate advisory and financial research company which is an NZX Sponsor and NXT Adviser,
and the publisher of the Investment Yearbook.

For further information on the businesses of General Finance and IRG, and the proposals for those
businesses, please refer to the Disclosure Document accompanying this Notice of Meeting.

Liquidity Risk

As a result of the Transaction the majority of the shares on issue in Mykco will not be widely held and
there may be limited liquidity in Mykco’s shares.

No Embargo

None of the shares to be issued to the Vendors will be subject to any embargo on sale. One or more
of these shareholders may wish to sell some or all of their shareholding. Should this happen then,
depending on the level of demand for shares in Mykco, the sale could significantly depress Mykco’s share
price.

Major Shareholders Influence

The major shareholders of Mykco on Completion will be Borneo Capital Limited (26.25%), Brent
Douglas King (16.90%) and together with his associates Barter Investments Limited and Garth William
Ward (21.13%), and CFS NBDT Interest Limited, as General Partner of the CFS Interest Limited
Partnership (13.13%, and together with its sole shareholder and director Marvin Yee 13.14%). These
shareholders will collectively have a major influence over matters that require the passing of ordinary
and special resolutions by shareholders unless they are required to abstain from voting by law and/or
the NZAX Listing Rules.

While Borneo and the King Associates will have significant control over Mykco, they cannot act in an
oppressive manner against minority shareholders. The Companies Act provides a level of protection to
minority shareholders. Furthermore, any transactions between Mykco and any shareholder holding 10%
or more of Mykco’s shares will need to satisfy the requirements of the NZAX Listing Rules with respect
to transactions with related parties.

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MANAGEMENT AGREEMENT WITH BRENT DOUGLAS KING

The Board proposes that on Completion (of the Transaction) Mykco employ Mr King as its Managing
Director under an employment Management Agreement with Mr King which would extend to Mykco
and its subsidiaries but otherwise be on substantially the same terms as and replace his existing
Management Agreement with CHL.

The proposed Management Agreement would nevertheless be structured differently to the existing
Management Agreement. Under the proposed Management Agreement (unlike the existing
Management Agreement) General Finance would also be an employer and be responsible for Mr King’s
remuneration, although it would be compensated by Mykco for a portion of that remuneration. These
changes, ie. also making General Finance an employer and making it responsible for Mr King’s
remuneration, will ensure that Mr King’s remuneration is paid by Mykco’s principal operating subsidiary,
General Finance, whilst also ensuring that Mykco as the parent company nevertheless compensates
General Finance for an amount that properly reflects what Mr King does for companies in the Mykco
group other than General Finance.

As the proposed Management Agreement would be a related party transaction and require Mykco to
pay an amount that exceeds 1.5% of its Average Market Capitalisation for the purposes of Listing Rule
9.2.2(e), Listing Rule 9.2.1 prohibits Mykco entering into the proposed Management Agreement unless
it has been approved by an ordinary resolution of Mykco’s shareholders.

Mr King’s existing Management Agreement with CHL was entered into at the time CHL acquired
General Finance and IRG to form the CHL Group; those acquisitions having been made by CHL as an
unlisted company.

The structure of the existing Management Agreement is in line with market practice, being a
combination of:

(a) Salary (plus contributions to expenses); and
(b) A performance fee; and
(c) A profit share.
Salary and Expenses

The existing Management Agreement provides for a salary of $120,000 per annum, a vehicle allowance
of $12,000 per annum, the cost of a covered carpark, and reimbursement of petrol charges for use of
a motor vehicle. The annual salary is reviewable every 12 months, with the first review to be undertaken
in March 2019.

Performance Fee

The existing Management Agreement also provides for Mr King to be paid an amount equal to 10% of
any fees earned by CHL or any of its subsidiaries (except fees earned by General Finance from its
lending business).

Profit Share

The existing Management Agreement also provides for Mr King to be paid a profit share equal to 8% of
any amount by which the CHL Group’s net profit after tax exceeds the Benchmark for that year or
part year. That Benchmark is the shareholders’ funds of the CHL Group at the commencement of the
relevant year or part year, multiplied by the OCR (expressed as a percentage) plus 10% per annum,
where OCR is the average official cash rate set by the Reserve Bank for the relevant year or part year.
Such fee has to be paid quarterly based on estimates calculated by the CHL Group’s Chief Financial

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Officer, with any adjustment to be made at the time of the final quarterly payment for the relevant year
or part year.

Potential Remuneration

Potential Performance Fees for the financial years ended 31 March 2019 and 2020:

Fees on which the performance fee is calculated are expected to be earned by IRG. Mykco has forecast
advisory fees for IRG for the financial years ended 31 March 2019 and 2020 of $265,000 and $325,000
respectively. Should these forecasts be achieved, Mr King would receive performance fees for the years
ended 31 March 2019 and 2020 of $26,500 and $32,500 respectively.

Potential Profit Share for the financial years ended 31 March 2019 and 2020:

Mykco has forecast a net profit after tax for the financial years ended 31 March 2019 and 2020 of
$38,641 and $1,313,112 respectively. Should these forecasts be achieved, Mr King’s profit share for
these years would be $0 and $10,623 respectively; ie. for the financial year ended 31 March 2020, based
on forecast shareholders’ funds at the commencement of that financial year of $9,079,374 and assuming
an OCR of 3%, the profit share would be 8% of A-B where:

A= $1,313,112; and
B= $9,079,374x (3%+10%).

Redundancy

In the event Mr King’s position becomes surplus to Mykco’s needs, and his contract is terminated for
this reason, Mr King will be entitled to redundancy compensation equal to six weeks pay for the first
year of service and two weeks for each subsequent year of service.

Termination

The existing Management Agreement has no finite term, but is terminable by either party on three
months’ written notice, and no monies are payable to Mr King on termination apart from:

(a) Any unpaid remuneration accrued up to the termination date. (including, without limitation,
salary, allowances, commission and reimbursement of expenditure); and
(b) The agreed redundancy payment described above.

Since the Management Agreement is an employment agreement, Mykco could only give notice
terminating the Management Agreement if it has substantive grounds to do so, ie. if there has been
misconduct or poor performance warranting termination, or redundancy, and in exercising its right of
termination Mykco would need to proceed in a manner that is procedurally fair to Mr King.

Assessment

The remuneration provided for in the existing Management Agreement was set having regard to
remuneration levels for Managing Directors of comparable financial groups to the CHL Group.

The performance fee does not apply to fees earnt by General Finance from its lending business, and is
likely to apply for the most part to other fees earned by CHL and its subsidiaries from an equity or
debt raising or a business combination, or a transaction of a similar nature.

The profit share is only payable from profits that exceed the Benchmark. Mr King’s share is 8% of that
excess.

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At the time CHL made its acquisitions of General Finance and IRG, it was contemplated that CHL
would list, and this will be achieved should the Resolutions be passed and the Transaction proceed to
Completion, as this will result in Mykco (a listed company) becoming the owner of the CHL Group.

The Board had regard to the following matters in its assessment of the proposed Management
Agreement between Mykco and Mr King:

(a) What was contemplated when CHL acquired General Finance and IRG;

(b) Mr King’s experience in acting as a Managing Director of a listed financial services group for
many years;

(c) The efficiencies that are obtained by having a single Managing Director for the Mykco Group
formed by the Transaction.

The Board considered that in light of the above circumstances it was appropriate and in the best
interests of Mykco to appoint Mr King as Managing Director of the Mykco Group as from Completion
under a Management Agreement that extends to Mykco and its subsidiaries but otherwise is on the
same terms as, and which would replace, his current Management Agreement with CHL.
DIRECTORS’ REMUNERATION FEE POOL
The total amount of fees available for payment to Directors was last increased prior to Mykco listing
on the NZAX on 10 January 2012.

It is proposed that the total amount of the fee pool be increased from $150,000 to $300,000 per annum,
which represents an increase of $150,000 per annum (or 100%) since the last increase on 1 December
2011. The aggregate amount of fees may be divided amongst the directors as they deem appropriate,
and may be paid either in part or in whole by way of an issue of equity securities, provided that issue
occurs in compliance with NZAX Listing Rule 7.3.7.

The Board has determined that the increase in the total fee pool is appropriate to provide flexibility for
the Board to allow the interim increase in fees paid to non-executive Directors in contemplation of the
purchase of CHL to be continued, to provide for payment of fees to an increased pool of directors as
a result of CHL and its subsidiaries becoming part of the Mykco Group, including in particular to enable
the independent directors of General Finance (who were required to be appointed to comply with the
requirements of the Non-bank Deposit Taker Act 2013) to continue to be remunerated, to ensure
optimal membership of board committees of members of the Mykco Group following the acquisition
of CHL, bearing in mind that CHL’s subsidiary, General Finance, has substantial regulatory
responsibilities, to allow sufficient head room to cover any unforeseen costs that may arise from time
to time, and to allow further increases in the fees paid to non-executive directors of the Mykco Group
if the Board determines this to be appropriate.

EFFECT OF RESOLUTIONS
Effect of Resolutions Passing
If the Resolutions are passed then on Completion:
(a) Mykco will complete the Transaction. The essential nature of Mykco’s business will change
from an investment business to a company specialising (through General Finance) as a finance
company and (through IRG) as a corporate advisory and financial research company. Mykco’s
existing shareholders will continue to have an interest (note the Dilution Effect table on page
11 of this Notice of Meeting) in Mykco and its business plan.
(b) the name of Mykco will change to General Capital Limited.

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This Notice of Meeting should be read in conjunction with:
(a) The Disclosure Document which discloses particulars of the assets and business plan of Mykco
if the Resolutions are passed; and
(b) The Independent Adviser Report which assesses the merits of the Transaction.

Effect of the Resolutions Not Passing
If the Resolutions are not passed the Transaction cannot proceed. Mykco will likely need to raise
additional capital in a relatively short timeframe to fund its current operating costs and to enable it to
continue to seek acquisition opportunities to affect a backdoor listing. If Mykco cannot raise sufficient
capital, this may lead to the need to wind up Mykco, in which case the return to the Non-associated
Shareholders may be minimal.
The Independent Adviser Report also sets out the implications if the Resolutions are not passed at
section 2.17 on pages 21 and 22.

DILUTION EFFECT
The dilution effect of the Transaction on existing shareholdings in Mykco is explained under the heading
Dilution Effect on pages 11 and 12.

REQUIREMENT FOR RESOLUTIONS
Resolution 1 – Acquisition of Corporate Holdings Limited, and Issue of Shares to the
Vendors
Resolution 1 is required to comply with the provisions of section 129 of the Companies Act (relating
to Major Transactions), Listing Rule 7.3.1 (relating to the issue of equity securities), Listing Rule 7.5
(relating to the issue of securities affecting control), Listing Rule 9.1.1 (also relating to Major
Transactions and changes in the essential nature of an issuer’s business), Listing Rule 9.2.1 (relating to
transactions with Related Parties) and Rule 7(d) of the Takeovers Code.
These requirements are described below.

Section 129 of the Companies Act
Section 129 of the Companies Act provides that a company must not enter into a Major Transaction
unless the transaction is approved by, or is contingent on approval by, a special resolution of
shareholders. A Major Transaction includes a transaction that has, or is likely to have, the effect of the
company acquiring rights or interests or incurring obligations or liabilities the value of which is more
than half of the value of the company’s assets before the transaction.

The consideration for the CHL Shares to be Acquired and the Mykco Shares to be Issued to the
Vendors to satisfy that consideration, are in excess of the relevant threshold under section 129 of the
Companies Act, and therefore the Transaction is a Major Transaction under the Companies Act.
NZAX Listing Rule 7.3.1
NZAX Listing Rule 7.3.1 permits Mykco to issue new shares if the precise terms and conditions of the
specific proposal to issue those shares have been approved by ordinary resolution of its shareholders.
NZAX Listing Rule 7.5
NZAX Listing Rule 7.5 prohibits Mykco from issuing shares if:

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(a) there is a significant likelihood that the acquisition will result in any person or group of
Associated Persons materially increasing their ability to exercise, or direct the exercise of
(either then or at any future time) effective control of Mykco; and
(b) that person or group of Associated Persons is entitled before the acquisition to exercise, or
direct the exercise of, not less than 1% of the total votes attaching to Mykco’s shares;
unless the precise terms and conditions of the issue have been approved by ordinary resolution of
Mykco.
As the Transaction will result in Brent Douglas King and his Associated Persons, Barter Investments
Limited and Garth William Ward, increasing their percentage shareholding in Mykco from an aggregate
12.80% to an aggregate 21.13% this will result in these persons materially increasing their ability to
exercise effective control of Mykco, and therefore the Transaction is one to which NZAX Listing
Rule 7.5 applies.
NZAX Listing Rule 9.1.1
NZAX Listing Rule 9.1.1 prohibits Mykco from entering into a transaction that would change the
essential nature of its business without approval by an ordinary resolution of shareholders. The
Transaction would involve Mykco changing the essential nature of its business from an investment
company to a company which (through subsidiaries) operates as a finance company (General Finance)
and provides corporate advisory and financial research services (IRG). Therefore, the Transaction is
one that involves Mykco changing the essential nature of its business for the purposes of NZAX Listing
Rule 9.1.1.
NZAX Listing Rule 9.1.1 also prohibits Mykco from entering into a Major Transaction without approval
by an ordinary resolution of shareholders (for the purposes of the NZAX Listing Rules a Major
Transaction means a transaction which has a gross value in excess of 50% of Mykco’s Average Market
Capitalisation). The amount of the purchase price for the CHL Shares to be Acquired, and the
consideration for that purchase price which is the Mykco Shares to be issued to the Vendors to satisfy
that consideration, are in excess of the relevant threshold under NZAX Listing Rule 9.1.1. Therefore
the Transaction is a Major Transaction in terms of NZAX Listing Rule 9.1.1.
NZAX Listing Rule 9.2.1
NZAX Listing Rule 9.2.1 prohibits Mykco from entering into a Material Transaction with a Related Party
unless that Material Transaction is approved by an ordinary resolution of shareholders. A Material
Transaction includes any transaction where Mykco acquires assets having an Aggregate Net Value in
excess of 10% of the Average Market Capitalisation of Mykco. Borneo Capital Limited and Brent
Douglas King are each Related Parties of Mykco and the Aggregate Net Value of the shares to be
acquired from each of these persons under the Transaction is in excess of this threshold. Therefore,
Mykco must not complete the Transaction unless it has first been approved by an ordinary resolution
of shareholders. A Material Transaction also includes a transaction whereby Mykco issues shares in
Mykco having a market value in excess of 10% of Mykco’s Average Market Capitalisation. Therefore
Mykco must not complete the issue of shares to Borneo Capital Limited and Brent Douglas King that
forms part of the Transaction unless the Transaction has been approved by an ordinary resolution of
shareholders.
As Barter Investments Limited and Garth William Ward are Associated Persons of Brent Douglas King,
Mykco must also not complete the acquisition of the Shares in CHL to be Acquired from those persons
under the Transaction or the issue of shares to them that forms part of the Transaction unless the
Transaction has been approved by an ordinary resolution of shareholders,

NZAX Listing Rule 9.2.5 requires this Notice of Meeting to be accompanied by a certificate from the
Directors (other than any Director who is interested in the Transaction Agreement) certifying that the
terms of the Transaction Agreement are fair and reasonable to the shareholders and in the best interest

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of Mykco, and this certificate forms part of the Reasons for Directors’ Recommendation on page 32 of
this Notice of Meeting.

Takeovers Code
Mykco is a “Code Company” under the Takeovers Code. The Takeovers Code restricts persons and
their associates acquiring voting rights (or the control of voting rights) above a 20% threshold in Mykco.
The Takeovers Code permits Mykco’s non-associated shareholders to approve an acquisition of voting
rights above the threshold by ordinary resolution. Resolution 1 seeks such approval.
The issue of the Mykco Shares to be issued to the Vendors will result in certain Vendors together with
their associates becoming the holder or holders of more than 20% of the voting rights in Mykco and
therefore the issue of the shares to those persons must be approved by an ordinary resolution of Mykco
in order to comply with the requirements of the Takeovers Code,
These persons are Borneo Capital Limited, Brent Douglas King, Barter Investments Limited and Garth
William Ward.
Hence shareholder approval by ordinary resolution is required for the shares in Mykco to be issued to
these persons under the Transaction.
These persons are not permitted to vote on Resolution 1 that seeks the approval. The prohibition on
voting extends to associates of these persons.
Each of Brent King, Barter Investments Limited and Garth Ward consider themselves as associates of
each other for the purposes of the Code.
Under the Takeovers Code, “associates” are in summary, where persons are or through a third person,
acting jointly or in concert, where one person acts or is accustomed to act in accordance with the
wishes of the other person, where the persons are related companies or where the persons have a
business relationship, personal relationship, or an ownership relationship such that they should, under
the circumstances, be regarded as associates. Under the Listing Rules “Associated Persons” (referred
to above) has a similar definition.

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The current shareholders of Mykco are



87.21%



The current shareholders of CHL are:




30.71% 22.34% 46.95%



The application of the Takeovers Code to the issue of the Mykco Shares to be issued to the Vendors
is demonstrated in the following diagram, which summarises the shareholdings in Mykco that would
result from this issue:










King Associates Borneo Capital
Limited
Other
shareholders in
CHL to be
issued shares in
Mykco
Non-associated
Shareholders
Mykco
Limited
26.25% 21.13%
38.82%
13.80%
King Associates
Non-associated
Shareholders

12.79%

King Associates Borneo Capital
Limited
Non-associated
Shareholders
Corporate
Holdings
Limited
Mykco
Limited
Corporate
Holdings
Limited

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The Transaction will result in Borneo holding 26.25% and the King Associates holding 21.13% of the
shares in Mykco without having to make a formal offer to all shareholders in accordance with Rules
7(a) and 7(b) of the Takeovers Code. This is the reason why the Takeovers Code requires the Non-
associated Shareholders to have the opportunity to vote for or against Resolution 1. No approval is
required for the 38.82% of shares in Mykco to be issued to other CHL shareholders because none of
these shareholders individually or with associates holds 20% or more of the voting rights in Mykco.
Borneo and the King Associates are not considered to be associates for the purposes of the Takeovers
Code. While Garth William Ward, one of Borneo’s two directors, is also a King Associate, his
appointment to the Board of Borneo was to enable Borneo to comply with the requirement under the
Companies Act 1993 for Borneo to have at least one New Zealand resident director. Mr Rewi Bugo,
the other director of Borneo, and its sole shareholder, is the person who is considered to have control
of Borneo and his decisions in relation to Borneo, at both shareholder and Board level, are not
considered to be subject to any influence by Mr Ward.
While Borneo and the King Associates are not considered to be associates for the purposes of the
Takeovers Code, and are therefore expected to act independently when voting, shareholders should
nevertheless note that their aggregate percentage shareholdings in Mykco upon completion of the
Transaction will be 47.38%. Should they vote the same way on any resolution, their combined votes
would normally be sufficient to determine the outcome of any ordinary resolution (which requires a
simple majority of votes of those entitled to vote and voting), and their combined votes may also be
sufficient to determine the outcome of a special resolution, depending on the number of shareholders
who vote (a special resolution means a resolution passed by a majority of 75% or more of the votes of
shareholders entitled to vote and voting).
The following information is provided in order to comply with the requirements of Rule 16 of the
Takeovers Code (Code) (the paragraph numbering below corresponds with the paragraphs of Rule
16):
(a) The allottees under the allotments for which disclosure is required by Rule 16 of the Code are
Borneo Capital Limited, Brent Douglas King, Barter Investments Limited and Garth William
Ward.

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(b) The following information is included as required by Rule 16(b)(i) of, and Schedule 4 to, the
Code. Paragraphs (a) to (d) in the table provide the information required by paragraphs (a)
to (d) of Schedule 4.

(a) The number of voting securities being allotted:

(i) Borneo Capital Limited.



32,540,000
(ii) Brent Douglas King. 20,825,600

(iii) Barter Investments Limited. 1,220,250

(iv) Garth William Ward 1,627,000
(b) The percentage of the aggregate of all existing voting securities
and all voting securities being allotted that that number
represents:

(i) Borneo Capital Limited.




26.25%
(ii) Brent Douglas King. 16.80%

(iii) Barter Investments Limited. 0.98%

(iv) Garth William Ward 1.31%
(c) The percentage of all voting securities that will be held or
controlled by the allottee and the allottee’s associates after
completion of the allotment:

(i) Borneo Capital Limited.




26.25%
(ii) Brent Douglas King. 21.13%

(iii) Barter Investments Limited. 21.13%

(iv) Garth William Ward 21.13%

(c) Not applicable (as the voting securities to be allotted are not securities of a body corporate
other than a Code company).
(d) The issue price of the voting securities being allotted is 5.88 cents per share. Subject to the
Conditions having been satisfied, the issue price is to be satisfied on or before seven Business
Days after satisfaction of the Conditions, or such other date agreed in writing by Mykco and
the Vendors. The Conditions must be satisfied on or before 10 June 2018 or such later date
as may be agreed between the parties.
(e) The proposed allotment of Mykco Shares to be issued to the Vendors arises from a
commitment made by Mykco under the Transaction Agreement and Mykco’s reasons for

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entering into the Transaction Agreement are set out under Directors’ Recommendation on
pages 5 to 7 above.
(f) The allotment of the Mykco Shares to be issued to the Vendors under the Transaction
Agreement, if approved, will be permitted under Rule 7(d) of the Code as an exception to Rule
6 of the Code.
(g) Mykco understands that, except for the Transaction Agreement, no agreements or
arrangements have been, or are intended to be, entered into between the Vendors and any
other person relating to:
(i) The allotment, holding or control of the Mykco Shares to be issued to the Vendors; or
(ii) The exercise of voting rights in Mykco.
(h) This Notice of Meeting is accompanied by an independent adviser report from Simmons
Corporate Finance Limited on the merits of the proposed allotment of voting securities to the
Vendors. The report, having given due regard to all relevant factors, states on page 10:

“In our opinion, after having regard to all relevant factors, the positive aspects of the CHL Transaction
(including the CHL Allotment) significantly outweigh the negative aspects from the perspective of the
Non-associated Shareholders”
(i) The Directors have issued a statement recommending approval of the proposed allotment of
voting securities to the Vendors and the reasons for and the grounds for that recommendation
on pages 5 to 7.

The voting restrictions relating to Resolution 1 are set out on page 2.

Resolution 2 – Management Agreement with Brent Douglas King

Resolution 2 is required to comply with Listing Rule 9.2.1 (relating to transactions with Related Parties).

NZAX Listing Rule 9.2.1. prohibits Mykco from entering into a Material Transaction with a Related
Party unless that Material Transaction is approved by an ordinary resolution of shareholders. By virtue
of Rule 9.2.2(e), a Material Transaction includes any transaction where Mykco obtains any services in
respect of which the actual gross cost to Mykco in any financial year is likely to exceed an amount equal
to 1.5% of the Average Market Capitalisation of Mykco. The remuneration payable to Mr King under
the proposed Management Agreement would exceed this threshold. Therefore Mykco must not enter
into the proposed Management Agreement with Mr King unless entry into that Management Agreement
has been approved by an ordinary resolution of Mykco’s shareholders.

NZAX Listing Rule 9.2.5 requires this Notice of Meeting to be accompanied by a certificate from the
Directors (other than any Director who is interested in the Management Agreement) certifying that
the terms of the Management Agreement are fair and reasonable to the shareholders and in the best
interest of Mykco, and this certificate forms part of the Reasons for Directors’ Remuneration on page
32 of this Notice of Meeting.

Mr King and his Associated Persons are prohibited from voting any shares they hold on Resolution 2.

Resolution 3: Directors’ Remuneration Fee Pool

Resolution 3 is required to comply with NZAX Listing Rule 3.4 (relating to Directors Remuneration).

NZAX Listing Rule 3.4 requires that a proposed increase in directors’ remuneration be authorised by
an ordinary resolution of Mykco’s shareholders.

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Directors of Mykco and their Associated Persons are prohibited from voting any shares they hold on
Resolution 3.

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Reasons for Directors’ Recommendation – including for the purposes of Rule 19 of the
Takeovers Code plus Listing Rule 9.2.5(b) Certificate.

Part A

1. All Directors recommend that shareholders vote in favour of Resolution 1, Resolution 2 and
Resolution 3.
2. Without limiting paragraph 1 above, all Directors recommend that shareholders vote in favour
of Resolution 1 for the purposes of the Takeovers Code.
3. The Directors of Mykco that are not interested in Resolution 1, being Huei Min Lim, Simon
John McArley and Graeme Iain Brown certify that, in their opinion, the terms of the Transaction
are fair and reasonable to shareholders of Mykco and are in the best interests of Mykco for the
purposes of Listing Rule 9.2.5(b).
4. The Directors of Mykco that are not interested in Resolution 2, being Huei Min Lim, Simon
John McArley, Graeme Iain Brown and Rewi Hamid Bugo certify that, in their opinion, the terms
of the proposed Management Agreement with Brent Douglas King are fair and reasonable to
shareholders of Mykco and are in the best interests of Mykco for the purposes of Listing Rule
9.2.5(b).
Part B

The reasons for and grounds supporting the above recommendations and certificates are set out on
pages 5 to 7.



_________________________ __________________________
Brent Douglas King Rewi Hamid Bugo



_________________________ __________________________
Huei Min Lim Simon John McArley



_________________________
Graeme Iain Brown

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GLOSSARY


Aggregate Net Value has the same value as in the NZAX Listing Rules.

Associated Persons has the same meaning as in the NZAX Listing Rules.

Average Market Capitalisation has the same meaning as in the NZAX Listing Rules.

Board means the Directors, acting as a board.

Borneo means Borneo Capital Limited.

CHL means Corporate Holdings Limited.

CHL Group means CHL, General Finance and IRG.

Code means the Takeovers Code in force pursuant to the Takeovers Code Approval Order 2000.

Companies Act means the Companies Act 1993.

Completion means completion under the Transaction Agreement.

Completion Date means the date for Completion, being on or before 3 Business Days after satisfaction
of the Conditions.

Conditions means the conditions described on page 17.

Constitution means the Constitution of Mykco.

Directors means the directors of Mykco.

General Finance means General Finance Limited.

Independent Adviser means Simmons Corporate Finance Limited.

Independent Adviser Report means the report of the Independent Adviser commissioned by Mykco to
appraise the Transaction and assess the merits of the issue of shares to be made to the Vendors
pursuant to the Transaction Agreement.

IRG means Investment Research Group Limited.

King Associates means Brent Douglas King, Barter Investments Limited and Garth William Ward.

Major Transaction:
(a) For the purposes of the Companies Act has the same meaning as in the Companies Act;
(a) For the purposes of the NZAX Listing Rules has the meaning set out in Rule 9.1.1(b) of the
NZAX Listing Rules.
Material Transaction has the same meaning as in the NZAX Listing Rules.

Mykco Shares to be issued to the Vendors means the shares to be issued to the Vendors under the
Transaction Agreement.

Mykco means Mykco Limited.

34

6883.003_078.docx

Mykco Group means Mykco and its subsidiaries from time to time.

Non-associated Shareholders means the current Mykco shareholders not associated with Borneo or
the King Associates.

NZAX means the alternative market operated by NZX.

NZAX Listing Rules means NZAX’s listing rules.

NZX means NZX Limited.

Purchase Price means 6,132,436.80.

Related Party has the same meaning as in the NZAX Listing Rules.

Resolutions means the resolutions set out under the Chairman’s introduction at the commencement of
this Notice of Meeting and Resolution has a corresponding meaning.

Resolution 1 means the first Resolution.

Resolution 2 means the second Resolution.

Resolution 3 means the third Resolution.

shareholders means the shareholders of Mykco.

shares means ordinary shares in Mykco.

Shares in CHL to be Acquired means all 6,512,000 shares in CHL, except for the 100,000 shares already
owned by Mykco.

Takeovers Code means the Takeovers Code in force pursuant to the Takeovers Code Approval Order
2000.

Trading Day means any day on which ordinary shares in Mykco are traded on NZAX.

Transaction means the transaction whereby Mykco:

(a) Acquires all the 6,412,000 Shares in CHL to be Acquired for the Purchase Price; and
(b) Satisfies the Purchase Price by issuing the 104,323,240 Mykco Shares to the issued to the
Vendors.
Transaction Agreement means a conditional agreement for Mykco:
(a) To purchase the CHL Shares to be Acquired; and
(b) To issue the Mykco Shares to be issued to the Vendors;

being an agreement made, inter alia, between Mykco as purchaser and the Vendors as vendors.

Vendors means the shareholders of CHL, except for Mykco.

---

MYKCO



MYKCO LIMITED




DISCLOSURE DOCUMENT: 16 JULY 2018

Warning – Restricted Disclosure

Mykco Limited (Mykco) is listed on the NZAX, and Mykco’s shares are quoted on the NZAX by
NZX Limited.

The NZAX is a licensed market operated by NZX Limited, and NZX Limited is a licensed market
operator, under the Financial Markets Conduct Act 2013.

This Disclosure Document has been prepared by Mykco for the purposes of the NZAX Listing Rules
and contains the information required by Appendix 3 of the NZAX Listing Rules.
This Disclosure Document gives you important information to help you decide whether to approve
the Transaction (described in this Disclosure Document) but does not contain as much information
as a Product Disclosure Statement prepared under the Financial Markets Conducts Act 2013.
This Disclosure Document is accompanied by a Notice of Special Meeting of Shareholders of Mykco
and an Independent Adviser’s Report from Simmons Corporate Finance Limited.
There is other useful information on Mykco’s NZAX web page
(http://www.nzx.com/markets/nzax/securities/myk).

Mykco strongly recommends that you seek independent professional advice before deciding whether
to approve the Transaction.

NZX Limited is not responsible for any statement in this Disclosure Document.

TABLE OF CONTENTS

Page
1. Key Information Summary 2
2. The Mykco Group and what it does 8
3. Purpose of the Transaction 20
4. Terms of the Transaction 23
5. Key features of ordinary shares in Mykco 27
6. The Mykco Group’s financial information 29
7. Risks to the Mykco Group’s business and plans 33
8. Tax 37
9. Where you can find more information 38
10. Contact information 39
11. Glossary 41
12. Directors’ Certificate 43
13. Appendix A – Mykco: Pro Forma Historical Consolidated Financial Statements
as at 31 March 2018
44
14. Appendix B – Mykco: Pro Forma Prospective Consolidated Financial Statements
for the Years Ended 31 March 2019 and 31 March 2020
45

2



1. KEY INFORMATION SUMMARY


1.1 What is this?
The transaction which shareholders are being asked to vote on (Transaction) under the first
resolution set out in a Notice of Meeting that accompanies this Disclosure Document is one
whereby Mykco:
(a) Acquires all the 6,512,000 shares in Corporate Holdings Limited (CHL) except for the
100,000 shares Mykco already owns (Shares in CHL to be Acquired) for a purchase
price of $6,132,436.80 (Purchase Price); and
(b) Satisfies the Purchase Price by issuing to the owners of the Shares in CHL to be Acquired
(Vendors) 104,323,240 fully paid ordinary shares in Mykco (Mykco Shares to be issued
to the Vendors).
CHL wholly owns the following companies, which together with CHL form the CHL Group:
(a) General Finance Limited (General Finance), a non-bank deposit taker, which operates as a
finance company; and
(b) Investment Research Group Limited (IRG), a financial advisory company, which is an NZX
Sponsor and NZXT Advisor and the publisher of the Investment Yearbook.
The Transaction is subject to satisfaction of the conditions described on page 23 below (Conditions).

The 104,323,240 Mykco Shares to be issued to the Vendors equates to the 6,412,000 Shares in CHL
to be Acquired, multiplied by 16.27. The multiplier of 16.27 is the number of Mykco Shares to be
issued to the Vendors for each Share in CHL to be Acquired. The multiplier of 16.27 represents:
(a) 95.64, being the net assets per share of CHL derived from management accounts of CHL
prepared as at 30 January 2018; divided by
(b) 5.88, being the net assets per share of Mykco as at 30 September 2017 based on unaudited
interim accounts of Mykco as at that date.
Shareholders should note that the CHL asset values were determined by CHL and the CHL accounts
on which the consideration at which the Transaction is completed is determined were prepared by
CHL and no independent assessment of those valuations or accounts undertaken before the
Independent Adviser was appointed to prepare the Independent Adviser Report and the Independent
Adviser did not review these valuations.
This Disclosure Document provides information to support the Transaction. The Transaction
amounts to the proposed backdoor listing of CHL. The proposed backdoor listing involves Mykco,
an existing NZAX listed shell, pursuant to a transaction agreement (Transaction Agreement) with
the Vendors, acquiring the Shares in CHL to be Acquired in exchange for new shares in Mykco i.e. the
Transaction. The issue of the new shares to the Vendors would result in the Vendors owning 86.2%
of the shares in Mykco, which would remain a listed company, and as a result of the Transaction would
own CHL, which owns General Finance (a finance company) and IRG (an investment advisory
company).
No shares in Mykco are being offered under this Disclosure Document, and the purpose of this
Disclosure Document is not to assist peoples’ decisions whether to acquire shares in Mykco, but

3

rather this Disclosure Document is to assist shareholders to make a decision whether to approve the
Transaction.
If Mykco runs into financial difficulties and is wound up, you will be paid only after all creditors have
been paid. You may lose some or all of your investment.
1.2 About the Mykco Group
Mykco is currently a shell listed on the NZAX. Should the Transaction proceed, Mykco and the CHL
Group would comprise a group (Mykco Group). The Mykco Group would comprise Mykco, CHL
(an intermediate holding company), and CHL’s subsidiaries, General Finance (a finance company) and
IRG (a financial advisory company). The Mykco Group is further described in Section 2: The Mykco
Group and what it does and Section 6: The Mykco Group’s financial information.
1.3 Purpose of the Transaction
The purpose of the Transaction is to make Mykco viable again, by effectively turning it into a holding
company for a group that would through its subsidiary, General Finance, operate as a finance company,
and through its subsidiary, IRG, provide financial advisory services. The Transaction would be made
in exchange for shares in Mykco. Mykco would not be raising any money under the Transaction.

Simmons Corporate Finance Limited (Independent Adviser) has prepared an independent adviser
report (Independent Adviser Report) in relation to the Transaction which accompanies this
Disclosure Document. In its report, the Independent Adviser states at page 10:
“There are a number of positive and negative features associated with the CHL Transaction. In our
view, when the Non-associated Shareholders are evaluating the merits of the CHL Transaction, they
need to carefully consider whether the negative aspects of the CHL Transaction, including the level of
control that Borneo and the King Associates will hold over the Company and the dilutionary impact,
could justify voting against the CHL Transaction Resolution with the outcome that the Company will
not be able to acquire CHL and will need to seek alternative sources of capital within a relatively short
timeframe in order to continue to fund its operations and evaluate backdoor listing opportunities”.

The purpose of the Transaction and the positive and negative features identified by the Independent
Adviser are further described in Section 3: Purpose of the Transaction.
1.4 Key Terms of the Transaction

Purchase Price $6,132,436.80
Purchase Price per CHL ordinary share 95.64 cents
Issue price of each Mykco ordinary share issued as consideration 5.88 cents
Number of Mykco ordinary shares to be issued for each CHL
ordinary share
16.27
Total number of fully paid ordinary shares in Mykco to be issued as
consideration
104,323,240

The above dates are indicative only and may change.

4

1.5 Key Dates and Transaction Process

Special meeting to approve the Transaction 31 July 2018
Date for satisfaction of the Conditions in the Transaction Agreement 31 July 2018
Completion of the Transaction 3 August 2018
Allotment of shares to the Vendors to be quoted on NZAX 3 August 2018*

The above dates are indicative only and may change by agreement between the parties to the
Transaction, being Mykco and the Vendors.

1.6 How pricing of ordinary shares in Mykco issued to the Vendors is fixed
The issue price of the shares to be issued to the Vendors under the Transaction Agreement will be
5.88 cents per share, being the net assets per share of Mykco as at 30 September 2017 based on
unaudited interim accounts of Mykco as at that date.

1.7 How can you get your money out?
Mykco intends to quote the ordinary shares to be issued to the Vendors on the NZAX. This means
they may be able to be sold on the NZAX if there are interested buyers. Should you acquire ordinary
shares in Mykco you too may be able to sell them on the NZAX if there are interested buyers. You
may get less than you invested. The price will depend on the demand for the ordinary shares.

1.8 Key drivers of returns
Should the Transaction proceed, Mykco considers that the current and future aspects of the Mykco
Group’s business that have, or may have, the most impact on the financial performance of its business,
and the key strategies and plans for those aspects of the business, can be summarized as follows:

General Finance


Current and Future Aspects of the Mykco
Group’s Business that have, or may have, the
most impact on Financial Performance
Key Strategies and Plans
General Finance’s ability to raise deposits General Finance relies on marketing activities
through advertising and via financial planners to
raise term deposits to grow its lending
operation.
General Finance’s ability to make loans Growth in term deposits enables growth in
lending, and General Finance sources lending
proposals from mortgage brokers and directly
from borrowers.
General Finance’s interest rate spread The key to generating income for General
Finance is the margin it makes between
borrowing and lending rates. General Finance
sets interest rates for deposits after considering
current market conditions, the rates being
offered by competitors and its funding
requirements. General Finance also sets its
lending rates after considering current market
conditions, and rates being offered by
competitors, as well as the demand for loans in
the sector in which General Finance operates.

5

General Finance’s reinvestment rates General Finance seeks to maximise the
availability of its funding by offering term
deposits, and seeks to provide returns that
incentivise depositors to reinvest on maturity.
General Finance’s level of default on its loans General Finance considers that one of its most
significant risks is loan default risk, which it
manages through its lending and risk
management policies: General Finance has limits
on the maximum amount it will lend to any one
borrower, limits on the aggregate loans secured
by way of second mortgage, and limits on its
exposure to provincial towns and country areas.

General Finance’s liquidity risk General Finance considers that another of its
significant risks is liquidity risk, which General
Finance seeks to mitigate by maintaining at least
10% of its total tangible assets in cash or in
short-term deposits with trading banks.

IRG


Current and Future Aspects of the Mykco
Group’s Business that have, or may have, the
most impact on Financial Performance
Key Strategies and Plans
IRG’s deal sourcing ability IRG has access to an extensive range of business
contacts, including contacts from Asia
(particularly China and Korea), to which it
provides business opportunities, including stock
exchange listing opportunities, and
opportunities to participate in placements,
acquisitions, sell downs and other M & A
transactions.
IRG’s access to a retail database IRG accesses an extensive database of potential
investors in selling its financial advisory services.

IRG’s research house capability IRG accesses an extensive database of financial
information to provide its Investment Yearbook
and other publications on issuers and products
that it publishes on a regular basis.


1.9 Key risks affecting this investment
The key risks are those associated with General Finance and IRG.

General Finance

Investment in term deposits in General Finance has some risks. A key risk is that General Finance does
not meet its commitments to repay depositors or pay depositors interest (credit risk). Section 7 of
this Disclosure Document (Risks to Mykco Group’s business and plans) discusses the main factors that
give rise to the risk. Investors in Mykco should consider the credit risk of these term deposits offered
by General Finance.

6

The interest rate for term deposits offered by General Finance should also reflect the degree of credit
risk. In general, higher returns are demanded by investors from businesses with higher risk of defaulting
on their commitments. Investors in Mykco need to decide whether the offer of term deposits made
by General Finance is fair.

Mykco considers that the most significant risk factors of General Finance are:

Loan Default Risk

This is where a significant amount of the loans and advances that General Finance has made, are not
repaid, or the security taken for those loan advances is inadequate, and full recovery of the loans
advanced is not possible. This may occur where borrowers to whom General Finance has lent money
are, due to their personal financial situation, unable to meet their loan obligations.

Liquidity Risk

This is where General Finance does not have sufficient cash liquidity to meet its obligations. This may
arise where borrowers, to whom General Finance has lent money, are not able to meet their
obligations in a timely manner.

IRG

Mykco considers that the most significant risk factors of IRG are:

Deal Flow Risk

This is the risk that IRG is not able to identify opportunities for transactions or bring them to fruition.

Lack of Appetite for Financial Products

This is the risk that potential investors do not invest and IRG is therefore not able to derive fees from
income for advising on investment.

Lack of Appetite for Financial Information

This is the risk that investors do not wish to purchase IRG’s financial publications.

Regulatory Risk – General Finance and IRG

General Finance and IRG are required to comply with various legal obligations, and any material failure
to comply with these could result in damage to their reputation and or expose them to financial and/or
other penalties. For General Finance this might mean an increase in withdrawal rates and a decrease
in reinvestment rates. For IRG this could mean a loss of corporate advisory and financial research
opportunities. In both cases it might have a material and adverse affect on the financial condition of
General Finance or IRG (as applicable).

Recent examples of major law changes that have imposed significant additional obligations on General
Finance and/or IRG are the Anti-Money Laundering and Countering Finance and Terrorism Act 2009,
the Financial Markets Conduct Act 2013 and the Non-bank Deposit Takers Act 2013. Any change to
existing laws or to the interpretation or enforcement of those laws or the introduction of new laws
can result in additional requirements being imposed on General Finance and/or IRG and/or result in
increased costs for them. For example, over the last 12 to 18 months, regulators have more rigorously
enforced the rules relating to lending fees, particularly the requirement that they must be reasonable.

7

Investors in Mykco should also read section 7 of this Disclosure Document (Risks to Mykco Group’s
business and plans) on page 35 and section 5 of this Disclosure Document (Key features of ordinary
shares in Mykco) on page 27.

1.10 No Credit Rating
General Finance is exempt from the requirement to have its creditworthiness assessed by an approved
rating agency. This is because General Finance operates under the Deposit Takers (Credit Ratings
Minimum Threshold) Exemption Notice 2016, exempting General Finance from the Non-bank Deposit
Taker Act 2013 requirement to have a credit rating. The exemption applies because General Finance
has liabilities of less than $20 million, making it unduly onerous to comply with the requirement to
have a credit rating, and because General Finance maintains a capital ratio of at least 15%. This means
that General Finance has not received an independent opinion of its capability and willingness to repay
its debts from an approved source.

1.11 Where you can find the Mykco Group’s financial information
The financial position and performance of the Mykco Group are essential to an assessment of the
Transaction. You should also read Section 6: The Mykco Group’s financial information.

8

2. THE MYKCO GROUP AND WHAT IT DOES

2.1 Overview of the Mykco Group

The following is a summary of the business of the Mykco Group as it will be after the Transaction.

2.2 Mykco

Mykco is currently a shell listed on the NZAX.

On 28 May 2018, Mykco entered into the Transaction Agreement (Transaction Agreement) with
all the shareholders of CHL (other than itself) to acquire all the shares in CHL (except for the
100,000 shares it already owns).

As the Transaction involves the shareholders of CHL (other than Mykco) swapping their shares for
shares in Mykco, Mykco does not need to raise any funds in order to complete the Transaction.

In the event the Transaction proceeds, Mykco would own CHL. CHL already wholly owns General
Finance and IRG.
2.3 CHL

CHL would be an immediate holding company, being 100% owned by Mykco, and owning 100% of the
shares in General Finance and IRG. CHL was incorporated on 16 March 2017 and raised $4,875,000
from investors prior to acquiring General Finance and IRG on 18 December 2017. Details of these
acquisitions are set out in the Notice of Special Meeting of Shareholders of Mykco that accompanies
this Disclosure Document.

2.4 General Finance

General Finance commenced trading on 1 April 2001, initially writing and managing prime residential
mortgages for an Australasian wholesaler, in competition with the trading banks. In 2002 it widened
its product range, to include non-conforming residential mortgages (i.e. those outside normal trading
bank criteria).

In 2003 General Finance began offering short term residential loans, as it found that there was a
demand not being satisfied through traditional sources. To secure these short term loans General
Finance took first and second mortgages and the loans were initially funded from its own resources.

Due to the success experienced for this short term residential mortgage product, General Finance
decided, in 2004, that it would fund part of this growth through the issue of term deposits. General
Finance registered its first prospectus for this purpose on 9 November 2004.

The global financial crisis, that commenced in 2008, caused a number of finance (and related)
companies to fail. General Finance survived the crisis by having a business model focused on lending
in the residential property sector, and by taking a conservative stance on the gearing of the business
and liquidity management. Those features remain in place today.

General Finance was issued with a non-bank deposit takers licence by the Reserve Bank of New
Zealand on 13 February 2015.

General Finance has no subsidiaries.

9


Nature of General Finance operations

General Finance’s main activity is to provide residential mortgage loans to borrowers.

These loans are written for a variety of different purposes, with solutions tailored to the borrowers’
individual requirements. They generally enable borrowers to complete a short term transaction, such
as preparing a property for sale, bridging a property acquisition, enhancing, developing, subdividing,
building, constructing on and improving a property, or funding a business purchase or expansion,
including working capital. The term “a property” may refer to more than one property or title.

The borrowers, to whom General Finance lends, are generally higher risk borrowers, who may have
some credit issues, and have not been able to borrow from trading bank sources. Accordingly General
Finance focuses on the security that is offered to support the loans that General Finance makes (see
below).

The loans, held in General Finance’s name, are written over 3 to 60 month periods. A real estate
mortgage or a right to such a mortgage is taken in all instances, as security to support General Finance’s
lending. Mortgages taken comprise either first or second ranking mortgage securities. At 31 March
2018, General Finance had made $7.66 million in first mortgage advances, and $1.06 million in second
mortgage advances (together with $0.01 million in unsecured advances, resulting from the realisation
of security).

Most loan applications are referred to General Finance through an established network of mortgage
brokers. Some borrowers do approach General Finance directly.

The loans that General Finance makes are funded from both General Finance’s equity and from
investors by way of term deposits.

Keys to generating income

General Finance depends on the funds being raised from term deposits to grow its lending operations.
Growth in term deposits comes from General Finance’s marketing activity though advertising and via
financial planners.

Growth in lending follows growth in term deposits. General Finance sources lending proposals from
mortgage brokers and directly from borrowers.

The aspects of General Finance’s business that are key to generating income are:
• the total value of the loans that General Finance makes
• the margin that General Finance makes between its borrowing and its lending rates.

General Finance’s profitability is impacted by:
• any losses that General Finance incurs on loans
• the amount of cash that General Finance holds.

Lending policy and loan quality

General Finance’s lending is done in accordance with its lending policy. This policy forms the basis for
assessment and management of loans that General Finance makes. It is updated from time to time. It
was a condition of the supervisor’s consent to the change of control to CHL that no material change
be made to General Finance’s lending policy (without the approval of the supervisor) until 2 November
2020. General Finance’s lending policy includes the following:

10

• Asset Class
General Finance currently makes loans on all types of residential securities, including
residential investment securities, bare land and lifestyle and rural blocks but excluding
specialised properties (such as motels), and commercial and farm properties.
• Development and Construction Loans
General Finance currently makes development and construction loans so long as they meet
its loan criteria.
• Lending Margin
Loans are advanced to a maximum of 70% (excluding fees and charges) of the value of the
property to be security for the loan and may be lower depending on location and the condition
of the property.
• Security
General Finance takes, by way of security, a first or second mortgage over the borrower’s
real property. These mortgages are either registered against the certificate of title or
supported by a registered caveat.
• Loan Exposure
General Finance will consider making loans as long as they remain inside its covenant to the
supervisor, not to advance more than 10% of total tangible assets to any one borrower. In
addition General Finance will not lend more than 25% of the equity in General Finance to any
one borrower.
• Geographical Exposure
Exposure to provincial towns and country areas is limited to certain percentages of total loans.
• The Loan Process
General Finance’s loan process requires a submission to its credit committee for review. The
submission will generally include the following: application, valuation, sale and purchase
agreement (if applicable), income details, refinancing statements and credit checks (with
Equifax). This material is reviewed, and the loan is approved or declined.
• Arrears Management
General Finance has a prescribed arrears management process. This involves contacting the
borrower for instalment arrears and arranging for the payment to be re-presented. When
arrears reach 60 days, the policy requires that a Property Law Act notice is issued, with
enforcement proceedings commencing on the expiry of this notice.
• Credit Protection Insurance
General Finance does not carry credit protection insurance, should a loan go into default.
Borrowers are not required to take out payment protection insurance.
• Guarantors
General Finance’s policy is to make loans to borrowers with a reasonable ability to pay.
General Finance is interested in the borrowers’ asset position and their ability and willingness
to make payments on their loan, when due. Where loans are made to companies or trusts
General Finance generally requires a guarantee from the individuals behind the transaction.

Risk management programme

The Non-bank Deposit Takers Act 2013 (“NBDT Act”) requires that, as a deposit taker, General
Finance has (and has taken all practicable steps to comply with) a risk management programme.

General Finance’s risk management programme is in writing; and sets out the procedures that it will
use for the effective identification and management of the following risks:
• credit risk
• liquidity risk
• market risk

11

• operational risk

General Finance revises its risk management programme, from time to time, with the approval of the
supervisor. The supervisor is required to review the risk management programme and advise whether
it is satisfied that it meets the requirements set out in section 27(2) of the NBDT Act.

Each month, General Finance reviews its activities for the previous month, against the risk management
programme.


2.5 IRG

Brent King is the sole director of IRG.

IRG’s corporate advisory and financial research business was established in 2013.

IRG’s business includes:

(a) Investment banking, where it acts as a financial intermediary, assisting corporates and
individuals to source capital from investors, including giving advice on mergers and acquisitions
(M & A);

(b) Providing corporate advisory services to corporates;

(c) Acting as a research house which provides financial information and other data to potential
investors.

IRG is currently:

(a) An NZX Sponsor and NXT Advisor;
(b) A registered financial service provider; and
(c) A publisher of the Investment Yearbook.
The key ingredients of IRG’s business are its people, the quality of its advice and its reputation.

IRG regularly advises clients in relation to corporate governance, negotiating with acquisition targets,
obtaining shareholder approvals, and liaising with regulators such as the Companies Office, NZX, the
Takeovers Panel and the Financial Markets Authority.

IRG’s investment banking business has advised on a number of stock exchange listings, including the
following listings on the NZAX: Australian Food Corporation Limited (2015) and Chow Group Limited
(2016). IRG’s investment banking services also include assisting listed companies to make placements
and advising investors on the acquisition and disposal of stocks in listed companies.

Corporate advisory and financial research businesses face changing attitudes to financial
intermediation. Bank loans still provide the majority of corporate finance, but corporate advisory and
financial research businesses benefit from investors becoming more prepared to lend via investment
banks or direct to corporates, rather than investing in bank deposits. Investment banks and financial
advisory firms now play an important role as intermediaries in lender/borrower transactions.
Notwithstanding the changes to financial intermediation, experience and networking remain key
ingredients of IRG’s corporate advisory and financial research business.

12

A key challenge for companies like IRG in an age where capital requirements of corporates are mainly
serviced by banks and private equity funds, is to demonstrate the continued relevance of advisors who
are not primary providers of capital, but nevertheless seek to provide advice as to how capital is
accessed and deployed.

Corporate advisory and financial research businesses face an operational environment of increasing
complexity. KYC (know your customer) and other requirements of the AML (Anti-Money
Laundering) legislation mean that considerable time can be spent enabling investors, particularly
overseas investors, to open bank accounts in order to transact financial business.

Developments in digitalisation and financial technology are occurring at an expanding rate. It is
important for corporate advisory and financial research businesses to invest in and understand the
capability of this technology to be able to use it to provide effective and efficient advice.


Despite the challenges, IRG is an established boutique, and considers itself to be well equipped to
succeed in what is a challenging business environment.

2.6 Future Acquisitions

Shareholders are likely to be required to approve any decision by Mykco to acquire further substantial
assets. Circumstances where shareholder approval by ordinary resolution would be required are:

(a) Major Transaction: If the Transaction is a major transaction for Mykco for the purposes of
Rule 9.1 of the NZAX Listing Rules i.e. if the amount of the consideration exceeds 50% of
Mykco’s Average Market Capitalisation (a transaction might also be a major transaction for
Mykco for the purposes of section 129 of the Companies Act 1993, in which case shareholder
approval by special resolution would be required i.e. if the amount of the consideration
exceeded 50% of Mykco’s total assets);
(b) Transactions Funded by Shares: If the transaction was to be funded (wholly or in part) by an
issue of shares made otherwise than on a pro rata basis, and the issue could not be made
within the limits set out in the NZAX Listing Rules for non-pro rata share issue;
(c) Related Party Transactions: If the transaction was to be made from a related party and the
purchase price exceeded 10% of Mykco’s Average Market Capitalisation.
2.7 Mykco’s Directors and Senior Management

Executive Directors

Mykco’s Board currently comprises five directors.

Brent King B.Com, C.A., C.M.A., R.F.A.
Executive Director (Managing Director)
Brent was the founder and managing director of Dorchester Pacific Limited, and its subsidiary
Dorchester Finance Limited, until he resigned in 2006. During his tenure he built that company from
zero to over $480m in assets and returns of 20% per annum for over 10 years. Dorchester Pacific
Limited was a public issuer with a registered prospectus for more than fifteen years. During that time
Dorchester Pacific Limited and other companies Brent was a director of registered in excess of 100
prospectuses/disclosure documents. After leaving Dorchester Pacific Limited Brent founded the
investment company, Viking Capital Limited, which was listed on the NZAX in 2006. Viking Capital
Limited undertook a number of investments but after sustaining losses sold its remaining business
assets in 2012, resulting in it becoming a listed shell that subsequently became a vehicle for a back

13

door listing in 2015. Mr King is a current director of Corporate Holdings Limited, Investment
Research Group Limited (IRG), Equity Investment Advisers Limited, King Capital & Investment
Corporation Limited and Mykco Limited. IRG is both an NZAX sponsor and an NXT advisor. Mr King
has also held directorships with a number of private companies. Equity Financial Advisers Limited
refers some clients to General Finance and it receives General Finance’s standard intermediary
brokerage on deposits that are accepted by General Finance.

Brent King was a director of PIC Tech Limited (formerly called ICP Biotechnology Limited) when it
was placed in voluntary administration on 14 May 2008 and then into receivership on 15 May 2008
and then into liquidation on 12 June 2008.

Lyn Lim (full name Huei Min Lim) LLB(Hons)
Non-Executive Director
Lyn graduated from the University of Canterbury in 1989 with an LLB(Hons). Lyn is the Senior Partner
of Forest Harrison, a boutique law firm that specialises in the provision of legal services to commercial
or high net worth Asian clients or businesses which have ties to Asia. Prior to forming Forest Harrison,
Lyn was a partner in the national law firm, Kensington Swan, from 1998 to 2005.

Lyn is currently the Chair and a Trustee of Foundation North, formerly known as ASB Community
Trust, a community charitable trust with a trust fund in the excess of NZD1.2 billion. Lyn is also a
council member of AUT, a tertiary education provider. She is also a Board member of Auckland
Regional Amenities Funding Board, a statutory funding body for 10 Auckland amenities. Lyn is also a
director of Asia New Zealand Foundation as well as being a director and shareholder of some personal
and/ small private companies.

Lyn is a Chartered member of the Institute of Directors and a member of the New Zealand Law
Society and the InterPacific Bar Association.

Lyn grew up in Malaysia before moving to New Zealand in 1985. Lyn is multilingual (being fluent in
English, Mandarin, Fugian, Cantonese and Malay).


Simon John McArley LLB(Hons)
Non-Executive Director
Simon graduated from Victoria University, Wellington in 1984 with an LLB (Hons). Simon is a lawyer
by training who specialises in corporate governance and risk.

After almost 20 years in private practice with Kensington Swan, specialising in banking and securities
law, Simon took up regulatory positions with NZX as acting Head of Regulation and the (then)
Securities Commission as acting Director Primary Markets. Simon went on to join the Serious Fraud
Office (SFO) as General Manager Capital Markets and Corporate Fraud in 2011 where he had
responsibility for the successful investigation and prosecution of finance sector fraud uncovered by
the GFC. After 12 months as acting Director of the SFO, Simon left the SFO in late 2013 and has
since been consulting with government and private sector entities on governance and risk management
issues. Simon has also held governance positions with commercial and not for profit entities.

Simon is a Chartered member of the Institute of Directors and a member of the New Zealand Law
Society,

Simon is also a keen sailor and has extensive coastal and blue water experience.

14

Graeme Iain Brown BCom
Non-Executive Director
Graeme is a graduate of the University of Otago where he obtained a Bachelor of Commerce. He has
over 20 years’ experience in the Malaysian plantation industry. He has been the Managing Director of
Keresa Plantations Sdn. Bhd since 1997. Keresa Plantations is one of just a few RSP0 certified
plantations in Sarawak. Graeme also founded Keresa Mill Sdn. Bhd in 2005 which has been a pioneer
in the successful implementation of advanced milling technologies for FFB processing. Graeme was
also a co-founder in 2007 and joint Chief Executive Officer of Asian Plantations Limited, which was
sold to a Malaysian corporation for RM1.2 billion in 2015. Graeme has been an Executive Director of
Sarawakiana Realty Sdn. Bhd, a property company, since 1996 , and Malesiana Tropicals Sdn. Bhd., a
tissue culture company, since 2000 as well as being a Director of several private companies, including
Rajang Wood Sdn. Bhd, a plantation holding company, since 1996.

Rewi Hamid Bugo B.Sc.,M.Com.
Non-Executive Director
Rewi Hamid Bugo is a graduate of the University of Canterbury, Christchurch, where he obtained a
Bachelor of Science in Management Science and a Master of Commerce in Business Administration.
He has business experience in several sectors including oil and gas, property development, insurance
broking and travel and tourism.

Mr Bugo sits on the Board of several private companies in Malaysia and New Zealand and is Vice
Chairman of the Sarawak Chapter of the Malaysia New Zealand Chamber of Commerce.

2.8 CHL’s Directors and Senior Management

CHL has 3 directors: Brent Douglas King, Rewi Hamid Bugo and Garth William Ward.

Brent Douglas King B.Com, CA, CMA, RFA
Executive Director (Managing Director)
Brent’s biography appears on pages 12 to 13.

Rewi Hamid Bugo B.Sc.,M.Com.
Non Executive Director
Rewi’s biography appears above on this page.

Garth William Ward B.Com, C.A.
Executive Director
Garth is a senior company secretary and CFO. He is a C.A., having been a member of the Chartered
Accountants Australia and New Zealand for over 35 years. Garth has acted for a number of listed
and unlisted companies over his 35 year career in accounting and finance.

Garth Ward (the CFO of General Finance) was an accountant reporting to the CFO of Allied
Nationwide Finance Limited when that company was placed in receivership on 20 August 2010.

2.9 General Finance’s Directors and Senior Management

General Finance has five directors – three independent non-executive directors and two full time
executive directors. The independent directors are Donald Frederick Hattaway, Robert Garry Hart
and Alistair Alan Ward. The executive directors are Brent Douglas King and Gregory John Pearce,
who are also the senior managers of General Finance.

15

Donald Frederick Hattaway CA, ACIS
Chairman and Independent Non-Executive Director
Don is a member of the Chartered Accountants Australia and New Zealand (CAANZ) and has practised
as a Chartered Accountant in public practice since 1980. He retired as a Partner in Price Waterhouse
in 1996 and has specialised in acting for small or medium sized enterprise businesses since then often
fulfilling the role of finance director for those companies. Don was the Chairman of listed banking
software technology company Finzsoft Solutions Ltd. Don is a previous Chairman of the Board of
Directors of the Auckland Cricket Association. He is a Director of Sietec (NZ) Limited and has held
a previous public company directorship with Cooks Global Foods Ltd as well as directorships with a
number of private companies.

Robert Garry Hart LLB (Hons) Waikato University (1998), PG Dip Management
Independent Non-Executive Director
Rob is a director of Waikato law firm Ellice Tanner Hart, who has practised law for 16 years. In this
role he has wide experience acting on finance and security related matters involving various tiers of
lenders. He also advises clients on governance and insolvency related matters. Rob was previously a
director of New Zealand Cricket Incorporated and is currently deputy chair of Balloons Over Waikato
Trust which annually stages Waikato’s largest event. Rob is a member of the New Zealand Sports
Tribunal and has held directorships with a number of private companies.

Alistair Alan Ward B.Com (Hons) M INST D AFNZIM
Independent Non-Executive Director
Alistair is a director & principal of Campbell MacPherson Limited, a corporate advisory firm he co-
founded in 2002. Campbell MacPherson is a leading corporate advisory firm providing a wide range
of corporate advisory and investment banking services. Alistair has advised many business leaders and
owners on issues relating to corporate governance, strategy, mergers, acquisitions and capital raising.
Alistair has extensive senior management experience in New Zealand and overseas with the Fletcher
Building Group between 1982 and 1997. Alistair is a former CEO of The Golden Bay Cement
Company Ltd, Alistair has also chaired a variety of industry groups including the Cement & Concrete
Association of NZ and the Major Energy Users Group. Alistair is a former director of Solid Energy
(having resigned in December 2001). He is a member of the New Zealand Institute of Directors and
an Associate Fellow of the NZ Institute of Management and has held directorships with a number of
private companies.

Alistair Ward was a director of PIC Tech Limited (formerly called ICP Biotechnology Limited) when
it was placed in voluntary administration on 14 May 2008 and then into receivership on 15 May 2008
and then into liquidation on 12 June 2008.

Brent Douglas King B.Com, CA, CMA, RFA
Executive Director (Managing Director)
Brent’s biography appears on pages 12 to 13.

Gregory John Pearce B.Com
Executive Director (Lending and Credit)
Greg is a lending and credit specialist having held roles with large companies (Telecom and Air New
Zealand) and a senior role with Dorchester Finance Limited being General Manager Lending and
Credit from 1997 to 2008. Since that time, he has consulted and contracted to receivers in relation
to loan recoveries.

Gregory Pearce is a former senior officer of Dorchester Finance Limited, having ceased to be
employed by Dorchester Finance Limited in December 2008, which is when Dorchester Finance

16

Limited entered into a Deferred Repayment Plan (this was followed by a Capital Reconstruction Plan
in 2010).

Garth William Ward B.Com, C.A.
Garth’s biography appears on page 14.

2.10 IRG’s Sole Director

IRG’s sole director is Brent King. Brent’s biography appears on pages 12 to 13.
2.11 No Immediate Change to the Directors

Mykco does not intend to make any immediate changes to its Board or the Board of any members of
the Mykco Group following Completion.

2.12 Garth Ward – CFO
It is intended that Garth Ward would continue as the CFO of the Mykco Group following the
Transaction. Garth’s biography appears on page 14.

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2.13 Substantial Product Holders

After Completion under the Transaction Agreement, the following persons will hold relevant interests
in not less than 5% of the total number of ordinary shares on issue in Mykco:

Name of Substantial Product Holder
Nature of
Relevant
Interest
Number of
Shares Held
Percentage
Shareholding
Borneo Capital Limited Registered holder 32,540,000 26.25%
Brent Douglas King Registered holder 20,948,166 16.90%
CFS NBDT Interest Limited, as General
Partner of the CFS Interest Limited
Partnership
Registered holder 16,270,000 13.13%

Each of the above substantial product holders are to acquire their shares in Mykco on Completion,
under the Transaction Agreement, except for Brent Douglas King who already holds 122,566 shares
in Mykco.

2.14 Directors’ Interests

After Completion under the Transaction Agreement, the following directors of Mykco will hold
relevant interests in the ordinary shares of Mykco:
Name of Director
Role Within
Mykco
Nature of
Relevant Interest
Number of
Shares Held
Percentage
Shareholding
Rewi Hamid Bugo Non-Executive
Director
Power to control
shares held by
Borneo Capital
Limited
32,540,000 26.25%
Brent Douglas King Executive
Director
Legal and beneficial
owner
20,948,166 16.90%
Graeme Iain Brown Non-Executive
Director
Power to control
shares held by Belian
Holdings Limited
3,269,479 2.64%

None of the current Directors is entitled to remuneration from Mykco other than by way of
Directors’ fees. The total fee pool for Directors is currently $150,000. Under the third resolution
set out in a Notice of Meeting that accompanies this Disclosure Document, shareholders are being
asked to approve an increase in this fee pool to $300,000. Upon completion of the Transaction Brent
Douglas King would also derive remuneration under a Management Agreement with Mykco. That
Management Agreement would provide for a salary of $120,000 per annum, a vehicle allowance of
$12,000 per annum, a performance fee equal to 10% of fees earned by Mykco and its subsidiaries
(excluding fees earnt by General Finance from its lending business) and an annual profit share equal to
10% of the amount by which the Mykco Group’s net profit after tax exceeds the Benchmark for the
relevant year (the Benchmark being calculated as the official cash rate expressed as a percentage, plus
10% per annum). Brent Douglas King and Rewi Hamid Bugo are also directors of CHL, and Brent
Douglas King is also director of General Finance and the sole director of IRG. Any remuneration they
receive as directors of these companies must form part of the foregoing fee pool.

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2.15 Recent and Proposed Share Issues
Shares issued by Mykco since 1 January 2016 are summarised in the table below.

Shares issued prior to the Transaction Agreement.
Description
Date of
Transaction
Number of
Shares Issued
Amount of
Capital Raised
in $
Total
Number of
Shares on
Issue Post the
Relevant
Share Issue
Issue of shares 22 August 2016 3,269,479 $204,342 16,347,395
Issue of shares 13 January 2017 3,269,479 $215,786 19,616,874

Shares to be issued under the Transaction Agreement.
Description - issues of
shares in Mykco to be
made pursuant of the
Transaction Agreement
to the persons listed
below.
Number of
Shares Issued
Amount of
Capital Issued
in $
Total
Number of
Shares on
Issue Post
the Relevant
Share Issue
Borneo Capital Limited 32,540,000 $1,912,800
123,940,114
Brent Douglas King 20,825,600 $1,224,192
Barter Investments
Limited
1,220,250 $71,730
Garth William Ward 1,627,000 $95,640
CFS NBDT Interest
Limited
as General Partner
of the CFS Interest
Limited Partnership
16,270,000 $956,400
Industrie Properties
Limited
5,808,390 $341,435
Baker Investment Trust 4,067,500 $239,100
Sinclair Investment
Trust
4,067,500 $239,100
Harrigens Trustees
Limited
4,067,500 $239,100
Bruce Gregory Speers 4,067,500 $239,100
John Tomson 4,067,500 $239,100
Owen Daji 4,067,500 $239,100
Sumner Family Trust 1,627,000 $95,640

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2.16 No Secretary

Mykco does not have a company secretary. No company secretary has been involved in the
preparation of this Disclosure Document. Mykco intends to appoint Garth William Ward as its
company secretary as from Completion (Garth’s biography appears on page 14).

2.17 Bankers

Except for Brent Douglas King, a Director of Mykco, no bankers have been involved in the preparation
of this Disclosure Document.

2.18 Sharebrokers

Except for Brent Douglas King, a Director of Mykco, no sharebrokers have been involved in the
preparation of this Disclosure Document.

2.19 Solicitors

Mykco’s solicitors, Lowndes Limited, Level 5, Lowndes House, 18 Shortland Street, PO Box 7311,
Auckland have assisted in the preparation of this Disclosure Document.

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3. PURPOSE OF THE TRANSACTION

The purpose of the Transaction is to make Mykco viable again, by effectively turning it into a holding
company for a Mykco Group comprising itself and CHL (an intermediate holding company) and CHL’s
subsidiaries, General Finance, which operates as a finance company, and IRG, which provides financial
advisory services.

The Transaction involves Mykco acquiring shares in CHL in exchange for shares in Mykco. Mykco
would not be raising any money under the transaction. The Transaction is further described in Section
5: Terms of the Transaction.

Mykco is presently a listed shell. Mykco had net assets of $1,152,957, as at 30 September 2017 (30
September 2016: $1,112,839), and cash reserves of $346,388 at that time.
Subsequent to the sale of Mykco’s core business in 2015, Mykco has considered a number of different
investment and capital raising opportunities to utilise Mykco’s NZAX listing and create value for
shareholders.

Mykco has continued to operate as a listed company on a minimal operating budget over the past
12 months. However, the Directors consider that Mykco’s current situation is not sustainable.

On 28 May 2018, Mykco entered into the Transaction Agreement with all the shareholders of CHL
(other than itself) to acquire all the shares in CHL (except for the 100,000 shares it already owns).

In the event the Transaction proceeds, Mykco would own CHL. CHL wholly owns General Finance
and IRG. CHL acquired both these companies on 19 December 2017.

21

The following diagram shows the structure of the Mykco Group on completion of the Transaction:








6












In their report, the Independent Adviser provides summaries of the key positive and negative
aspects of the Transaction. In their report the Independent Advisor refers to Mykco as Mykco
or the Company and to the Transaction as the CHL Transaction (including the CHL Allotment).
The Independent Adviser’s summary includes the following statements concerning the key positive
aspects of the Transaction:

(a) The rationale for the Transaction is sound. It achieves Mykco’s objective of backdoor
listing one or more businesses through its listed shell. Mykco will be transformed into a
listed financial services company operating a finance company and a financial advisory
services business.

(b) The terms of the CHL Transaction are reasonable.

(c) The CHL Transaction will have a significant positive impact on the Company’s financial
performance and financial position.

(d) The main implication of the CHL Transaction Resolution not being approved by Non-
associated Shareholders is that the CHL Transaction cannot proceed. The Company will likely
need to raise additional capital in a relatively short timeframe to fund its current operating
costs and to enable it to continue to seek acquisition opportunities to effect a backdoor listing.
If the Company cannot raise sufficient capital, this may lead to the need to wind up the
Company, in which case the return to the Non-associated Shareholders may be minimal.

The Independent Adviser’s summary of the key negative aspects of the Transaction contains the
following statements:

(a) The risk profile of Mykco will change significant from the limited risks associated with a listed
shell company to the wide range of risks associated with businesses operating in the financial
services sector.

Shares issued to CHL
shareholders
Shares held by Mykco
shareholders prior to
the Transaction
Mykco Limited
84.2% 15.8%
100%
Investment Research
Group Limited
100%
General Finance
Limited
100%
Corporate Holdings
Limited
100%

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(b) Borneo ... and the King Associates ... will both hold significant influence over the outcome of
shareholding voting and exert a high degree of influence over the Company’s board of
directors and the Company’s operations.

(c) A dilutionary impact of the CHL Transaction on the Non-associated Shareholders will result
in their proportionate shareholdings in the Company reducing by 84.2% following the CHL
Allotment.

(d) The attraction of Mykco as a takeover target may diminish.

In its report, the Independent Adviser also states: The CHL Transaction may have some impact on
the liquidity of Mykco’s ordinary shares if some of the CHL shareholders seek to trade their
Consideration Shares (being the shares in Mykco issued to them as consideration for the CHL
Shares in Mykco to be Acquired). However, the number of shares in Mykco held by the Non-
associated Shareholders will not change. It is uncertain as to what price range the shares may
trade at post the CHL Transaction.
In their report, the Independent Adviser reaches the following conclusions in relation to the
Transaction on page 10 of the Independent Adviser Report:

“In our opinion, after having regard to all relevant factors, the positive aspects of the CHL Transaction
(including the CHL Allotment) significantly outweigh the negative aspects from the perspective of the
Non-associated Shareholders”

At page 24 of the Independent Adviser Report, the Independent Adviser states:

“In our opinion, after having regard to all relevant factors, the terms of the CHL Transaction are fair
and reasonable to the Non-associated Shareholders and in the best interests of Mykco given the
options reasonably available to the Company at the current time.”

At page 7 of the Independent Adviser Report, the Independent Adviser issues the following caveat:

“Our opinion should be considered as a whole. Selecting portions of the evaluation without considering
all the factors and analyses together could create a misleading view of the process underlying the
opinion”.

For the Directors’ recommendation relating to the Transaction and their interests in the Transaction
see the heading Directors’ Recommendation on pages 5 to 7 of the Notice of Special Meeting of Mykco
that accompanies this Disclosure Document.

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4. TERMS OF THE TRANSACTION

4.1 Key Terms

The table below sets out the key terms of the Transaction. The Constitution of Mykco sets out the
terms of the ordinary shares in Mykco.

You can find a copy of the Constitution filed on a public register at the Companies Office of the
Ministry of Business Innovation and Employment which is available for public inspection free of charge,
including at https://companies-register.companiesoffice.govt.nz.

The Vendors
Borneo Capital Limited, Brent Douglas King, Barter Investments
Limited, Garth William Ward, CFS NBDT Interest Limited as General
Partner of the CFS Interest Limited Partnership, Industrie Properties
Limited, Baker Investment Trust, Sinclair Investment Trust, Harrigens
Trustees Limited, Bruce Gregory Speers, John Tomson, Owen Daji
and the Sumner Family Trust.
Transaction Agreement
Mykco entered into the Transaction Agreement to purchase all the
shares in CHL except for the 100,000 shares that it already owns.
The Transaction Agreement supersedes the potential transaction
announced to the market on 30 March 2017 (with an update on
20 December 2017).
Purchase Price $6,132,436.80.
Satisfaction of the
Purchase Price
By the issue of 104,323,240 fully paid ordinary shares in Mykco.
Conditions
The Transaction is conditional upon the following Conditions:
(a) Consent of Supervisor: CHL and Mykco approaching and
obtaining the written consent of Covenant Trustee Services
Limited (Supervisor) as supervisor of General Finance under a
Trust Deed dated 2 November 2004 (as amended), to the
Transaction and to continue in their role as supervisor of
General Finance after Completion on terms that are
acceptable to CHL and Mykco (acting reasonably).
(b) Reserve Bank Consent: CHL and Mykco approaching and
obtaining the written consent of the Reserve Bank under
section 43 of the Non-Bank Deposit Takers Act 2013 to the
Transaction on terms that are acceptable to CHL and Mykco
(acting reasonably).
(c) Approvals: Mykco obtaining all shareholder and other
approvals required to implement the Transaction and the
transactions to be entered into pursuant to the Transaction
or contemplated by the Transaction in compliance with the
Companies Act 1993, NZAX Listing Rules, the Takeovers
Code and any other applicable laws and any contracts binding
on Mykco on a basis that is acceptable to CHL and Mykco
(acting reasonably).
The date for satisfaction of the Conditions is 31 July 2018 or such
later date as may be agreed between the parties.

24

Warranties
Under the Transaction Agreement, each of the Vendors warrants that
it owns its shares in CHL, that they are fully paid, and that on
Completion they will pass to Mykco free of encumbrances and rights
of pre-emption. In addition, Brent King in his capacity as a Vendor on
the one hand, and Mykco on the other, provide limited warranties
including as to the accuracy of the information provided prior to
entering into the Transaction Agreement. Each party’s liability under
these warranties is limited to claims brought within 18 months of
Completion and to an aggregate amount in the case of each Vendor
of the purchase price for its Shares in CHL to be Acquired. In relation
to the additional warranties provided by Brent King there is an
additional separate cap of liability equal to the amount of the purchase
price of his Shares in CHL to be Acquired under the Transaction. The
liability of Mykco under its warranties is limited to the amount of the
purchase price payable for the Shares in CHL to be Acquired.
No Change of Directors
of the Mykco Group
intended immediately
Mykco does not intend to make any immediate changes to its Board
or the Board of any members of the Mykco Group immediately
following Completion.
Completion On or before three Business Days after the Conditions are satisfied.
CHL’s subsidiaries General Finance and IRG.
General Finance A non-bank deposit taker, which operates as a finance company.
IRG
A financial advisory company, which is a NZX Sponsor and NXT
Advisor and the publisher of the Investment Yearbook.

4.2 Listing

Mykco is listed on the NZX Alternative Market (NZAX) operated by NZX Limited. The NZAX differs
from the NZX Main Board, also operated by NZX Limited, in the following key respects:

1. There are reduced criteria for listing on the NZAX. There is no requirement for 25% of the
securities of the NZAX issuer to be widely held and no minimum value requirement for an
NZAX listing as applies to NZX Main Board listings. Whilst an NZX Main Board issuer must
have 500 shareholders, an NZAX issuer needs only 50 shareholders. Mykco has 719
shareholders at the date of this Disclosure Document.
2. An NZAX issuer requires an NZAX Sponsor in order to list on the NZAX, whereas NZX
Main Board companies require an Organising Participant.
3. Greater flexibility is accorded by the NZAX Listing Rules to NZAX issuers seeking to raise
capital, buy back securities, and undertake major transactions. The NZAX Listing Rules
provide NZAX issuers with an option to undertake these activities without seeking
shareholder consent, by making an announcement to the market, which discloses fully the
transaction prior to that transaction becoming final.
4. The corporate governance standards for NZAX issuers do not contain all the matters
provided for in the corporate governance standards for NZX Main Board issuers. For
instance, whereas Mykco on the Main Board must have two independent directors, there is
no such requirement for NZAX listed companies.

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4.3 Possible Migration to the NZX Main Board
Mykco is currently listed on the NZAX. NZX Limited announced on 11 April 2018 that it proposes
to move to a single-tier listed market for equity securities. Under the proposals, new rules would
apply from January 2019, but compliance would not be mandatory until 1 July 2019. It is possible that
under grandfathering arrangements Mykco might be given additional time to meet the requirements
of, and apply to migrate to, a restructured single-tier NZX Board for equity securities. However,
there can be no certainty that grandfathering arrangements will apply, so Mykco must plan for the
possibility that 1 July 2019 is the deadline date for complying with the rules for a restructured single-
tier NZX Board for equity securities. To be eligible under the current proposals to apply for migration
to a restructured NZX Main Board, Mykco would need to have a market capitalization of not less
than $15,000,000, at least 300 shareholders, a 20% free float, and at least three directors, two of
whom would need to be independent. The market capitalisation requirement, in particular, is
considerably more stringent than the requirement of the NZAX Listing Rules where there is no
minimum market capitalization requirement. Also the other current requirements of the NZAX
Listing Rules comparable to those under the current NZSX Listing Rules are less stringent i.e. NZAX
listed companies currently only have to have at least 50 shareholders, and at least three directors, but
there is no requirement for independent directors.
If Mykco wishes to migrate to the NZX Main Board under the proposed structure, it will need to
apply to NZX for cancellation of its NZAX listing under NZAX Listing Rule 5.4.1(b), at least one
month prior to the proposed cancellation date. Mykco would also need to hold a meeting of
shareholders to seek approval for changes that would need to be made to its constitution to
incorporate certain NZX Main Board Listing Rules. The notice for that meeting would need to set
out:

(a) Mykco’s intention to delist from NZAX and to relist on the NZX Main Board; and
(b) The key differences between NZAX and the NZX Main Board and the consequences
of those differences for investors.
The Notice of Meeting would need to be provided to NZX Regulation for review and approval. NZX
Regulation would review the Notice to ensure that the explanatory notes to the resolution explain
the costs and benefits of migrating to the NZX Main Board, and also explain the difference in the
regulatory framework, and provide a summary of the NZX Main Board fees.

NZX would determine whether Mykco would need to prepare a listing document, and NZX does this
on a case-by-case basis.

NZX would be likely to require Mykco to prepare a cleansing statement that:

(a) Contains a link to where all announcements released by Mykco on the NZAX can be
accessed; and
(b) Is signed by Mykco’s directors and confirms that the cleansing statement, together
with the information contained in the announcements referred to above, contains all
material information.
Mykco would not be delisted from NZAX until NZX has approved Mykco’s application to be listed
on the NZX Main Board.

Mykco will need to assess its options regarding listing going forward. Mykco might seek to comply
with NZX’s proposals for a restructured single-tier Board for equity securities, and apply for migration
to that Board. Other possibilities are that it might seek to migrate to an unlisted market or to an

26

overseas exchange. Mykco’s intention is that shareholders would continue to have a platform on
which to trade their shares.

27

5. KEY FEATURES OF ORDINARY SHARES IN MYKCO

5.1 General

The key features of ordinary shares in Mykco do not differ from those that apply to ordinary shares
in a company generally.

Each share in Mykco confers on the holder the right to:

1. One vote on a poll at a meeting of shareholders of Mykco;
2. An equal participation with all other existing shareholders in Mykco in any dividend declared;
3. An equal participation with all other shares in Mykco in the residual assets on a liquidation of
Mykco;
4. Be sent reports, notices of meetings and other information sent to Mykco’s shareholders; and
5. All other rights as a shareholder conferred by the Companies Act 1993 and Mykco’s
constitution.
5.2 Dividend Policy
Mykco aims to be a growth company and Mykco’s dividend policy is to not pay a dividend in the
foreseeable future, but this will be reviewed at the end of each financial reporting period, taking into
consideration the financial position, operating performance, cash flow and capital requirements of the
Mykco Group.

However, Mykco can give no assurance as to the frequency or level of any dividend (or other
distributions, if any) payable, or the level or imputation credits, if any, attached. Payment of dividends
is at the discretion of the Directors, and dividends (if any) will be declared only after meeting solvency
requirements. Should Mykco pay dividends, it will expect to pay them on a fully imputed dividend
basis.

5.3 No guarantee of shares
No person guarantees or undertakes any liability in respect of the shares in Mykco or the future value
or performance of them.

5.4 Alteration of Shares
The terms and conditions attaching to Mykco’s shares may only be altered with the approval of a
special resolution of the shareholders of Mykco, subject to the rights of interest groups under the
Companies Act 1993, or in special circumstances by Court order.

A special resolution of shareholders is a resolution that is approved by 75% of the shareholders present
in person or by proxy and voting at a meeting of the shareholders of Mykco.

Section 117 of the Companies Act 1993 restricts a company from taking any action that affects the
rights attached to its shares unless that action has been approved by a special resolution of the
shareholders whose rights are affected by the action. Under certain circumstances a shareholder
whose rights are affected by a special resolution may require Mykco to purchase its shares.

28

5.5 Consequences of Insolvency

Mykco’s shareholders will not be liable to pay any money to any person as a result of the insolvency
of Mykco. All of Mykco’s creditors (secured and unsecured) will rank ahead of shareholder claims if
Mykco is liquidated. After all creditors have been paid any remaining assets will be available for
distribution between all holders of Mykco’s ordinary shares who will rank equally amongst themselves.
There may not be sufficient remaining assets to enable Mykco’s shareholders to recover all or any of
their investment.

5.6 No Trading Restrictions/Controlling Shareholders

As from Completion under the Transaction Agreement, the Vendors will own 86.2% of Mykco’s
expanded shares on issue.

None of the shares owned by the Vendors will be subject to any embargo on sale. One or more of
these shareholders may wish to sell some or all of their shareholdings. Should this happen, then
depending on the level of demand for the shares, the sale could significantly depress the share price.

The major shareholders will collectively have a major influence over matters that require the passing
of ordinary and special resolutions by shareholders unless they are required to abstain from voting by
law and/or NZAX Listing Rules.

5.7 Minimum Holdings

The minimum holding of shares that any shareholder can hold in Mykco (Minimum Holding) is
2,000 shares as at the date of this Disclosure Document.

Under Mykco’s Constitution the Board may at any time give notice to a shareholder holding less than
a Minimum Holding of shares of any class that if at the expiration of 3 months after the date the Notice
is given, the shareholder still holds less than a Minimum Holding of shares of that class the Board may
sell those shares. Where that power of sale arises, Mykco must account to the shareholder for the
net proceeds of the sale (after the deduction of reasonable sale expenses).

29

6. THE MYKCO GROUP’S FINANCIAL INFORMATION

The tables in this section provide key financial information about the Mykco Group. Full financial
statements are available on Mykco’s website atwww.mykco.co.nz. If you do not understand this
financial information, you can seek advice from a financial adviser or accountant.

This Disclosure Document contains prospective financial information, which is based on the Directors’
assessment of events and conditions existing at the date of this Disclosure Document and the
accounting policies and assumptions in connection with that prospective financial information. You
should read the prospective financial information in this Disclosure Document in light of those
assumptions, and in conjunction with the other information in this Disclosure Document (including, in
particular, the information in Section 7: Risks to Mykco Group’s business and plans).

Prospective financial information by its nature involves risks and uncertainties, many of which are
beyond the control of the Mykco Group. The Board believes that the prospective financial information
has been prepared with due care and attention, and considers the assumptions, when taken as a whole,
to be reasonable at the time of preparing this Disclosure Document. Actual results are likely to vary
from the information presented. Results may not occur as expected, and the variations may be
material. Accordingly, neither the Directors nor any other person can provide any assurance that the
prospective financial information will be achieved and investors are cautioned not to place undue
reliance on the prospective financial information.

6.1 Selected Financial Information presented

There are three different types of financial information referred to or presented in this Disclosure
Document:

• Statutory historical financial information.
• Pro forma prospective financial information.
• Statutory prospective financial information.

Statutory Historical Financial Information

Audited financial statements for Mykco for the year ended 31 March 2018 (and the two preceding
financial years ended 31 March 2017 and 31 March 2016) are available on its website at
www.mykco.co.nz.

CHL was not incorporated until 16 March 2017, and did not acquire General Finance and IRG until
19 December 2017. Unaudited financial statements for CHL for the year ended 31 March 2018 are
available on Mykco’s website at www.mykco.co.nz.

Audited financial statements for General Finance for the year ended 31 March 2018 (and the two
preceding financial years ended 31 March 2017 and 31 March 2016) are available on its website at
www.mykco.co.nz.

Unaudited financial statements for IRG for the year ended 31 March 2018 (and the two preceding
financial years ended 31 March 2017 and 31 March 2016) are available on its website at
www.mykco.co.nz.

30

Pro forma Financial Information/Statutory Prospective Financial Information
Pro forma historical consolidated financial statements of Mykco for the year ended 31 March 2018 are
attached as Annexure A to this Disclosure Document. Pro forma prospective consolidated financial
statements for Mykco for the years ended 31 March 2019 and 31 March 2020 are attached as
Annexure B to this Disclosure Document.

The following summaries have been extracted from the statements annexed as Annexures A and B to
this Disclosure Document.
FY2018PF FY2019SPF FY2020SPF

Pro forma,
including CHL
and subsidiaries
Statutory Statutory
(year ended
31 March)
NZ$000
(year ended
31 March)
NZ$000
(year ended
31 March)
NZ$000
Revenues as determined in
accordance with GAAP
1,986,859

2,480,911

5,470,247

Net profit after tax plus interest,
tax, depreciation, and
amortisation as each of those
items is determined in
accordance with GAAP
271,714

930,331

3,691,247

Net profit after tax as determined
in accordance with GAAP
(365,819)

38,641

1,313,112

Dividends on all equity securities
of the issuer
_ _ _
Total assets as determined in
accordance with GAAP
17,756,011

30,789,547

58,415,639

Cash and cash equivalents as
determined in accordance with
GAAP
5,216,677

3,751,799

4,106,490

Total liabilities as determined in
accordance with GAAP
10,431,511

21,710,,173

48,023,153

Total debt (being total interest –
bearing liabilities as determined in
accordance with GAAP)
9,854,092
21,389,195

47,374,470

Net cash flows from operating
activities as determined in
accordance with GAAP
44,682

(14,460,328)

(25,240,805)


See also sections 2.6, 4.5, 4.6, 4.7, 5.4, 5.5 and 5.6 of the Independent Adviser Report for commentary
by the Independent Adviser on Mykco’s financial information.

6.2 Principal Assumptions

Pro-forma financial statements for the year ended 31 March 2018. (FY2018)

These statements assume that the Transaction has been completed, resulting in CHL (and its
subsidiaries General Finance and IRG) becoming subsidiaries of Mykco.

31

Prospective Financial Statements for the year ended 31 March 2019 (FY2019)

Mykco expects net profit after tax to be marginally positive ($38,641) for FY2019. The key factors
that Mykco believes will drive this forecast result are:

• Growth of 24.86% in consolidated revenue driven primarily by the factors listed below.
• Growth of 117.06% in General Finance’s deposit ledger driven primarily by increased advertising
and internet presence, expanding its network of financial advisers, sponsorship of a sporting or
cultural event each year, publication of quarterly newsletters, and improving its website.
• Growth of 169.19% in General Finance’s loan book driven primarily by an expanded and more
committed broker network, more streamlined approval processes and increased loan sizes as net
assets grow i.e. an increase in lending from $8.7 million at the end of FY2018 to $23.4 million at
the end of FY2019 could be achieved by making 16 additional loans where the loan size is $900,000
per loan.
• One off costs associated with the acquisition of CHL not reoccurring.

This is notwithstanding an expected increase of total operating expenses of General Finance from
an average of $498,083 for the three years ending with FY2018 to $760,300 for FY2019 due to
increases in brand advertising, staff and computer systems.


Prospective Financial Statements for the year ended 31 March 2020 (FY2020)

Mykco expects net profit after tax to increase from a forecast $38,641 for FY2019 to $1,313,112 for
FY2020. The key factors that Mykco believes will drive this forecast result are:

• Growth of 120.49% in consolidated revenue driven primarily by the factors listed below.
• Growth of 121.49% in General Finance’s deposit ledger driven primarily by the same factors as in
FY2019.
• Growth of 117.75% in General Finance’s loan book driven primarily by the same factors as in
FY2019, i.e. an increase in lending from $23.4 million at the end of FY2019 to $50.9 million at the
end of FY2020 could be achieved by making 31 additional loans where the average loan size is
$900,000 per loan.

This is notwithstanding an expected increase of total operating expenses of General Finance from
$700,000 for FY2019 to $900,000 for FY2020 due to increases in brand advertising, staff and computer
systems.


Other Principal Assumptions

The following are additional principal assumptions on which the prospective financial statements for
FY2019 and FY2020 are based:

1. Interest rates on loans will decrease from an average of 14.7% over the three years ending
with FY2018 to 12.1% over FY2019 and FY2020.
2. Loan fees on loans will decrease from an average of 2.6% over the three years ending with
FY2018 to 1.92% over FY2019 and FY2020.
3. Interest rates on deposits will average 5.64% over FY2019 and FY2020 compared to 5.67%
over the three years ending with FY2018.
4. Impairment of loan receivables will not increase significantly over FY2019 and FY2020.

32

5. In addition to the deposit growth forecast above Mykco will raise additional cash from share
capital totaling $1,750,000 during FY2019.

6.3 Other Financial Information

Prior to signing and announcing the Transaction Agreement, Mykco was a listed shell.

Pursuant to the Transaction Agreement, and subject to satisfying the Conditions, Mykco is to acquire
CHL on Completion for a purchase price equal to $6,132,436.80 which is to be satisfied by Mykco
issuing 104,323,240 fully paid ordinary shares that will result in the Vendors owning 86.2% of Mykco’s
expanded shares on issue.

The 104,323,240 Mykco Shares to be Issued to the Vendors equates to the 6,412,000 Shares in CHL
to be Acquired, multiplied by 16.27. The multiplier of 16.27 is the number of Mykco Shares to be
issued to the Vendors for each CHL Share to be Acquired. The multiplier of 16.27 represents:
(a) 95.64, being the net assets per share of CHL derived from management accounts of CHL
prepared as at 30 January 2018; divided by
(b) 5.88, being the net assets per share of Mykco as at 30 September 2017 based on unaudited
interim accounts of Mykco as at that date.

Shareholders should note that the CHL asset values were determined by CHL and the CHL accounts
on which the consideration at which the Transaction is completed is determined were prepared by
CHL and no independent assessment of those valuations or accounts has been undertaken prior to
appointing the Independent Adviser to prepare the Independent Adviser Report which did not
independantly review these valuations.

33

7. RISKS TO MYKCO GROUP’S BUSINESS AND PLANS

General
Potential investors should seek financial and legal advice before deciding to acquire shares in Mykco.

The principal risks for shareholders are that:

1. While Mykco is listed on the NZAX market, shareholders may not be able to sell their shares
or, if they can sell them, the price they get for them may be less than the amount paid for
them;
2. The market for shares in Mykco may become volatile, illiquid or cease to exist;
3. Shareholders may not receive the distributions they anticipate receiving from Mykco;
4. The Mykco Group’s operational and financial performance does not reach levels anticipated
by the shareholders, or projected by Mykco and this impacts adversely on the value of Mykco’s
shares and/or any distributions made to shareholders;
5. The Mykco Group’s lenders may take enforcement action under their securities, the amount
recoverable under their securities may be less than what is owing, and Mykco’s shares may
cease to have any value;
6. The Mykco Group may become insolvent and Mykco’s shares cease to have any value.
Specific Risks
Set out below is a description of the circumstances that Mykco is aware of that exist or are likely to
arise that significantly increase the risk to Mykco’s financial position, financial performance and plan.
The risks described below relate to General Finance, which will be Mykco Group’s principal operating
subsidiary, and IRG which will be a subsidiary providing corporate advisory and financial research
financial research services.

General Finance Limited

Loan default risk
This is where a significant amount of the loans, that General Finance has made, are not repaid, or the
security taken for those loan advances is inadequate, and full recovery of the loans is not possible. This
may occur where borrowers to whom General Finance has lent money are, due to a change in their
personal financial situation, unable to meet their loan obligations.

If a number of borrowers defaulted on their loan obligations around the same time, there may be
insufficient funds to fully repay holders of term deposits. At 30 September 2017, General Finance’s
largest six borrowers made up 38.2% of total lending. If all or a majority of these borrowers defaulted
around the same time, this could significantly increase the risk of default on General Finance’s payment
obligations to holders of term deposits.

General Finance is exposed to risks associated with the geographical concentration of its lending. At
30 September 2017, over a third of General Finance’s loan portfolio was concentrated in Auckland. If
any issues arose in the Auckland market (such as a result of a significant fall in prices, or some natural
disaster), this could significantly increase the risk of default on General Finance’s payment obligations
to holders of term deposits.

34


General Finance is also exposed to risks associated with the number of loans that are secured by way
of second mortgage. If the borrower on a second mortgage loan defaults, there is a greater likelihood
that General Finance will lose money because the first mortgage holder has first right to the proceeds
from the sale of the security property. This could significantly increase the risk of default on General
Finance’s payment obligations to holders of term deposits. At 30 September 2017, 5.9% of loans were
secured by way of second mortgage.

General Finance manages loan default risk according to its lending and risk management policies.
General Finance has limits on its exposure to provincial towns and country areas, limits on the
maximum amount that it will lend to any one borrower, and limits on the aggregate loans secured by
way of second mortgages.

Customer and geographical concentration information and the amount of loans secured by way of
second mortgages are detailed in General Finance’s latest financial statements, available on its website
at www.generalfinance.co.nz or on www.companiesoffice.govt.nz/disclose.

Under General Finance’s Trust Deed, General Finance is required to maintain a capital ratio, of not
less that 15% if it does not have a credit rating. General Finance’s capital ratio, at the end of the last
financial year, is detailed in a document called Key ratios and selected financial information, available on
General Finance’s website at www.generalfinance.co.nz or on www.companiesoffice.govt.nz/disclose.

Liquidity risk

General Finance’s ability to meet its payment obligations to holders of term deposits is linked to both
its lending activities and its deposit taking activities.

There is a risk that the duration of General Finance’s term deposits becomes shorter than the duration
of its loans. This is where General Finance lends for longer terms and accepts term deposits for shorter
terms. If this occurred, General Finance may not have sufficient cash liquidity to meet its obligations.
This could significantly increase the risk of default on General Finance’s payment obligations to holders
of term deposits. This risk is managed by General Finance seeking to attract term deposits for terms
of two to three years while making loans for terms of one to two years. General Finance reports on
liquidity to the supervisor monthly.

There is a risk that holders of term deposits may want to have their term deposits repaid before the
maturity date. If this occurred, General Finance may not have sufficient cash liquidity to meet its
obligations. This could significantly increase the risk of default on General Finance’s payment
obligations to holders of term deposits. Generally, General Finance will only agree to early repayment
where, due to unforeseen circumstances, holding the term deposit gives rise to some form of material
hardship (causing a significant adverse impact in the term deposit holder’s personal financial situation).
Early repayment is permitted only rarely.

Many holders of term deposits reinvest for a further term on the maturity of their term deposit. The
rates at which General Finance receives new term deposits, and at which existing holders of term
deposits reinvest, impact on General Finance’s cash flow. General Finance expects a certain level of
reinvestment when planning its cash flow. There is a risk that reinvestment rates and the rate of
investment for new term deposits change adversely. This may be caused by some negative news about
General Finance or the market generally. If this occurred, General Finance may not have sufficient cash
liquidity to meet its obligations. This could significantly increase the risk of default on General Finance’s
payment obligations to holders of term deposits.

There is a risk that borrowers, to whom General Finance has made loans, are not able to meet their
obligations in a timely manner, particularly their principal repayment obligation. Where completion of

35

the purpose, for which the borrower has borrowed, is delayed, the borrower may request that their
loan term be extended. This is considered in a similar manner to the initial loan and if approved, the
borrower’s loan is extended for a further term. If a number of borrowers seeking loan term extensions
increases beyond what General Finance has planned for, it may not have sufficient cash liquidity to
meet its obligations. This could be caused by an economic shock and could significantly increase the
risk of default on General Finance’s payment obligations to holders of term deposits.

General Finance mitigates these risks by maintaining at least 10% of its total tangible assets in cash or
in short term deposits with trading banks.

Under General Finance’s Trust Deed, General Finance is required to maintain a liquidity cover ratio
of not less than 1.25 times, which means that cash and the expected inflow of funds is 1.25 times the
expected outflow of funds. General Finance’s liquidity cover ratio, at the end of the last financial year,
is detailed in a document called Key ratios and selected financial information, available on General
Finance’s website at www.generalfinance.co.nz or on www.companiesoffice.govt.nz/disclose.

Information about loan extensions and reinvestment rates is detailed in General Finance’s latest
financial statements, available on its website at www.generalfinance.co.nz or on
www.companiesoffice.govt.nz/disclose.

IRG

Deal Flow Risk

Corporate Advisory/investment banking is a transactional business. Transactional opportunities can
take considerable time to develop and bring to fruition. They can often depend on levels of business
confidence, or companies wanting or needing to raise capital or engage in M & A activities. Hence
business can be intermittent, and often potential opportunities do not eventuate, notwithstanding
substantial time invested in them. IRG seeks to mitigate this risk by concentrating its activities on
sectors of the market where it has most experience and on prospective parties who have a history of
successful investment activities.

Lack of Appetite for Financial Products

Investors in financial products make their decisions based on a range of factors, most of which are
beyond the control of an advisor. Economic trends, particularly trends in share and bond markets,
tend to be very influential on attitudes to investment. Hence advisors are susceptible to these trends
and investors having discretionary income they wish to invest in financial products. IRG seeks to
mitigate this risk by concentrating its focus on quality financial products that it considers are likely to
appeal to its client base.

Lack of Appetite for Financial Information

Investors vary in their requirements for financial information. Some investors are passive, tending
simply to follow the market, or to provide advisors with discretionary mandates. Others like to
receive financial data to assist them with their decisions. If markets are over weighted with passive
investors there is a risk of a drop in demand for IRG’s financial advisory publications. IRG seeks to
mitigate this risk by encouraging investors to take responsibility for their own investment decisions,
assisted by financial information which IRG looks to provide through its Investment Yearbook and
other regular publications.

36

Regulatory Risk – General Finance and IRG

General Finance and IRG are required to comply with various legal obligations, and any material failure
to comply with these could result in damage to their reputation and or expose them to financial and/or
other penalties. For General Finance this might mean an increase in withdrawal rates and a decrease
in reinvestment rates. For IRG this could mean a loss of corporate advisory and financial research
opportunities. In both cases it might have a material and adverse affect on the financial condition of
General Finance or IRG (as applicable).

Recent examples of major law changes that have imposed significant additional obligations on General
Finance and/or IRG are the Anti-Money Laundering and Countering Finance and Terrorism Act 2009,
the Financial Markets Conduct Act 2013 and the Non-bank Deposit Takers Act 2013. Any change to
existing laws or to the interpretation or enforcement of those laws or the introduction of new laws
can result in additional requirements being imposed on General Finance and/or IRG and/or result in
increased costs for them. For example, over the last 12 to 18 months, regulators have more rigorously
enforced the rules relating to lending fees, particularly the requirement that they must be reasonable.

Forward looking statements
Certain statements in this Disclosure Statement constitute forward looking statements. Such forward
looking statements involve known and unknown risks, uncertainty and other factors which may cause
the actual results, performance and achievements of Mykco to be materially different from any future
results, performance or achievements expressed or implied in such forward looking statements. Such
factors include, among other things, general economic and business conditions, regulatory risk,
competition, labour relations and other factors described in this Disclosure Document.

Given these uncertainties, prospective investors are cautioned not to place undue reliance on such
forward looking statements. In addition, under no circumstances should the inclusion of such forward
looking statements in this Disclosure Document be regarded as a representation or warranty by
Mykco or any other person with respect to the achievement of the results set out in such statements,
or that the underlying assumptions used will in fact be the case. Mykco disclaims any responsibility to
update any such risk factors or publicly announce the result of any revisions to any of the forward
looking statements contained in this Disclosure Document to reflect future developments or events,
other than where they are required to do so by the Financial Markets Conduct Act 2013, the Financial
Markets Conduct Regulations 2014, the NZAX Listing Rules, the Financial Reporting Act 1993 or any
other applicable laws.

37

8. TAX

Tax can have significant consequences for investment.

If an investor has queries relating to the tax consequences of investment in Mykco, the investor should
obtain professional advice on those consequences.

38

9. WHERE YOU CAN FIND MORE INFORMATION

Further information relating to Mykco is available on the public register at the Companies Office at
the Ministry of Business, Innovation and Employment. This information can be accessed on the
Companies Office website at www.business.govt.nz/companies.

Mykco is required to make half yearly and annual announcements to NZX and such other
announcements as required by the NZAX Listing Rules from time to time. You will be able to obtain
this information free of charge by searching under Mykco’s stock code “MYK” on NZX’s website
www.nzx.com.

39

10. CONTACT INFORMATION

Issuer
Mykco Limited


Registered Office
Forest Harrison
Level 9
191 Queen Street
Auckland 1010
New Zealand


Directors who will also be the Directors on Completion of the Transaction
Brent Douglas King, Chair
24 Tuhaere Street
Orakei
Auckland 1071
New Zealand

Lyn Lim (full legal name being Huei Min Lim)
4 Halifax Avenue
Epsom
Auckland 1051
New Zealand

Simon John McArley
91 Crummer Road
Grey Lynn
Auckland 1021
New Zealand

Graeme Iain Brown
34 Ngatoto Street
Ngaio
Wellington 6035
New Zealand

Rewi Hamid Bugo
41 Bampfylde Road
Kuching
Sarawak 93200
Malaysia

40

Auditor
Staples Rodway Auckland
Level 9
Tower Centre
45 Queen Street
Auckland 1010
New Zealand

Share Registrar
Computershare Investor Services Limited,
Level 2,
159 Hurstmere Road,
Takapuna,
Auckland 1142
New Zealand

Investor Inquiries: +64 9 304 0145

Investor Email: investors@mykco.co.nz

Website: www.mykco.co.nz

41

11. GLOSSARY

Aggregate Net Value has the same value as in the NZAX Listing Rules.

Associated Persons has the same meaning as in the NZAX Listing Rules.

Average Market Capitalisation has the same meaning as in the NZAX Listing Rules.

Board means the Directors, acting as a board.

CHL means Corporate Holdings Limited.

CHL Group means CHL, General Finance and IRG.

Code means the Takeovers Code in force pursuant to the Takeovers Code Approval Order 2000.

Companies Act means the Companies Act 1993.

Completion means completion under the Transaction Agreement.

Completion Date means the date for Completion, being on or before three Business Days after
satisfaction of the Conditions.

Conditions means the conditions described on page 23.

Constitution means the Constitution of Mykco.

Directors means the directors of Mykco.

FY2018 means the financial year ending 31 March 2018.

FY2019 means the financial year ending 31 March 2019.

FY2020 means the financial year ending 31 March 2020.

General Finance means General Finance Limited.

Independent Adviser means Simmons Corporate Finance Limited.

Independent Adviser Report means the report of the Independent Adviser commissioned by Mykco to
appraise the Transaction and assess the merits of the issue of shares to be made to the Vendors
pursuant to the Transaction Agreement.

IRG means Investment Research Group Limited.

Major Transaction:
(a) For the purposes of the Companies Act has the same meaning as in the Companies Act;
(b) For the purposes of the NZAX Listing Rules has the meaning set out in Rule 9.1.1(b) of the
NZAX Listing Rules.
Material Transaction has the same meaning as in the NZAX Listing Rules.

Mykco means Mykco Limited.

42


Mykco Group means Mykco and its subsidiaries from time to time.

Mykco Shares to be issued to the Vendors means the shares to be issued to the Vendors under the
Transaction Agreement.

NZAX means the alternative market operated by NZX.

NZAX Listing Rules means NZAX’s listing rules.

NZX means NZX Limited.

Purchase Price means $6,132,436.80.

Related Party has the same meaning as in the NZAX Listing Rules.

shareholders means the shareholders of Mykco.

shares means ordinary shares in Mykco.

Shares in CHL to be Acquired means all 6,512,000 shares in CHL, except for the 100,000 shares already
owned by Mykco.

Takeovers Code means the Takeovers Code enforced pursuant to the Takeovers Code Approval Order
2000.

Trading Day means any day on which ordinary shares in Mykco are traded on NZAX.

Transaction means the transaction whereby Mykco:

(i) Acquires all the 6,412,000 Shares in CHL to be Acquired for the Purchase Price; and
(ii) Satisfies the Purchase Price by issuing the 104,323,240 Mykco Shares to the issued to the
Vendors.
Transaction Agreement means a conditional agreement for Mykco:
(i) To purchase the CHL Shares to be Acquired; and
(ii) To issue the Mykco Shares to be issued to the Vendors
being an agreement made, inter alia, between Mykco as purchaser and the Vendors as vendors.

Vendors means the shareholders of CHL, except for Mykco.

43

12. DIRECTORS’ CERTIFICATE

We refer to the Notice of Meeting and Disclosure Document relating to a Special Meeting of
Shareholders to be held on 31 July 2018.

We, the persons signing this Disclosure Document, being the Disclosure Document referred to in the
previous paragraph, after due inquiry by us, certify that:

1. All material information relating to Mykco, the Transaction, the Mykco Group upon
completion of the Transaction, the shares of Mykco, and the business of Mykco and the Mykco
Group upon completion of the Transaction is set out in the Notice of Meeting and this
Disclosure Document;
2. All the information contained in the Notice of Meeting and this Disclosure Document is
complete and accurate in all material respects, and neither the Notice of Meeting nor this
Disclosure Document contains any material that is false, or untrue, or is likely to deceive or
mislead, with regard to any particular that is material to Mykco, the Transaction, the Mykco
Group upon completion of the Transaction or the shares of Mykco; and
3. In the period between 31 March 2018 and the date of this Disclosure Document, there have
not, in our opinion, arisen any circumstances that materially affect:
(a) The trading or profitability of Mykco or the Mykco Group upon completion of the
Transaction; or
(b) The value of the assets of Mykco or the Mykco Group upon completion of the
Transaction; or
(c) The ability of Mykco or the Mykco Group upon completion of the Transaction to pay
its liabilities due within the next twelve months,
that is not disclosed in this Disclosure Document.



Signed by all the Directors of Mykco who
will also be Directors of Mykco on Completion
of the Transaction:




Brent Douglas King Graeme Iain Brown




Lyn Lim (Full legal name Huei Min Lim) Rewi Hamid Bugo





Simon John McArley

44

15. APPENDIX A – MYKCO: PRO FORMA HISTORICAL CONSOLIDATED
FINANCIAL STATEMENTS AS AT 31 MARCH 2018

1
MYKCO LIMITED
Pro Forma Consolidated Financial information
For the years ended 31 March 2016, 2017 and 2018
1.LEGAL ENTITY
REPORTING ENTITY
2.BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The accounting policies assumed in the Pro Forma Consolidated Financial Statements reflect the policies
expected to be adopted by the Group in the actual Financial Statements for the year ending 31 March 2019.
The Pro Forma Financial Statements for were prepared by the Company's management for the Directors to
be used in the Disclosure Document and not for any other purpose.
The Pro Forma information included below is for the legal entity Mykco Limited (the “Company”)(Mykco), a
company incorporated and domiciled in New Zealand and registered under the Companies Act 1993 and its
proposed subsidiaries. The company is listed on the Alternative Market of the New Zealand Stock
Exchange (“NZAX”).
For financial reporting purposes aspects of "reverse acquisition" accounting are relevant and the accounting
rules require that CHL is treated as the acquirer of Mykco. The Pro Forma Consolidated Financial
Statements are prepared assuming a "reverse acquisition" and are issued under the name of the legal
parent (Mykco), but described as a continuation of the financial statements of CHL (Group).
The Pro Forma Consolidated Financial Statements have been prepared for the years ended 31 March
2016, 31 March 2017 and 31 March 2018 as if Mykco had acquired the shares in Corporate Holdings
Limited on or before 1 April of the respective years and Corporate Holdings Limited had acquired General
Finance Limited and Investment Research Group Limited on or before 1 April of the respective years.
The Pro Forma Consolidated Financial Statements have been prepared from the the following financial
statements:
- Mykco Limited Audited Financial Statements for years ended 31 March 2016, 2017 and 2018.
- Corporate Holdings Limited Unaudited Financial Statements for the year ended 31 March 2018.
- General Finance Limited Audited Financial Statements for yeasr ended 31 March2016, 2017 and 2018.
- Investment Research Group Limited Unaudited Financial Statements for the years ended 31 March
2016, 2017 and 2018.
The company has made an offer for all the shares of Corporate Holdings Limited (CHL) that it does not
already own. The purchase of the shares in CHL is to be settled by the issue of ordinary shares of Mykco
Limited as described in the Disclosure Document that has been prepared for the shareholders of Mykco
Limited. The Disclosure Document has been prepared as required by the NZAX listing rules and may not be
suitable for any other purpose.
Corporate Holdings Limited is a holding company with the following wholly owned trading subsidiaries:
- General Finance Limited (acquired on 19 December 2017)
- Investment Research Group Limited (acquired on 19 December 2017)