Notice of Annual Meeting and Independent Appraisal Report
LODGE YOUR PROXY
Online:
https://investorcentre.linkmarketservices.co.nz/Voting/BGI
Scan & email:
meetings@linkmarketservices.com
Deliver: Mail::
Link Market Services Limited Use the enclosed reply
Level 30 envelope or address to:
PwC Tower Link Market Services
15 Customs Street West PO Box 91976
Auckland 1010 Auckland 1142
Scan this QR code with your smartphone and vote online
General Enquiries
+64 9 375 5998 | enquiries@linkmarketservices.com
PROXY FORM/ADMISSION CARD FOR BLACKWELL GLOBAL HOLDINGS LIMITED’S 2022 ANNUAL MEETING
The Annual Meeting of Shareholders of Blackwell Global Holdings Limited (the “Company”) will be held online on 22 September 2022 commencing at
1.30pm (New Zealand time). To participate in the meeting online please use the following link to BGI’s virtual meeting Zoom platform:
https://us02web.zoom.us/j/87194200168?pwd=a2NscW1ENS85cnhBbldnZ3Q1NHZGQT09
Meeting ID: 871 9420 0168
Passcode: 123123
Shareholders are encouraged to vote via their proxy form before the meeting.
If you will not attend the Meeting online, but wish to be represented by proxy, please complete and return this form (in accordance with the lodgement
instructions above) to Blackwell Globals’ Share Registry, Link Market Services, by no later than 1.30pm on 20 September 2022. You can also appoint
your proxy and vote on the resolutions on the reverse of this form online by going to https://investorcentre.linkmarketservices.co.nz/voting/BGI or by
scanning the QR code above with your smartphone.
Appointment of proxy
The Chairman of the Meeting is willing to act as proxy for any shareholder who wishes to appoint him for that purpose.
If, in appointing a proxy, you do not name a person as your proxy but they otherwise complete the proxy form in full, or your named proxy does not attend
the meeting, Mr Sean Joyce will act as your proxy and will vote in favour of all resolutions. Mr Sean Joyce, when acting as your proxy, must only vote in
accordance with your express directions and not vote on a resolution and such resolution is subject to a voting restriction that applies to the proxy.
Voting of your holding
If you appoint a proxy you must either direct the proxy how to vote by ticking the “For”, “Against” or “Abstain” box in respect of each resolution OR by
ticking the “Proxy Discretion” box in respect of each resolution. A shareholder can direct the proxy holder in respect of one or more resolutions and give
the proxy holder discretion in respect of other resolutions. If you tick the “Proxy Discretion” box for a particular resolution, your proxy will decide how to
vote that resolution. If a shareholder does not tick any boxes in respect of a resolution then the proxy may vote as he/she thinks fit or abstain from voting,
unless specifically restricted from voting on that resolution.
Voting Restrictions
Blackwell Global Group Limited and its “Associated Persons” (as defined in the NZX Listing Rules), including Director Kaw Sing Chai (Michael Chai), are
restricted from voting on resolution 3, referred to in the Notice of Annual Meeting, but may act as a proxy or voting representative for a person who is
qualified to vote on that resolution, in accordance with that person’s express instructions.
Signing instructions for proxy forms
Individual
Where the holding is in one name, the shareholder must sign the Proxy Form.
Joint Holding
If you are joint holders of shares, either of you may sign this Proxy Form. If the shareholder is a company, this Proxy Form must be signed on behalf of
the company by a person acting under the company’s express or implied authority.
Power of Attorney
If this Proxy Form has been signed under a power of attorney (“POA”), a copy of the POA (unless already noted by the company or its registry) and a
signed certificate of non-revocation of the POA must be produced to the company with this form.
Corporate Shareholder
Any corporation that is a shareholder of the Company may appoint a person as its representative to attend the meeting and vote on its behalf, in the same
manner as that in which it could appoint a proxy.
Go online to https://investorcentre.linkmarketservices.co.nz/voting/BGI to vote or turn over to complete the Proxy Form
PROXY/CORPORATE REPRESENTATIVE FORM
STEP 1: APPOINT A PROXY TO VOTE ON YOUR BEHALF
I/We being a shareholder/s of Blackwell Global Holdings Limited hereby appoint:
_________________________________________________________at ____________________________________________________
(Full Name) (E-mail address)
Or ________________________________________________________at ____________________________________________________
(Full Name) (E-mail address)
as my/our proxy to vote for me/us on my/our behalf at the Annual Meeting of the Company to be held online on 22 September 2022 at 1.30pm
and at any adjournment of that meeting.
STEP 2: ITEMS OF BUSINESS – PROXY VOTING INSTRUCTIONS
Complete this part if you have appointed a proxy above and you want to direct the proxy as to how the proxy should vote.
Please note: For each resolution you must tick one box.
ORDINARYBUSINESS
To consider and, if thought fit, pass the following ordinary resolutions:
Tick () in box to vote
Ordinary Business
For Against Abstain
1
Discretion
2
1. That Mr Kaw Sing Chai, who retires in accordance with the provisions of the Constitution
of the Company and, being eligible, offers himself for re-election as a Director of the
Company.
2. To record the appointment of William Buck Audit (NZ) Limited as Auditors of the
Company under section 200 of the Companies Act, and to authorise the Board to fix
their remuneration for the forthcoming year.
3. To approve:
(a) extension of the maturity date of the secured bonds issued by the Company to
31 December 2023; and
(b) the issue of 100,000,000 ordinary shares in the Company to Blackwell Global
Group Limited, being the majority shareholder of the Company at a price of
$0.0045 per share, to be satisfied by capitalising $450,000 of its secured bonds,
as explained further in the explanatory notes
And to vote on any resolutions to amend any of the resolutions, on any resolution so amended, and on any other resolution proposed at the meeting (or
any adjournment thereof). Unless otherwise instructed as above, the proxy will vote to abstain from voting on each resolution. The proxy is appointed only
in respect of the above meeting or any adjournment thereof.
1
If you mark the ‘Abstain’ box for a particular resolution, you are directing your proxy NOT to vote on that resolution. If a proxy does not vote on your
behalf on a resolution, your votes will not be counted when calculating the majority of that resolution.
2
If you tick the ‘Proxy Discretion’ box for a particular resolution, you are directing your proxy to decide how to vote on that resolution on your behalf.
STEP 3: SHAREHOLDER QUESTIONS
Shareholders present at the Annual Shareholders’ Meeting will have the opportunity to ask questions during the meeting. If you cannot attend
but would like to ask a question, you can submit a question online by going to https://investorcentre.linkmarketservices.co.nz/voting/BGI and
completing the online validation process or complete the question section below and return to Link Market Services. Questions will need to be
submitted by 5pm on 21 September 2022. The Board will address and answer questions during the meeting.
STEP 4: SIGNATURE OF SHAREHOLDER(S) This section must be completed
Shareholder 1 Shareholder 2 Shareholder 3
or duly authorised officer or attorney or duly authorised officer or attorney or duly authorised officer or attorney
Contact Name _________________________________________Contact Daytime Telephone ______________________Date ____________
Electronic Investor Communications: If you received the Notice of Meeting and Proxy Form by mail and wish to receive your future
investor communications by email please provide your email address below.
Question:
---
Blackwell Global Holdings Limited
Independent Appraisal Report
In respect of:
− The proposed extension and capitalisation of secured bonds held by
Blackwell Global Group Limited
31 August 2022
Statement of Independence
Armillary Limited, trading as Armillary Private Capital, confirms that it:
− Has no conflict of interest that could affect its ability to provide an unbiased Report; and
− Has no direct or indirect pecuniary or other interest in the proposed transaction considered in this
Report, including any success or contingency fee or remuneration, other than to receive a fixed
fee for providing this Report.
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Table of Contents
1. Glossary of Defined Terms ............................................................................ 3
2. Introduction ................................................................................................... 5
3. Evaluation of the Fairness of the Bond Transaction for the Purposes of
the NZX Listing Rules .................................................................................... 10
4. Profile of BGI ................................................................................................ 23
5. Sources of Information, Reliance on Information, Disclaimer and
Indemnity ..................................................................................................... 30
6. Qualifications, Independence, Declarations and Consents ................ 33
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1. Glossary of Defined Terms
In this Report the following terms have the following meanings unless otherwise
specified:
Armillary Private
Capital
Armillary Limited
BGGL Blackwell Global Group Limited
BGGL Associates Blackwell Global Group Limited and Kaw Sing (Michael)
Chai
BGI Blackwell Global Holdings Limited
Board The Board of Directors of Blackwell Global Holdings Limited
Bonds The secured bonds issued by Blackwell Global Holdings
Limited, which are held by Blackwell Global Group Limited
Bond Capitalisation The capitalisation of $450,000 principal amount of the
Bonds for an issue of 100,000,000 fully paid ordinary shares
in BGI to be completed on 17 October 2022
Bond Extension The extension of the Bonds maturity date to 31 December
2023
Bond Resolution A resolution to approve the Bond Capitalisation and the
Bond Extension
Bond Transaction The Bond Capitalisation and the Bond Extension
collectively
Company Blackwell Global Holdings Limited
DOCA Deed of Company Arrangement
Issue Price The issue price of $0.0045 per ordinary share
Mr. Chai Kaw Sing (Michael) Chai, a director and substantial
product holder of ordinary shares in Blackwell Global
Holdings Limited
Non-Associated
Directors
The Company’s directors not associated with Blackwell
Global Group Limited and Kaw Sing (Michael) Chai
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Non-Associated
Shareholders
The Company’s shareholders not associated with Blackwell
Global Group Limited and Kaw Sing (Michael) Chai
NTA Net Tangible Assets
NZX NZX Main Board financial product market operated by NZX
Limited
Share Fully paid ordinary share in Blackwell Global Holdings
Limited
Report This Independent Appraisal Report
RTO A reverse takeover transaction
Takeovers Code New Zealand’s takeovers legislation
VWAP Volume weighted average price
Except where indicated otherwise all $ references are to New Zealand dollars.
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2. Introduction
2.1. Background
Blackwell Global Holdings Limited (“BGI” or the “Company”) is a New Zealand
incorporated holding company.
On 18 January 2021 BGI announced that it had decided to wind down its finance
company operation and explore alternative business opportunities via a potential
reverse takeover transaction (“RTO”). As at March 2022 the final outstanding loan
in BGI’s loan book was repaid which effectively completed the wind down of its
finance company operation.
BGI’s fully paid ordinary shares (“Shares”) are listed on the NZX Main Board
financial product market operated by NZX Limited (“NZX”) with a market
capitalisation of approximately $2.3 million as at 1 August 2022. With audited
Shareholders’ Funds as at 31 March 2022 of approximately $0.2 million, BGI is now
essentially a shell company that is actively looking to identify a suitable business
to invest in and/or acquire through an RTO.
Further information on the Company is set out in section 4.
2.2. Bond Capitalisation and Bond Extension
BGI is 66.7% owned by Blackwell Global Group Limited (“BGGL”). BGGL currently
holds $1,000,000 of secured bonds issued by BGI (the “Bonds”). Further details on
the Bonds are discussed in section 4.3.
On 25 July 2022 BGI announced that its directors not associated with BGGL
(“Non-Associated Directors”) had agreed with BGGL, subject to shareholder
approval, that:
− BGGL shall extend the maturity date of the Bonds to 31 December 2023
(“Bond Extension”) and will not call for repayment of the Bonds prior to
that date except in the event that BGI was placed in liquidation or
through the capitalisation referred to below; and
− BGGL will capitalise $450,000 principal amount of the Bonds at an issue
price of $0.0045 per new Share (for an issue of 100,000,000 new Shares)
(“Issue Price”) on 17 October 2022 (“Bond Capitalisation”).
We refer to the Bond Extension and the Bond Capitalisation collectively as the
“Bond Transaction”.
Assuming shareholder approval is granted, and the Bond Transaction is
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implemented, BGI would retain $550,000 principal amount of the Bonds on issue
with a maturity date of 31 December 2023.
2.3. Blackwell Global Group Limited
BGGL is BGI’s largest shareholder holding 382,929,770 Shares, or 66.7% of the
Shares on issue as at 1 August 2022.
BGGL is a company incorporated and registered in the Cayman Islands. We
understand BGGL has several subsidiaries, all of which provide financial services
such as the issuing and trading of derivatives. BGGL has operations in Cambodia,
China, Cyprus, Hong Kong and the UK.
BGGL is 100% owned by Kaw Sing (Michael) Chai (“Mr. Chai”), who is also BGI’s
second largest shareholder and a non-executive director of the Company. As at
1 August 2022, Mr. Chai held 55,871,667 Shares, representing 9.7% of Shares on
issue.
Mr. Chai is the founder and CEO of BGGL and with over a decade of experience
in forex and derivatives trading has overseen the inception of Blackwell in New
Zealand and its other global operations.
We refer to BGGL and Mr. Chai as the “BGGL Associates”. Combined, the BGGL
Associates held 438,801,437 Shares, representing 76.5% of the Shares on issue as at
1 August 2022.
2.4. Impact on Ownership
BGI shareholders not associated with the BGGL Associates (“Non-Associated
Shareholders”) collectively held 134,957,622 Shares, representing 23.5% of the
Shares on issue as at 1 August 2022.
If the Bond Capitalisation is approved by the Non-Associated Shareholders and
implemented by the Company, BGI would have 673,759,059 Shares on issue:
− 134,957,622 held by the Non-Associated Shareholders, representing 20.0%
of the Shares on issue; and
− 538,801,437 held by the BGGL Associates, representing 80.0%. This would
be split into 482,929,770 Shares held by BGGL (71.7% of the Shares on issue)
and 55,871,667 (8.3% of the Shares on issue) held directly by Mr. Chai.
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We note that the Bond Extension will not have any impact on the ownership of
BGI.
2.5. Regulatory Requirements
2.5.1. NZX Listing Rules
NZX Listing Rule 5.2.1 stipulates that an Issuer must not enter into a Material
Transaction (as defined in the NZX Listing Rules) if a Related Party (as defined in
the NZX Listing Rules) is, or is likely to become a direct party to the Material
Transaction, unless that Material Transaction is approved by an ordinary resolution
(such resolution being subject to the voting restrictions in NZX Listing Rule 6.3) or
conditional on such approval.
The Bond Transaction is a Material Transaction as it has an aggregate value
above 10% of BGI’s Average Market Capitalisation (as that term is defined in the
NZX Listing Rules).
BGGL is a Related Party of the Company as it has a relevant interest in more than
10% of the Shares on issue.
NZX Listing Rule 7.8.8(b) requires an Appraisal Report to be prepared where a
meeting will consider a resolution required by NZX Listing Rule 5.2.1.
Listing Rule 4.1.1 stipulates that except as provided for in Listing Rule 4.1.2 (none of
which apply in the case of the Bond Transaction) an Issuer must only issue Equity
Securities (as that term is defined in the NZX Listing Rules) with approval by an
ordinary resolution in accordance with Listing Rule 4.2.1.
Where a meeting will consider a resolution of the nature referred to in Listing Rule
7.8.4 (i.e. in respect of the issue of Financial Products (as that term is defined in the
NZX Listing Rules)) Listing Rule 7.8.5 (b) requires an Appraisal Report to be
prepared if more than 50% of the Financial Products to be issued are intended or
New Shares
Issued
Holder
No. of shares
%
No. of shares
%
BGGL
382,929,770
66.7%
100,000,000
482,929,770
71.7%
Mr. Chai
55,871,667
9.7%
–
55,871,667
8.3%
BGGL Associates
438,801,437
76.5%
100,000,000
538,801,437
80.0%
Non-Associated shareholders
134,957,622
23.5%
–
134,957,622
20.0%
Total
573,759,059
100.0%
100,000,000
673,759,059
100.0%
Source: BGI Share Register
Summary of
Pro-Forma
Share Ownership Impact of the Bond Transaction
Pre Bond Transaction
Post Bond Transaction
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likely to be acquired by Directors or Associated Persons of Directors.
BGGL is an Associated Person of Mr. Chai, a director of the Company, and so an
Appraisal Report is required as BGGL will be acquiring 100% of the Shares to be
issued pursuant to the Bond Capitalisation.
2.5.2. Takeovers Code
Under New Zealand’s takeovers legislation (the “Takeovers Code”) shareholders
holding 20% or more of the voting rights in a code company (as that term is
defined in the Takeovers Code) are restricted from increasing their shareholding
without either making a full, or partial, acquisition offer or with shareholder
approval (via an ordinary resolution of the code company).
The Takeovers Code also provides for a holder of more than 50%, but less than
90%, of the voting rights in a code company to increase their holding by no more
than 5% within a 12-month period under Rule 7(e) of the Takeovers Code.
Under the proposed Bond Capitalisation BGGL would increase its shareholding
from 66.74% to 71.68%, representing a 4.94% increase. Therefore, there are no
regulatory requirements arising from the Takeovers Code in respect of the Bond
Transaction.
2.6. Annual Meeting
BGI’s Annual Meeting of shareholders is expected to be held in late September. In
addition to resolutions in respect of re-election of Mr. Chai and remuneration of
the auditors, shareholders will be asked to vote on a single resolution that seeks
approval to:
− extend the maturity date of the Bonds to 31 December 2023; and
− issue 100,000,000 new Shares to BGGL at the Issue Price, to be satisfied by
capitalising $450,000 of the Bonds.
We refer to this resolution as the “Bond Resolution”. The Bond Resolution is an
ordinary resolution which can be passed by a simple majority of votes of those
shareholders entitled to vote and who vote on the resolution (i.e. the Non-
Associated Shareholders).
In accordance with NZX Listing Rule 6.3.1 the BGGL Associates and any other
Associated Party (as defined in the NZX Listing Rules), are not entitled to vote on
the Bond Resolution. We understand that other than BGGL and Mr. Chai there are
no other Associated Parties not entitled to vote on the Bond Resolution.
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2.7. Purpose of the Appraisal Report
NZX Listing Rule 7.10.2 requires an Appraisal Report to consider whether or not, in
the opinion of the appraiser, the terms and conditions of the Bond Transaction
are fair to the holders of equity securities other than the BGGL Associates, and the
supporting reasons for that opinion.
The Non-Associated Directors engaged Armillary Limited (“Armillary Private
Capital”) to prepare this Appraisal Report (“Report”) on the fairness of the Bond
Transaction.
Armillary Private Capital was approved by NZ RegCo on 27 July 2022 to prepare
this Report.
Armillary Private Capital has addressed this Report to the Non-Associated
Directors, for the benefit of the Non-Associated Shareholders of BGI to assist them
in forming their own opinion on whether to vote for or against the Bond
Resolution.
This Report is not to be used for any other purpose without our prior written
consent.
We note that each shareholder’s circumstances and objectives are unique.
Accordingly, it is not possible to report on the fairness of the Bond Transaction in
relation to each individual shareholder. This Report on the fairness of the Bond
Transaction is therefore necessarily general in nature.
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3. Evaluation of the Fairness of the Bond
Transaction for the Purposes of the NZX Listing
Rules
3.1. Basis of Evaluation
NZX Listing Rule 7.10.2 requires an Appraisal Report to consider whether the terms
and conditions of the Bond Transaction are fair to the Non-Associated
Shareholders.
There is no legal definition of the term “fair” in New Zealand in either the NZX
Listing Rules or in any legislation dealing with securities or commercial law. It is
generally considered that an assessment of the fairness of a transaction, as
required under NZX Listing Rules, is a narrower test than an assessment of the
“merits” of a transaction as required under the Takeovers Code. Notwithstanding
this we have evaluated the fairness of the Bond Transaction on essentially the
same terms as we would evaluate the merits of the Bond Transaction and so
gave due regard to:
− the rationale for the Bond Transaction;
− the terms and conditions of the Bond Transaction;
− the impact of the Bond Transaction on BGI’s financial position;
− the potential impact on the ownership and control of BGI;
− potential alternatives to the Bond Transaction;
− the impact on Share price and liquidity;
− the benefits and disadvantages of the Bond Transaction for the BGGL
Associates;
− the benefits and disadvantages for BGI and the Non-Associated
Shareholders;
− the likelihood of the Bond Resolution being approved; and
− the implications of the Bond Resolution not being approved.
Our opinion should be considered as a whole. Selecting only portions, without
considering all the factors and analysis together, could create a misleading view
of the factors and process underlying the opinion.
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3.2. Summary of the Evaluation of the Fairness of the Bond Transaction
In our opinion, after having regard to all of the relevant factors, the overall terms
and conditions of the Bond Transaction are fair to the Non-Associated
Shareholders.
The analysis leading to our opinion is detailed in sections 3.3.1 to 3.3.11. In
summary, the key factors underpinning our opinion are:
− the rationale for the Bond Transaction is sound as it preserves the
Company’s cash and strengthens its overall financial position while it seeks
a suitable RTO opportunity.
− The Terms and Conditions of the Bond Transaction are reasonable:
o the new Shares being issued as part of the Bond Capitalisation are
being issued at a premium to the price that Shares have recently
traded at on the NZX and at a substantial premium to BGI’s Net
Tangible Assets (“NTA”) per share; and
o the Bond Extension provides additional certainty to BGI with no
additional interest or any other costs or fees to pay.
− The Bond Transaction should have a positive impact on BGI’s financial
position.
− While the Non-Associated Shareholders’ shareholding percentage will fall
as a result of the Bond Transaction we consider this dilution of ownership to
be less important than our assessment that there is no material value
transfer to the BGGL Associates from the Non-Associated Shareholders as
the Bond Transaction is swapping one claim (Bonds) for another (Shares).
− The Bond Transaction is not expected to be associated with any change
in the control of the Board or the Company as the BGGL Associates
already hold in excess of the 75% threshold needed to pass a special
resolution.
− We do not consider that the Bond Transaction will have any material
impact on Share price or the liquidity of Shares.
− We do not consider that the Board had many, if any, viable alternatives to
the Bond Transaction which would both strengthen BGI’s financial position
and providing greater certainty while the Company seeks a suitable RTO
opportunity.
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− We do not consider that there any direct material benefits to the BGGL
Associates as a result of the Bond Transaction, however, as the largest
shareholders in the Company they also benefit from the improved
financial position and the extension of the time to find a suitable RTO
opportunity.
− We consider that there are direct benefits to the Non-Associated
Shareholders from the Bond Transaction as the conversion of secured
debt to equity, at a premium to the recent price of Shares on the NZX, not
only strengthens the financial position but also provides for greater
certainty and financial flexibility as the maturity date for the Bonds is
extended until the end of 2023.
− If the Bond Transaction is not approved there would be no immediate
impact on the Company however an increased amount of its cash
reserves would need to be reserved for the repayment of the Bonds. This
would be likely to restrict the level of financial flexibility within the
Company as it seeks an RTO opportunity.
3.3. Factors Evaluated in Considering the Fairness
As outlined in section 3.1 we have considered a range of factors in our evaluation
of the fairness of the Bond Transaction which were summarised in section 3.2. The
following sections detail the elements we considered in reaching our conclusion.
3.3.1. The Rationale for the Bond Transaction
On 18 January 2021 BGI announced that its Board had decided to wind down its
finance company operation as it was unable to raise sufficient funding to grow
and develop a meaningful finance company operation.
To reduce the outgoings of the Company the Board also disestablished the roles
of CEO and COO. Both executives left the Company in February 2021.
BGI’s Board has stated that it is actively looking to identify a suitable business
opportunity to invest in and/or acquire via an RTO. We have been advised that
the Board has held discussions with several potential acquisition targets, but to
date none of those discussions have developed into a tangible transaction. The
Board is focusing on business opportunities that satisfy one or more of the
following criteria:
− excellent personnel and management;
− operating in an attractive and positive business sector with a robust
business model;
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− solid historic earnings or alternatively has a solid platform from which to
implement a business plan for growth;
− ownership of proprietary intellectual property;
− has the potential to grow organically via acquisition or through further
capital investment into the business;
− the potential to scale internationally;
− the potential to benefit from being able to raise additional capital; and
− likely to generate superior returns for the Company and its existing
shareholders.
If the Company undertook an RTO it is likely that at that time it would also seek to
raise additional capital to assist in implementing the RTO and/or funding the
future growth of the acquired business. In any event, and in advance of an RTO,
BGI’s Board wishes to strengthen the Company’s financial position and capital
structure via the Bond Transaction.
We consider the rationale for the Bond Transaction to be sound. It will result in the
conversion of $450,000 of debt into equity, at a price in excess of the Company’s
NTA and recent traded price on the NZX. Furthermore, it includes a delay in the
repayment of the $550,000 of remaining Bonds thus preserving BGI’s cash reserves
and strengthening its overall financial position.
3.3.2. Terms and Conditions of the Bond Transaction
Issue price
The Bond Capitalisation involves the issue of 100 million Shares to BGGL at the
Issue Price. We assessed the reasonableness of the Issue Price with reference to:
− the prices at which Shares have traded on the NZX prior to
announcement of the Bond Transaction;
− the prices at which BGI has previously issued Shares; and
− the per Share NTA value of the Shares.
Recent Share Trading
The following chart compares the Issue Price with the volume weighted average
price (“VWAP”) of the Shares trading on the NZX over various periods prior to the
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announcement of the Bond Transaction on 25 July 2022. The Issue Price is broadly
in line with VWAP over the past six to 12-months but represents a premium to BGI’s
more recent trading history.
The table below presents the premium / discount of the Issue Price to VWAP:
BGI’s daily closing Share price and monthly Share trading volume since 5 January
2021 is discussed in section 4.7.
Recent Share Issues
The following table outlines Share issues over the last five years.
Date
VWAP
Issue Price
Premium / (discount)
to share price
Last Price
$0.0040
$0.0045
12.5%
1-month
$0.0040
$0.0045
12.5%
3-month
$0.0041
$0.0045
10.3%
6-month
$0.0044
$0.0045
2.2%
9-month
$0.0044
$0.0045
2.2%
12-month
$0.0046
$0.0045
(2.8%)
Source: S&P Capital IQ
BGI Issue Price compared to VWAP up to 25 July 2022
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Consistent with the Issue Price of the Bond Capitalisation, the previous Share issue
prices have typically been at a premium to the prevailing Share price at the time
of those transactions.
The Issue Price is lower than the previous Share issues. This largely reflects the
gradual decline seen in BGI’s traded Share price which we surmise is likely due to
two years of trading losses, BGI’s ongoing search for a suitable RTO opportunity
and the associated uncertainty as to the future direction of the Company.
Net Tangible Assets Value
The Issue Price represents a significant premium to BGI’s reported NTA of $230,983
or $0.000402 per Share as at 31 March 2022.
Bond Extension
The Bond Extension involves extending the maturity date of the Bonds until 31
December 2023. Subject to shareholder approval of the Bond Transaction BGGL
has agreed not to call for repayment of the Bonds prior to this date except in the
event of liquidation or through the Bond Capitalisation.
Following the Bond Transaction BGI will have $550,000 principal amount of the
Bonds which need to be repaid on the new maturity date of 31 December 2023
with all other terms and conditions of the Bonds remaining unchanged. Of
particular benefit to the Non-Associated Shareholders is that the interest rate on
the Bonds will remain at 0% p.a. until maturity.
In contrast, we consider it likely that if the Bonds were owned by an unrelated,
third-party investor, any extension of the maturity date would be accompanied
by some form of offsetting adjustment to the terms e.g. a higher interest rate or
payment of a fee of some kind.
Conclusion
Overall, we consider the terms and conditions of the Bond Transaction are fair to
the Non-Associated Shareholders. The primary factors behind this conclusion are:
Date
Type
Issue Price
(NZD)
No. of Shares
Total Raised
(NZD 000's)
7 July 2017
Private Placement
$0.0080
313,872,866
2,511
28 January 2020
Conversion of convertible notes
$0.0080
62,500,000
500
18 October 2021
Capitalisation of secured bond
$0.0070
71,428,571
500
Source: NZX, Company Information
BGI Share Issues (Last Five Years)
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− The Issue Price is either higher than, or in line with, BGI’s VWAP; and
− the Bond Extension was granted without any offsetting cost, changed
provisions or amendment to any other terms of the Bonds. Importantly for
the Non-Associated Shareholders the interest rate on the Bonds remains
unchanged at 0% p.a. until maturity.
3.3.3. The Impact on BGI’s Financial Position
A summary of the impacts of the Bond Transaction is set out in the table below
which presents a pro-forma restatement of the Company’s Balance Sheet as at
31 March 2022 as if the Bond Transaction had occurred on that date.
The impact of the Bond Transaction on BGI’s pro-forma financial position would
be to:
- Increase total equity;
- decrease total liabilities with a reclassification from Current Liabilities to
Non-Current Liabilities; and
- increase BGI’s NTA per Share.
Overall, we consider that the Bond Transaction represents a substantial
strengthening of BGI’s balance sheet.
A summary of BGI’s recent financial position is set out in section 4.5.
NZD (000's)
31 March 2022
Bond
Extension
Bond
Capitalisation
Post Bond
Transaction
Current assets
1,163
–
–
1,163
Non current assets
77
–
–
77
Total assets
1,240
–
–
1,240
Current liabilities
1,009
(550)
(450)
9
Non current liabilities
–
550
–
550
Total liabilities
1,009
–
(450)
559
–
Total equity
231
–
450
681
No. of Shares (000's)
573,759
–
100,000
673,759
NTA per Share
$0.0004
–
$0.0045
$0.0010
Source: S&P Capital IQ, Armillary analysis
Summary
Pro-Forma
Financial Impact of the Bond Transaction
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3.3.4. The Impact on Ownership and Control of BGI
BGI currently has 573,759,059 Shares on issue held by a total of 468 shareholders.
Further details on the largest shareholders are set out in section 4.3.
BGI currently has three registered shareholders holding more than 5% of its Shares:
− BGGL: 66.7%;
− Mr. Chai: 9.7%; and
− New Zealand Depository Nominee Limited: 5.4%.
The top 10 shareholders collectively hold 92.9% of the total Shares on issue.
Beyond those shareholders ownership is widely spread as the next 10 largest
holders collectively own 2.6% of the total Shares on issue.
If the Bond Resolution is approved, BGI would have 673,759,059 Shares on issue
with the main shareholding blocs as shown in the following table.
Voting
The Bond Transaction will result in the BGGL Associates increasing their collective
ownership of BGI from 76.5% to 80.0%. As the BGGL Associates currently hold over
75.0% of the voting rights of the Company they are already able to determine the
outcome of any special resolutions (which require approval from 75% of votes
cast by shareholders) and ordinary resolutions (which require approval from 50%
of votes cast by shareholders), albeit this level of control is subject to the voting
restrictions under the NZX Listing Rules and the Companies Act 1993.
The increase in the BGGL Associates shareholding therefore does not change
their practical level of control over BGI and so we consider that it has little direct
impact on the Non-Associated Shareholders.
New Shares
Issued
Holder
No. of shares
%
No. of shares
%
BGGL
382,929,770
66.7%
100,000,000
482,929,770
71.7%
Mr. Chai
55,871,667
9.7%
–
55,871,667
8.3%
BGGL Associates
438,801,437
76.5%
100,000,000
538,801,437
80.0%
Non-Associated shareholders
134,957,622
23.5%
–
134,957,622
20.0%
Total
573,759,059
100.0%
100,000,000
673,759,059
100.0%
Source: BGI Share Register
Summary of
Pro-Forma
Share Ownership Impact of the Bond Transaction
Pre Bond Transaction
Post Bond Transaction
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Board
We understand the Bond Transaction will not lead to any change in the
composition of the Board, which consists of four directors. We note that Mr. Chai’s
alternate director (Mr. Chua) is also deemed to be associated with BGGL.
Operations
We understand from the Non-Associated Directors that the BGGL Associates’
influence over BGI’s operations is primarily through Board representation. As the
Board is expected to remain unchanged the Bond Transaction will not have any
impact on the BGGL Associates’ level of control or influence over the Company’s
business operations.
The Bond Transaction will result in Non-Associated Shareholders’ shareholding in
BGI being diluted by 3.5%. This impact is relatively insignificant and when
combined with the effective level of control that the BGGL Associates already
have we consider that the Non-Associated Shareholders should focus more on
the financial impacts of the Bond Transaction and the associated impact on the
value of their individual shareholdings. Non-Associated Shareholders will still retain
the protections against the BGGL Associates majority shareholding position in BGI
that are contained within The Companies Act 1993, the NZX Listing Rules and the
Takeovers Code.
As set out in section 3.3.2 we are of the view that the terms and conditions of the
Bond Transaction are fair to the Non-Associated Shareholders from a financial
perspective. We consider therefore that as the Bond Transaction does not dilute
the value of Non-Associated Shareholders’ individual shareholdings the impact of
the Bond Transaction on control and ownership of BGI are not material.
3.3.5. The Impact on BGI’s Share Price and Liquidity
Share Price
A summary of Share price movements since 5 January 2021 is shown in section
4.7. As detailed in section 3.3.2 the Issue Price is at a premium to recent share
market traded prices.
Since the announcement of the Bond Transaction Shares have traded at $0.004,
which is unchanged to the price in the month before the announcement.
The issue of new Shares is relatively small, it is solely to the existing majority
shareholder and is not raising additional cash. Accordingly, despite the premium
the Issue Price represents to BGI’s 1 to 3-month VWAP, and the Company’s NTA
per Share, we do not believe it will have a material impact on Share price.
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While the Bond Extension provides additional certainty and demonstrates BGGL’s
ongoing commitment to support BGI there are many other factors, both within
and outside of BGI’s control, that will determine the Share price. Accordingly, we
also consider it unlikely that the Bond Extension will have a material direct impact
on Share price.
Liquidity
While the Bond Transaction provides increased certainty to BGI we consider it
unlikely to have any direct impact on the liquidity of Shares in the short term. This is
primarily because the number of Shares held by the Non-Associated Shareholders
will not change.
3.3.6. Potential Alternatives to the Bond Transaction
As an alternative to the Bond Capitalisation the Board could have considered
different options to raise capital with the proceeds used to repay the Bonds.
Possible alternatives include:
− a placement of new Shares to other investors; and/or
− an issue of new bonds to a third-party investor; and/or
− the sale of assets.
BGI would need to raise $1,000,000 from other existing, or new investors to repay
the Bonds. At current prices this would represent over 40% of BGI’s current issued
capital. We do not consider such a large transaction, particularly in the context of
BGI having failed in prior years to raise sufficient capital to fund the growth of its
finance operations, as a viable alternative. In any event, such a transaction is
likely to be costly and time consuming.
Any issue of new debt could be complicated by the fact that BGGL has a first
ranking security position although if any new debt issue were large enough to
repay the Bonds in full a new lender could most likely obtain a first ranking security
position themselves. We consider that, as with an issue of new Shares, such an
issue of debt would likely be a time consuming and costly process. Additionally,
even if alternative sources of debt could be found, we consider it most unlikely
that new lenders would also lend at the 0% interest rate that BGGL currently is.
Accordingly, we do not consider issuing new debt as a viable alternative.
Other than a term deposit BGI does not hold any material assets, therefore an
asset sale is not a viable option for the Company.
In summary, we do not consider that the Company has any viable alternatives. At
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the very least any alternatives would be substantially more costly and time
consuming than the Bond Transaction.
3.3.7. Benefits and Disadvantages of the Bond Transaction for the BGGL
Associates
As detailed in section 3.3.6 we consider it most unlikely that additional capital
would be available from any external third-party sources. Accordingly, we
consider the key benefit of the Bond Transaction for the BGGL Associates to be
that they are in essence protecting the value of their existing shareholding and
extending the time to find a suitable RTO opportunity (at which time the value of
their shareholding could be expected to increase).
We consider the following to be the key disadvantages of the Bond Transaction
for the BGGL Associates:
− the Issue Price represents a premium to BGI’s recent Share price, and a
substantial premium to the Company’s NTA per share; and
− through the Bond Capitalisation BGGL is converting secured Bonds for
Shares. Not only are the Shares riskier than the Bonds as the Shares rank
behind the Bonds, there is very low liquidity in the Shares, particularly for a
majority shareholder like BGGL where it would be very difficult to sell even a
small portion of its shareholding.
3.3.8. Benefits and Disadvantages of the Bond Transaction for BGI and the
Non-Associated Shareholders
We consider the following to be the key benefits of the Bond Transaction for the
Company and the Non-Associated Shareholders:
− the Bond Capitalisation decreases BGI’s debt by $450,000 providing it more
certainty in the short term to continue its strategic plan of pursuing an RTO;
− the Bond Extension defers a $550,000 payment, which as it currently stands
would otherwise utilise a substantial proportion of BGI’s cash reserves;
− the Bond Transaction provides greater certainty for BGI, it further
demonstrates BGGL’s commitment to provide ongoing support for BGI and
it extends the time to find a suitable RTO (at which time the price of Shares
could be expected to increase); and
− approval from the Non-Associated Shareholders is required for the Bond
Transaction to proceed.
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We consider the following to be the key disadvantages of the Bond Transaction
for the Company and the Non-Associated Shareholders:
− it increases the BGGL Associates shareholding (although it does not result in
any material change to their effective level of control over BGI);
− while the Issue Price is at a premium to the current NZX market price it is
possibly below what the Share price could be if an attractive RTO were to
be announced; and
− it dilutes the Non-Associated Shareholders holding from 23.5% to 20.0%.
3.3.9. The Likelihood of the Bond Resolution Being Approved
The BGGL Associates are unable to vote on the Bond Resolution so the outcome
will be determined by the votes of the Non-Associated Shareholders who
collectively hold 134,957,622 Shares or 23.5% of the total Shares on issue.
We understand that the Non-Associated Directors will unanimously recommend
that shareholders vote in favour of the Bond Resolution. Additionally, Say Chan
(James) Law (one of the Non-Associated Directors) owns 3.4% of BGI, or 14.3% of
the Shares eligible to vote.
We have examined voting records of BGI’s last two Annual Meetings with a focus
on 2021’s Annual Meeting where a similar resolution was voted on. The BGGL
Associates were similarly unable to vote on the resolution and so total votes cast,
of just under 20 million, represented around 15% of the total eligible number.
Importantly, the votes cast were unanimously in favour of the resolution.
The Company’s top 10 shareholders other than the BGGL Associates and the
Non-Associated Directors collectively own 14.2% of the Shares or around 60% of
the Shares eligible to vote on the Bond Resolution. The Board is not aware of
individual shareholder voting intentions however the votes by these shareholders
will likely have a significant influence on the outcome of the Bond Resolution.
3.3.10. The Implications of the Bond Resolution Not Being Approved
If the Bond Resolution is not approved the Company will have less financial
flexibility as a greater proportion of its cash reserves (and its term deposit) will
need to be reserved for repayment of the Bonds. This would limit the ability of the
Company to continue paying administrative costs while investigating an RTO.
As outlined in section 3.3.6 we consider alternative sources of finance most
unlikely, particularly in the absence of an attractive RTO. Furthermore, we note
that if the Bond Resolution is not approved that could have negative implications
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for any future capital raisings as potential investors may be concerned about
investing in BGI, particularly if shareholder approval is required. This increased
uncertainty could also mean that alternative capital raisings would have even
higher costs than the costs associated with the Bond Transaction.
While the existing term deposit could cover repayment of the full amount of the
Bonds currently outstanding it would leave the Company with only a minimal
level of cash and other assets. Accordingly, if alternative sources of capital were
not available, we consider that in the absence of an RTO that the Company may
need to look to cease operations and liquidate its remaining assets. This course of
action could be a costly and time-consuming process with a high degree of
uncertainty as to the eventual outcome for shareholders.
3.3.11. Voting For or Against the Resolution
Voting for or against the Bond Resolution is a matter for individual shareholders
based on their own views as to current and future market conditions, risk profile
and tolerances, value considerations and other factors. Shareholders need to
consider these factors and their consequences and, if appropriate, consult their
own professional adviser.
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4. Profile of BGI
4.1. Company Profile
The Company was incorporated on 22 January 2004 as New Zealand Finance
Holdings Limited. It changed its name to NZF Group Limited on 31 March 2008
and then again to Blackwell Global Holdings Limited on 10 July 2017.
BGI listed its Shares on the NZX in October 2004 after the issue of 5.5 million Shares
at a price of $0.30 per share. At the time of listing on the NZX the Company was
the holding company for two wholly owned subsidiaries: New Zealand Finance
Limited (which was established in 1997) and New Zealand Mortgage Finance
Limited (which was acquired in 2004).
The 2007 global financial crisis had a material impact on the overall New Zealand
economy and, in particular, the finance company sector and the Company’s
operations were no exception. By April 2014 the Company had sold its trading
subsidiaries and jointly controlled entities by which time BGI had accumulated
losses of over $26 million.
On 21 May 2015 the Board resolved that the Company be placed into Voluntary
Administration to facilitate the distribution of the Company’s funds to creditors
and other claimants.
At the Watershed Meeting held on 15 June 2015 BGI’s creditors resolved that the
Company execute a Deed of Company Arrangement (the “DOCA”). The DOCA
resulted in senior creditors receiving 100 cents in the dollar while noteholders
received a full and final settlement of 12.7 cents in the dollar. The DOCA was
terminated on 3 July 2015.
After Mr. Chai purchased an initial shareholding in February 2016 the Company
announced, in November 2016, that it had entered into a conditional
Implementation Deed with BGGL whereby BGI would allot new Shares and issue
convertible notes to implement an operational and capital restructure of the
Company.
Following shareholder approval of the restructure the issue of Shares and
convertible notes to BGGL was implemented on 7 July 2017. The Company also
announced that with effect from 10 July 2017 it would change its name to
Blackwell Global Holdings Limited and launch a new finance company operation
as well as a derivatives trading operation.
On 18 January 2021 the Board announced that it had decided to wind down the
Company’s finance company operation to reduce costs due to BGI’s inability to
raise sufficient capital to fund the growth of its loan book. As a result of this
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decision BGI’s Board resolved to disestablish the CEO and COO roles. The CEO
and COO formally left BGI’s employment in February 2021. By 31 March 2022 all
outstanding loans issued by BGI’s finance company operation had been repaid.
Following this announcement BGI’s Board announced that it was actively looking
to identify a suitable business opportunity to invest in and/or acquire through an
RTO. The new business acquired via the RTO transaction would then effectively
become a subsidiary of BGI.
On 26 November 2021 the New Zealand Markets Disciplinary Tribunal released a
public censure of BGI for breaches of NZX Listing Rules 3.5.1 and 3.26.1 as a result
of BGI incorrectly stating its NTA per Share in its 2020 financial year results
announcement. In addition to a public censure BGI paid a $40,000 financial
penalty to the NZX Discipline Fund as well as costs relating to the proceeding.
Further information on the Company can be found at:
− the Company’s own website: https://www.bgholdings.co.nz/
− NZX’s website: https://www.nzx.com/companies/BGI
4.2. Key Issues and Risks Affecting the Company
The main industry and specific business factors and risks that BGI face include:
− The Company’s ability to finance its activities given BGI has made losses in
each of the last five years and does not have any operating revenues
following the wind down of its finance company operations.
− The Company’s ability to find appropriate RTO opportunities in the near
term is likely to impact BGI’s ability to continue to operate.
− Changes to regulatory and/or compliance regimes.
4.3. Directors
As shown in the following table the Company’s Board currently comprises four
directors and an alternate.
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4.4. Capital Structure and Shareholders
Secured Bonds
On 18 December 2017 BGI issued $2,000,000 bonds to BGGL at a fixed interest
rate of 6% p.a. and a maturity date three years from the issue date (i.e. 18
December 2020). A further $500,000 bonds were issued to BGGL on 27 April 2019
at a fixed interest rate of 6% p.a., payable semi-annually, and a maturity date
three years from the issue date (i.e. 27 April 2022).
On 24 March 2020 a Deed of Variation was agreed with BGGL extending the
maturity period to four years and reducing the interest rate to 0% p.a. for six
months starting 24 March 2020. The Bonds were further amended through a Letter
of Undertaking, dated 25 November 2020, extending the maturity of the Bonds to
30 June 2022 and extending the 0% p.a. interest rate for this period.
In June 2021, BGI redeemed $1,000,000 of the Bonds for cash, reducing the Bonds
on issue to $1,500,000. On 18 October 2021 BGI’s shareholders approved the
capitalization of $500,000 of the Bonds by BGGL at an issue price of $0.007 per
Share (for 71,428,571 new Shares).
BGI currently has $1,000,000 face value of the Bonds on issue to BGGL. The Bonds
have a contributed capital component that represents that difference in fair
value between the current fixed interest rate and the estimated interest rate of a
similar bond issued to a third party. Accordingly, the value reported in BGI’s
financial statements as at 31 March 2022 of $958,538 reflects the face value minus
the contributed capital component of the Bonds.
Shares
BGI currently has 382,929,770 Shares on issue which at 1 August 2022 were held by
468 shareholders. Details of the 20 largest shareholders as at 1 August 2022 are set
NameRoleDate Appointed
Sean JoyceChairman and Independent
non-executiv e Director
21-Aug-13
Kaw Sing (Michael) ChaiNon-executiv e director27-Jun-17
Kim Chan (Stev e) ChuaAlternate non-executiv e
director for Mr. Chai
17-Sep-18
Craig AlexanderIndependent non-executiv e
director
27-May-11
Say Chan (James) LawNon-executiv e director27-Jun-17
Source: Company information, NZ Companies Office
BGI Board of Directors
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out in the following table.
Other than Shares the Company has no other securities on issue, nor does it have
any arrangements, or contractual undertakings, to issue other securities.
4.5. Financial Performance
A summary of BGI’s financial performance for the last five full financial years
ending 31 March is summarized in the table below.
Historically BGI primarily derived revenue through interest income on loans and
from term deposits and/or bank accounts. Following the wind down of BGI’s
finance company operations BGI’s primary revenue source will be interest earned
on term deposits. BGI no longer has any employees so operating expenses largely
NameShares Held% Held
Blackw ell Global Group Limited382,929,770 66.7%
Chai Kaw Sing55,871,667 9.7%
New Zealand Depository Nominee30,701,216 5.4%
Say Chan Law19,290,000 3.4%
Pat Redpath O'Connor17,010,002 3.0%
Lynton Ross Campbell 9,095,514 1.6%
Barbara Charlotte Brow n7,834,488 1.4%
Annette Kathleen Early4,010,000 0.7%
Minhua Chen3,082,461 0.5%
Fiona Patricia Lyons 3,001,915 0.5%
Paul Richard Huljich 2,451,664 0.4%
Walter Mick George Yovich 2,193,409 0.4%
New Zealand Central Securities2,142,710 0.4%
Land Securities Limited1,689,752 0.3%
Kim Best1,400,000 0.2%
Teck Khing Yong1,331,069 0.2%
David Alexander Kennedy1,062,500 0.2%
Kenneth Paul Donelan1,000,000 0.2%
Tzu-Tong Ma974,500 0.2%
Margaret Dorothea Greene819,672 0.1%
Top 20 Shareholders547,892,309 95.5%
Source: BGI Share Register
BGI Top 20 Shareholders
Year ending 31 March
NZD (000's)
20182019202020212022
Net interest income/(expense)(23)303 153 (4)(87)
Other revenue82 432 156 113 15
Total revenue
60 734 309 109 (73)
Total operating costs(812)(1,319)(975)(889)(382)
Pre Tax profit
(752)(585)(665)(780)(455)
Tax- - - - -
Net Profit/(Loss) after Tax
(752)(585)(665)(780)(455)
Source: S&P Capital IQ, Company Information
BGI - Summary Statement of Financial Performance
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reflect Directors Fees, Professional Services Fees and other Administrative costs.
4.6. Financial Position
A summary of BGI’s financial position as at 31 March for the last five full financial
years is summarized in the table below.
BGI’s main assets are cash and cash equivalents. Loan and lease receivables
reached nil as at 31 March 2022 following the wind down of BGI’s finance
company operations. The $1,014,000 of other current assets as at 31 March 2022
reflected a $1,000,000 term deposit held with ASB.
The current portion of Debt reflects the net present value of the Bonds after
accounting for fair value changes. The Bonds were previously reported under
Long-term debt, with the $44,000 as at March 2020 and March 2021 representing
the current portion of the Bonds at that time.
4.7. Cash Flow
A summary of BGI’s cash flows for the last five financial years ending 31 March is
summarized in the following table.
As at 31 March
NZD (000's)
2018
2019
2020
2021
2022
Cash and equivalents
801
1,513
1,806
1,987
148
Loan receivables
3,259
5,377
1,549
644
–
Other current assets
10
26
17
8
1,014
Total Current Assets
4,070
6,917
3,371
2,639
1,163
Non-current assets
77
79
85
81
77
Total Assets
4,147
6,996
3,457
2,720
1,240
Payables
271
167
190
112
23
Current Debt
–
2,956
44
44
986
Other current liabilities
–
40
64
48
–
Total Current liabilities
271
3,163
298
204
1,009
Long term debt
2,342
2,858
2,468
2,324
–
Total Liabilities
2,613
6,021
2,766
2,529
1,009
Total Equity
1,534
975
690
191
231
Total Liabilities and Equity
4,147
6,996
3,457
2,720
1,240
Source: S&P Capital IQ, Company Information
BGI - Summary Statement of Financial Position
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Net Operating Cashflows primarily represent payments to employees and
directors while historic figures are primarily driven by movements in BGI’s loan
book.
Net Investing Cashflows in FY22 represent the investment of the $1,000,000 term
deposit.
Net Financing Cashflows largely represent BGI’s raising, repayment and
capitalisation of the Bonds.
4.8. Share Price History
A summary of BGI’s daily closing Share price and volumes of Shares traded from 5
January 2021 to 25 July 2022 is shown in the chart below.
Year ending 31 March
NZD (000's)
2018
2019
2020
2021
2022
Net Operating Cashflow s
(4,075)
(2,688)
3,207
182
127
Net Investing Cashflow s
(3)
–
(11)
(1)
(1,000)
Net Financing Cashflow s
4,720
3,400
(2,904)
–
(966)
Net change in cash
642
712
292
181
(1,839)
Cash at start of period
159
801
1,513
1,806
1,987
Cash at end of period
801
1,513
1,806
1,987
148
Source: S&P Capital IQ, Company Information
BGI - Summary Statement of Cash Flow
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During the period shown in the chart BGI’s Shares have traded between $0.011
and $0.003 with a VWAP of $0.0065.
As shown in the table below 34.9% of the Shares held by the Non-Associated
Shareholders have traded since 5 January 2021 at a VWAP of $0.0065. Over the
last six months however only 3.7% of the Shares held by the Non-Associated
Shareholders have traded at a VWAP of $0.0044.
An analysis of VWAP, traded volumes and liquidity (measured as traded volumes
as a percentage of current Shares held by Non-Associated Shareholders) is set
out below.
Period
Low ($)
High ($)
Volume
Traded
VWAP ($)
Liquidity (excl.
BGGL Associates)
Since 05-01-21
0.003
0.011
47,052,566
0.0065
34.9%
12 months
0.003
0.006
18,629,603
0.0046
13.8%
9 months
0.003
0.006
12,293,212
0.0044
9.1%
6 months
0.004
0.005
4,964,128
0.0044
3.7%
3 months
0.004
0.005
1,358,207
0.0041
1.0%
1 month
0.004
0.004
415,715
0.0040
0.3%
Source: S&P Capital IQ
BGI Recent Share Trading
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5. Sources of Information, Reliance on
Information, Disclaimer and Indemnity
5.1. Sources of Information
The statements and opinions expressed in this Report are based on the following
primary sources of information:
− BGI annual reports;
− BGI Share Register as at 1 August 2022;
− BGI Annual Meeting Results for the years ended 31 March 2020 and 31
March 2021;
− NZX announcements;
− Companies Office filings; and
− S&P Capital IQ.
During the course of preparing this Report, we have had correspondence and
discussions with and / or received information from the Board of BGI and its legal
advisers.
The Board has confirmed that we have been provided, for the purpose of this
Report, with all information relevant to the Company and the Bond Transaction
that is known to them and that all the information provided is true and accurate
in all material aspects and is not misleading by reason of omission or otherwise.
Including this confirmation, we have obtained all the information that we believe
is necessary for the purpose of preparing this Report.
In our opinion, the information to be provided by BGI to the Non-Associated
Shareholders is sufficient for them to understand all relevant factors and to make
an informed decision in respect of the Bond Transaction.
5.2. Reliance on Information
In preparing this Report we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was available
from public sources and all information that was furnished to us by BGI and its
advisers.
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Blackwell Global Holdings Limited
31 August 2022
We have evaluated that information through analysis, enquiry and examination
for the purposes of preparing this Report, but we have not verified the accuracy
or completeness of any such information or conducted an appraisal of any
assets. We have not carried out any form of due diligence or audit on the
accounting or other records of BGI. We do not warrant that our enquiries would
reveal any matter which an audit, due diligence review or extensive examination
might disclose.
5.3. Disclaimer
We have prepared this Report with care and diligence and the statements in the
Report are given in good faith and in the belief, on reasonable grounds, that such
statements are not false or misleading. However, in no way do we guarantee or
otherwise provide any warranty or representation that any forecasts of future
profits, cash flows or financial position of BGI will be achieved. Forecasts are
inherently uncertain. They are predictions of future events that cannot be
assured. They are based upon assumptions, many of which are beyond the
control of BGI and its directors and management. Actual results will vary from the
forecasts and these variations may be significantly more or less favorable.
We assume no responsibility arising in any way whatsoever for errors or omissions
(including responsibility to any person for negligence) for the preparation of this
Report to the extent that such errors or omissions result from our reasonable
reliance on information provided by others or assumptions disclosed in this Report
or assumptions reasonably taken as implicit, provided that this shall not absolve
Armillary Private Capital from liability arising from an opinion expressed recklessly
or in bad faith.
Our evaluation has been arrived at based on economic, exchange rate, market
and other conditions prevailing at the date of this Report. Such conditions may
change significantly over relatively short periods of time. We have no obligation
or undertaking to advise any person of any change in circumstances which
comes to our attention after the date of this Report or to review, revise or update
the Report.
5.4. Indemnity
BGI has agreed that to the extent permitted by law, it will indemnify Armillary
Private Capital and its directors and employees in respect of any liability suffered
or incurred as a result of or in connection with the preparation of this Report. This
indemnity does not apply in respect of any negligence, willful misconduct or
breach of law. BGI has also agreed to indemnify Armillary Private Capital and its
directors, employees and consultants for time incurred and any costs in relation to
any inquiry or proceeding initiated by any person. Where Armillary Private Capital
or its directors, employees and consultants are found liable for or guilty of
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Blackwell Global Holdings Limited
31 August 2022
negligence, willful misconduct or breach of law or term of reference, Armillary
Private Capital shall reimburse its fees for preparing this Report.
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Blackwell Global Holdings Limited
31 August 2022
6. Qualifications, Independence, Declarations
and Consents
6.1. Qualifications and Expertise
Armillary Private Capital is a specialist New Zealand based investment banking,
funds management, financial training and advisory firm. It provides a range of
services including the preparation of valuations, merger and acquisition advice,
capital raising and due diligence. Its client base includes a range of small to
medium sized private and listed companies, iwi organisations and government
agencies.
The individuals responsible for preparing this Report are Geoff Davis (BCom, ACA),
David Wallace (BCom, Dip Bus Fin), and Jansson Ford (BCom, MFINC).
Geoff Davis has over 30 years of experience in investment markets with an
emphasis on corporate finance, equity capital markets and all aspects of M&A.
Prior to joining Armillary Private Capital, Geoff has worked at TeamTalk, Active
Equities, Brierley Investments and National Mutual / AXA Funds Management.
Geoff holds a Bachelor of Commerce degree from the University of Auckland
and is an ACA member of Chartered Accountants Australia and New Zealand.
David Wallace is a founding director of Armillary Private Capital and is active
across the Investment Banking, Funds Management and Advisory areas of the
firm. He has a background in investment banking, investment analysis and
corporate treasury, with over 30 years’ experience working in capital markets in
New Zealand. David holds a Bachelor of Commerce degree from Canterbury
University and a Post Graduate Diploma in Business Finance from the Auckland
University Graduate School of Business.
Jansson Ford is an Analyst at Armillary Private Capital and has been with the firm
since July 2022. He holds a Masters of Finance from the University of Otago and a
Bachelor of Commerce degree from the University of Otago.
6.2. Independence
Armillary Private Capital does not have at the date of this report, and has not
had, any shareholding in or other relationship with BGI or BGGL or any conflicts of
interest that could affect its ability to provide an unbiased opinion in relation to
the Bond Transaction.
Armillary Private Capital will receive a fixed fee for the preparation of this Report.
This fee is not contingent on the conclusions of this Report or the outcome of the
voting in respect of the Bond Resolution. Armillary Private Capital will receive no
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Blackwell Global Holdings Limited
31 August 2022
other benefit from the preparation of this Report. Armillary Private Capital does
not have any conflict of interest that could affect its ability to provide an
unbiased Report.
6.3. Declarations
This Report is dated 31 August 2022 and has been prepared by Armillary Private
Capital at the request of the Non-Associated Directors of BGI to fulfil the reporting
requirements of the NZX Listing Rules. This Report, nor any part of it, should not be
reproduced or used for any other purpose.
Armillary Private Capital specifically disclaims any obligation or liability to any
party whatsoever in the event that the Report is supplied or applied for any
purpose other than that for which it is intended.
Advance drafts of the Report were provided to the Non-Associated Directors.
Certain changes were made to the Report as a result of the circulation of the
drafts. However, there was no material alteration to any part of the substance of
this Report, including the methodology or conclusions as a result of issuing the
drafts.
Our terms of reference for this engagement did not contain any term that
materially restricted the scope of the Report.
6.4. Consents
Armillary Private Capital consents to the issuing of this Report in the form and
context in which it is to be included with the BGI Notice of Meeting to be sent to
BGI shareholders. Neither the whole nor any part of this Report, nor any reference
thereto may be included in any other document without our prior written consent
as to the form and context in which it appears.
Yours faithfully,
Geoff Davis David Wallace
Director Joint Managing Director
Armillary Limited Armillary Limited
---
9391035.4
BLACKWELL GLOBAL HOLDINGS LIMITED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is given that the Annual Meeting of shareholders of Blackwell Global Holdings Limited (BGI or the
Company) will be held online on Thursday 22 September 2022 at 1.30pm.
VIRTUAL SHAREHOLDER MEETING
To participate in the meeting online, please use the following link to BGI’s virtual meeting Zoom platform:
https://us02web.zoom.us/j/87194200168?pwd=a2NscW1ENS85cnhBbldnZ3Q1NHZGQT09
Meeting ID: 871 9420 0168
Passcode: 123123
Shareholders are encouraged to vote via their proxy form before the meeting.
BUSINESS OF THE MEETING
1. Re-election of Director
“That Mr Kaw Sing Chai, who retires in accordance with the provisions of the Constitution of the
Company and, being eligible, offers himself for re-election as a Director of the Company.”
2. Remuneration of Auditors
“To record the appointment of William Buck Audit (NZ) Limited as Auditors of the Company under
section 200 of the Companies Act, and to authorise the Board to fix their remuneration for the
forthcoming year.”
3. Extension and capitalisation of bonds
“To approve:
(a) extension of the maturity date of the secured bonds issued by the Company to 31 December
2023; and
(b) the issue of 100,000,000 ordinary shares in the Company to Blackwell Global Group Limited,
being the majority shareholder of the Company at a price of $0.0045 per share, to be satisfied
by capitalising $450,000 of its secured bonds, as explained further in the explanatory notes.”
NOTES
1. Explanatory notes
Explanatory notes on the business of the meeting are set out in the following pages. Additional
information on the proposed capitalisation of bonds is set out in the accompanying Independent
Appraisal Report from Armillary Limited dated 31 August 2022.
2. Proxies
All shareholders of the Company entitled to attend online and vote at the meeting are entitled to
appoint a proxy to attend to vote for them instead. A proxy need not be a shareholder of the
Company.
If a shareholder wishes to appoint a proxy, the shareholder should complete the proxy form
enclosed. To be effective, the proxy form must be lodged at the Registered Office of the Company
or with the Company’s Share Registrar, Link Market Services, in accordance with the instructions in
the Notes to the Proxy Form accompanying this Notice within at least 48 hours before the meeting
is due to begin (i.e. before 1.30pm on 20 September 2022).
If you wish to appoint an independent director or the Chairman as your proxy, Mr Sean Joyce is
willing to act on your behalf and will vote “for” on all 3 resolutions.
If you do not name a proxy in your proxy form, Mr Sean Joyce, as Chairman, will be deemed
appointed your proxy and will vote in accordance with your express instructions. Proxy forms that
record an express intention may not be exercised by someone disqualified from voting.
2
Discretionary proxies given to persons disqualified from voting will not be valid.
3. Entitlement to vote
All persons registered on the Company’s register of shareholders as at 5pm on 21 September 2022
are entitled to vote at the Meeting online or by proxy.
By order of the Board of Directors
Sean Joyce
Chairman
31 August 2022
EXPLANATORY NOTES
Ordinary Resolutions
All items of business to be considered at the meeting are ordinary resolutions. An ordinary resolution is a
resolution passed by a simple majority of votes of shareholders of the Company, entitled to vote and
voting.
Voting restrictions
Blackwell Global Group Limited and any of its “Associated Persons” (as defined in the NZX Listing Rules),
including its director Kaw Sing Chai (Michael Chai), are restricted from voting on resolution 3 referred to in
the Notice of Annual Meeting. See further discussion below in the Explanatory Notes on resolution 3.
Resolution 1: Re-election of Director
Mr Kaw Sing Chai (Michael), retires in accordance with the provisions of the Constitution of the Company.
Mr Chai, being eligible, offers himself for re-election.
Michael is the founder and CEO of Blackwell Global Group Limited. With more than a decade of forex and
derivatives experience, he has built Blackwell on transparency and devotion to clients earning special
mentions, accolades and awards from international financial portals like Forex Magnates as well as Global
Banking and Finance Review. Michael holds a Degree in Economics with National Cheng Chi University
(NCCU), Taiwan.
Due to his association with Blackwell Global Group Limited, and because he is a substantial shareholder in
his own right, Michael Chai is not an independent director for the purposes of the NZX Listing Rules.
Resolution 2: Remuneration of auditor
William Buck Audit (NZ) Limited are automatically reappointed as Auditors of the Company under section
200 of the Companies Act. Resolution 2 seeks authority for the Board to fix their remuneration for the
forthcoming year.
Resolution 3: Overview of Proposed Capitalisation of Secured Bonds
Background
Summary of essential terms of secured Bonds
The Company currently has $1 million principal amount of secured bonds (Bonds) on issue, held by its
majority shareholder Blackwell Global Group Limited (BGGL). The Bonds carry 0% interest. The Bonds are
secured by a first ranking general security deed over the present and after acquired property of the
Company.
The Bonds were scheduled to be repaid on 30 June 2022. However, on 25 November 2020 BGGL had
agreed with the Company that BGGL would not seek to enforce the Bonds unless and until BGI has the
financial resources to repay the Bonds whilst still complying with the Companies Act 1993 solvency test.
3
Proposed Bond Transaction
On 29 June 2022 BGI disclosed in its annual report released to NZX that BGGL had provided a letter of
comfort to the Company stating that, in its capacity as majority shareholder, BGGL will provide ongoing
support to the Company and planned to: 1. Capitalise $450,000 of the Bonds into new fully paid ordinary
shares and 2. Provide the Company with adequate financial support, in the form of additional funding to the
extent of no less than $550,000 to ensure ongoing business continuity and solvency.
To further formalise the letter of comfort and to provide the Company with greater financial flexibility, on
25 July 2022 BGI’s independent directors and BGGL agreed that, subject to shareholder approval:
1. BGGL will extend the maturity date of the Bonds to 31 December 2023, and will not call for a
repayment of the Bonds prior to that date except in a liquidation of BGI or through the Bond
Capitalisation referred to below (the Bond Extension); and
2 BGGL agreed to capitalise $450,000 of the Bonds at an issue price of NZ$0.0045 per new share (for an
issue of 100,000,000 new fully paid ordinary shares in BGI) (the Bond Capitalisation).
(the Bond Extension and the Bond Capitalisation, together the Bond Transaction).
Entry into the Bond Transaction was also announced to NZX on 25 July 2022.
Following completion of the Bond Transaction there would be $550,000 of Bonds that remain outstanding
with a maturity date of 31 December 2023.
The proposed issue price of $0.0045 per share is at a premium to the recent trading prices of BGI’s shares
over the 3 months prior to announcement of the Bond Transaction on 25 July 2022. The Bond
Capitalisation issue price per share represents:
a 12.5% premium to BGI’s share price immediately prior to the announcement of the Bond Transaction
on 25 July 2022 of $0.0040;
a 12.5% premium to the one month volume weighted average price (VWAP) up to 25 July 2022 of
$0.0040; and
a 10.3% premium to the 3 month VWAP up to 25 June 2022 of $0.0041.
Should shareholders approve the Bond Transaction the Company plans to complete it on 17 October 2022
(being the 12 month anniversary of the last issue of shares to BGGL, and therefore not requiring approval
under the Takeovers Code).
The new shares issued will rank equally with the existing 573,759,059 ordinary shares currently on issue.
BGGL is the majority shareholder in the Company and is therefore a “Related Party” of the Company
pursuant to the NZX Listing Rules. In addition, the Company’s director Michael Chai is also a BGGL director
and therefore is treated as an “Associated Person” of BGGL under the NZX Listing Rules.
BGGL currently holds 382,929,770 shares in the Company, representing 66.74% of the voting securities in
the Company. If shareholders approve the Bond Transaction, the additional 100,000,000 shares issued
would increase BGGL’s holding to 482,929,770 shares or 71.68% (an increase of 4.94 %).
BGGL is permitted to increase its holding or control of the Company’s voting rights by this amount under
rule 7(e) of the Takeovers Code (the ‘5% creep’ exception), and so the Company is not seeking shareholder
approval under the Takeovers Code.
The minority buyout rights in sections 110 to 118 of the Companies Act 1993 do not apply in relation to the
Bond Transaction.
Requirement for the resolution
Resolutions 3 is required by NZX Listing Rule 5.2 as the Bond Transaction is a Material Transaction with a
Related Party that triggers a shareholder approval requirement by ordinary resolution. The Bond
Transaction is a Material Transaction as it has an aggregate value in excess of 10% of the Average Market
Capitalisation of the Company.
4
Further, BGGL is an Associated Person of one of the Company’s directors, Kaw Sing Chai (Michael Chai), as
Michael Chai is a director of BGGL and the Company and is the second largest shareholder of the Company.
Therefore, shareholder approval is also required under NZX Listing Rule 4.2.1 because of the size of the
issue and given that BGI is not using placement headroom. BGGL and its “Associated Person” (as defined in
the NZX Listing Rules) is restricted from voting on Resolution 3 referred to in this Notice of Meeting.
As shown in the below table, Michael Chai also holds 9.74% of the shares in the Company (of which
55,871,667 shares in the Company are personally held by Michael as at 5 August 2022), and he is the
second largest Shareholder of the Company. Michael Chai is an “Associated Person” of BGGL for the
purpose of the NZX Listing Rules, and an “associate” of BGGL for the purpose of the Takeovers Code.
Therefore, Michael Chai will also be restricted from voting on resolution 3.
BGI Shareholding Post the Bond Transaction
Current Bond Conversion Post Bond Conversion
No of Shares % No of Shares % No of Shares % Change
BGGL 382,929,770 66.74% 100,000,000 100.00% 482,929,770 71.68% + 4.94%
Michael Chai 55,871,667 9.74%
0.00% 55,871,667 8.29% - 1.45%
Total BGGL and
Associates
438,801,437 76.48% 100,000,000 100.00% 538,801,437 79.97% + 3.49%
Non-associated
Shareholders
134,957,622 23.52% 0 0.00% 134,957,622 20.03%
- 3.49%
Total 573,759,059 100.00% 100,000,000 100.00% 673,759,059 100.00%
Consequences of Resolution not being approved
In the event that resolution 3 is not approved by shareholders then the Company will have less financial
flexibility as BGGL could call for repayment of some of the Bonds and deplete the Company’s cash resources
(although not to a level that would mean the Company could not satisfy the Companies Act solvency test).
Appraisal Report
Additional information is set out in the accompanying Appraisal Report from Armillary Limited dated
31 August 2022.
NZ RegCo No Objection
NZ RegCo have reviewed and do not object to the Notice of Annual Meeting. However, NZ RegCo does not
take any responsibility for any statements in the Notice of Annual Meeting or any other document.
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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