MOA – Waiver from NZX Listing Rules 4.2.2 and 4.16.2(b)

NZX Regulation Decision
MOA Group Limited (
MOA
)
Application for waivers from NZX Listing Rules 4.2.2 and
4.16.2(b)







4 October 2019

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Background
1. NZX has updated the NZX Listing Rules, effective from 1 January 2019 (
Rules
). This waiver
decision re-documents the prior waiver decision granted by NZX Regulation (
NZXR
) dated
21 February 2019 to reflect the updated Rule references.
2. The information on which this decision is based is set out in Appendix One to this decision.
These waivers will not apply if that information is not, or ceases to be, full and accurate in all
material respects.
3. The Rules to which this decision relates are set out in Appendix Two.
4. Capitalised terms that are not defined in this decision have the meanings given to them in
the Rules.

Waiver from Listing Rules 4.2.2 and 4.16.2
Decision
5. Subject to the conditions set out in paragraph 6 below, and on the basis that the information
provided by MOA is complete and accurate in all material respects, NZXR grants MOA a
waiver from Rules 4.2.2 and 4.16.2 to the extent that these Rules would otherwise require
MOA to issue or acquire the consideration Shares within the 12 months following
shareholder approval for the allotment or redemption.
6. The waiver in paragraph 5 above is provided on the conditions that:
a. Any Shares issued as partial satisfaction of the Additional Payment are issued within
25 months of Completion;
b. Any Shares issued as partial satisfaction of an upwards Earn-out Adjustment are
issued within 25 Business Days of the date following the end of the first two full
financial years after Completion;
c. Any Shares acquired as partial satisfaction of a downwards Earn-out Adjustment are
acquired and cancelled within 25 Business Days of the date following the end of the
first two full financial years after Completion;
d. The Timing Waivers, and MOA’s reliance on the waivers, is disclosed in MOA’s annual
reports during the period MOA is reliant on the waiver; and
e. The Timing Waivers, and MOA’s reliance on the waivers, is disclosed in any Offering
Document that MOA publishes during the period MOA is reliant on the waiver.
Reasons
7. In coming to the decision to provide the waiver set out in paragraph 6 above, NZXR has
considered that:
a. The purpose of Rules 4.2.2 and 4.16.2 is to ensure that Issuers do not unduly delay the
issue or acquisition of Securities for which they have received shareholder approval.
This mischief is not present where:

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i. the number of shares to be issued or acquired in the future is determined by an
objective formula; and
ii. the possibility of issuing or acquiring the securities is clearly disclosed by MOA
during the period MOA is reliant on the Timing Waivers.
b. MOA’s shareholders have had the opportunity to vote on whether or not to approve the
Proposed Transaction at a special meeting. The notice of special meeting clearly
explained the Proposed Transaction as well as the Timing Waivers granted by NZX on
21 February 2019. In particular, it was clear that the allotment and/or acquisition of
Shares would take place later than 12 months after the date of the meeting, and that
MOA has been granted a waiver from the timeframes under the Rules;
c. The issue of Additional Payment Shares is conditional on the Vendors achieving certain
agreed commercial milestones to the Purchaser’s satisfaction in the 12-24 months
following Completion. It will therefore not be known if the Additional Payment Shares
are to be issued within the 12 months following shareholder approval of the issue;
d. The issue, or acquisition and cancellation, of Shares pursuant to the Earn-out
Adjustment is dependent on the financial performance of the sale businesses in the two
financial years following Completion. It will therefore not be known if any Shares are to
be issued, or acquired and cancelled, pursuant to the Earn-out Adjustment within the 12
months following shareholder approval of the issue or acquisition;
e. MOA has submitted, and NZXR has no reason not to accept:
i. that it is common for commercial transactions of this nature to include both
contingent consideration such as the Additional Payment, as well as earn-out
mechanisms designed to adjust the purchase price depending on the actual
performance of the business being acquired;
ii. the timeframes agreed for the Additional Payment and Earn-out Adjustment are
typical for this type of transaction; and
iii. The agreed timeframes allow MOA’s Board sufficient time to determine whether
the achievement of the commercial milestones will lead to the business
outcomes required in order for the Additional Payment to become payable.
f. The issue or acquisition of Shares pursuant to the Earn-Out Adjustment will be
determined based on an objective formula, which will be set out in the notice of special
meeting;
g. The Timing Waivers, and MOA’s reliance on the Timing Waivers, will be clear to future
MOA shareholders as it will be disclosed in MOA’s Annual Reports and any Offering
Document published during the period MOA is reliant on the Timing Waivers; and
h. There is precedent for waivers of Rule 4.2.2.

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Appendix One
1. Moa Group Limited (
MOA
) is a Listed Issuer with ordinary shares (
Shares
) Quoted on the
NZX Main Board.
2. On 21 December 2018, MOA announced that it had entered into a conditional agreement to
acquire eleven Auckland hospitality businesses (the
Savor Group Businesses
)
(
Transaction
). MOA has entered into the Transaction via Savor Group Limited, a wholly
owned subsidiary incorporated for the purposes of the Transaction (
Purchaser
).
3. The Transaction is governed by six separate sale and purchase agreements, with different
vendors, although all corporate vendors are majority owned and controlled by Lucien Law
and/or Paul Robinson (
Vendors
). The Transaction was completed on 1 April 2019
(
Completion
).
4. The consideration for the Transaction is as follows:
a) At Completion, the Purchaser paid the Vendors an initial purchase price of $13 million
(Initial Purchase Price) by way of a 60/40 split of cash and ordinary MOA Shares;
b) Subject to the Vendors achieving certain agreed commercial milestones within 24
months of Completion, and MOA’s Board being satisfied that the achievement will lead
to certain business outcomes, the Purchaser will, 12-24 months from Completion, pay
the Vendors up to $5.4 million (Additional Payment) by way of a 60/40 split of cash and
Shares; and
c) A further adjustment will be made following Completion, depending on the financial
performance of the Savor Group Businesses over the first two financial years (years
ending 31 March 2020 and 31 March 2021) (Earn-out Adjustment). The Earn-out
Adjustment may result in up to $3 million of Shares being issued to the Vendors, or up to
$3 million of Shares which were issued in satisfaction of the Initial Purchase Price being
transferred from the Vendors to MOA, and cancelled on acquisition.
5. MOA obtained shareholder approval on 12 March 2019 for the Transaction as it is a Major
Transaction under the NZX Listing Rules (
Rules
).
6. MOA has also obtained shareholder approval:
a) for the issue of Shares to be issued as consideration for the Transaction; and
b) to cancel any Shares that are transferred back to MOA in the event of a downwards
Earn-out Adjustment.
7. Any shares issued as partial satisfaction of the Additional Payment would be issued 12-24
months from Completion. If the Additional Payment becomes payable, payment by MOA
would be due promptly, so the latest possible date for the issue of such shares would
therefore be 24 months from Completion (in practice this might be a few working days
after).
8. Any Shares issued in satisfaction of an upwards Earn-out Adjustment would be issued
within 25 business days of the date following the end of the first two full financial years after
Completion (therefore any such Shares would be issued within 25 business days of 31
March 2021).

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9. If, pursuant to a downwards Earn-out Adjustment, the Vendors are required to transfer
Shares back to MOA, MOA intends to cancel those Shares upon acquisition. If any such
Shares are required to be transferred to MOA, the transfer will take place within the same
timeframe described above.
10. MOA has applied for a waiver from Rules 4.2.2 and 4.16.2 to enable it to satisfy the
consideration required by the Transaction without having to seek future shareholder
approval. In particular, MOA requests a waiver from those Rules as they apply with respect
to the:
a) issue of Shares as partial satisfaction of the Additional Payment (Additional Payment
Shares);
b) issue of Shares as satisfaction of an upwards Earn-out Adjustment; and
c) acquisition of Shares as satisfaction of a downwards Earn-out Adjustment.
(together, Timing Waivers).

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Appendix Two
Rule 4.2.2
An issue of Equity Securities authorised under Rule 4.2.1 must be completed within:
(a) 36 months after the passing of those resolutions, if the issue is restricted to Employees,
and
(b) 12 months after the passing of those resolutions in all other circumstances,
otherwise the issue cannot occur until further approval is obtained under Rule 4.2.1.

Rule 4.16.2
A transaction authorised by resolutions passed under Rule 4.16.1 must be completed:
(a) within 36 months if transacted only with Employees, and
(b) within 12 months in all other circumstances,
otherwise the transaction cannot occur until further approval is obtained under Rule 4.16.1.