Notice of Meeting – Master Trust Deed amendment
NZX RELEASE
25 September 2023
Notice of Meeting - Master Trust Deed
amendment
Kiwi Property has provided NZX with a copy of its Notice of Meeting of holders of Bonds
maturing on 19 December 2024 (ticker code KPG030), 12 November 2025 (ticker code
KPG040) and 19 July 2028 (ticker code KPG050) (together, the Relevant Bonds).
The meeting will be held at 1pm on Friday, 20 October 2023 at Russell McVeagh, Level
30, Vero Centre, 48 Shortland Street, Auckland 1010.
In summary, Kiwi Property is proposing to amend the gearing ratio set out in the Master
Trust Deed by increasing the ratio from 45% to 50% (Gearing Ratio Amendment). Holders
of the Relevant Bonds are being asked to vote on a special resolution at the meeting to
approve the Gearing Ratio Amendment.
If the special resolution is passed, Kiwi Property will pay holders who voted in favour of
the special resolution a one-off consent fee equal to 0.50% of the principal amount of
their Relevant Bonds ($1.00 per Relevant Bond).
The attached booklet (Booklet) (which also includes the Notice of Meeting) contains
more information about the Gearing Ratio Amendment, the consent fee and the
process for passing the special resolution.
Kiwi Property has engaged Grant Samuel to prepare an independent report to assist
the holders of the Relevant Bonds in evaluating Kiwi Property's p roposal. A copy of the
Grant Samuel report is also attached.
The Booklet, the proxy form referred to in the Booklet and the Grant Samuel report will
be sent to all holders of Relevant Bonds.
Copies of the Booklet and the Grant Samuel report are also available on the
company's website at kp.co.nz.
> Ends
Contact us for further information
Clive Mackenzie
Chief Executive Officer
clive.mackenzie@kp.co.nz
Steve Penney
Chief Financial Officer
steve.penney@kp.co.nz
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About us
Kiwi Property (NZX: KPG) is one of the largest listed property companies on the New Zealand
Stock Exchange and is a member of the S&P/NZX 20 Index. We’ve been around for over 25
years and proudly own and manage a significant real estate portfolio, comprising some of New
Zealand’s best mixed-use, retail and office buildings. Our objective is to provide investors with a
reliable investment in New Zealand property through the ownership and active management of
a diversified, high-quality portfolio. Kiwi Property is licensed under the Real Estate Agents Act
2008. To find out more, visit our website kp.co.nz
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KIWI PROPERTY GROUP LIMITED
MEETING OF RELEVANT HOLDERS TO APPROVE AN AMENDMENT TO THE
MASTER TRUST DEED
Notice of Meeting and other relevant information for Relevant Holders
25 September 2023
This document gives you important information about a proposal to amend the Master Trust
Deed (as defined in this document). You should read this document in full before making any
decision on how to vote on the matters set out in this document. You can seek advice from a
financial advice provider or solicitor to help you make your decision.
This document and any other material prepared in respect of the matters set out in this document
may not be published, delivered or distributed in or from any country or jurisdiction except under
circumstances which will result in compliance with all applicable laws and regulations. Kiwi
Property has not and will not take any action which would permit possession or distribution of
this document or any other related material in any country or jurisdiction where action for that
purpose is required (other than New Zealand). This document does not constitute a solicitation
or offer in any country or jurisdiction in which it is unlawful to make such solicitation or offer
under any applicable laws or regulations.
ii
TABLE OF CONTENTS
1. KEY INFORMATION ......................................................................................................................... 1
Introduction ......................................................................................................................... 1
What are you being asked to do? ....................................................................................... 1
Consent Fee paid to Relevant Holders that vote in favour ................................................ 1
Other information ................................................................................................................ 2
2. CHAIRPERSON'S LETTER .............................................................................................................. 3
3. GEARING RATIO AMENDMENT...................................................................................................... 4
Background – Gearing Ratio .............................................................................................. 4
Gearing Ratio Amendment and its effect if the Special Resolution is passed ................... 4
Reason for the Gearing Ratio Amendment ........................................................................ 5
Gearing Ratio reporting ...................................................................................................... 5
4. CONSENT FEE ................................................................................................................................. 6
Consent Fee if you vote in favour of the Special Resolution and the Special Resolution is
passed ................................................................................................................................ 6
Consent Fee – tax implications .......................................................................................... 6
5. OTHER RELEVANT INFORMATION ............................................................................................... 7
Holders KPG060 Bonds will not vote on the Special Resolution ....................................... 7
Key dates ............................................................................................................................ 7
Grant Samuel Report .......................................................................................................... 7
6. ACTIONS FOR RELEVANT HOLDERS ........................................................................................... 8
Carefully read this booklet .................................................................................................. 8
Vote on the Special Resolution .......................................................................................... 8
7. HOW IS THE SPECIAL RESOLUTION PASSED? ........................................................................10
Who can pass the Special Resolution? ............................................................................ 10
Quorum ............................................................................................................................. 10
Voting process .................................................................................................................. 10
Appointment of the Chairperson of the Meeting .............................................................. 11
What happens if the Special Resolution is not passed? .................................................. 11
8. SUPERVISOR'S LETTER ...............................................................................................................12
9. NOTICE OF MEETING ...................................................................................................................13
10. GLOSSARY .....................................................................................................................................14
1. KEY INFORMATION
Introduction
Some capitalised words and expressions used in this booklet have defined meanings. The
Glossary in section 10 of this booklet defines these words and expressions.
1.1 We, Kiwi Property Group Limited (Kiwi Property), have sent you this booklet because you are
a Holder (Relevant Holder) of Bonds (Relevant Bonds) issued by us that form part of one of
the following Series:
(a) Kiwi Property's $125,000,000 fixed-rate senior secured green Bonds maturing on 19
December 2024 which are quoted on the NZX Debt Market under ticker code
KPG030 (KPG030 Bonds);
(b) Kiwi Property's $100,000,000 fixed-rate senior secured green Bonds maturing on 12
November 2025 which are quoted on the NZX Debt Market under ticker code
KPG040 (KPG040 Bonds); and
(c) Kiwi Property's $150,000,000 fixed-rate senior secured green Bonds maturing on 19
July 2028 which are quoted on the NZX Debt Market under ticker code KPG050
(KPG050 Bonds).
1.2 For the reasons set out in section 5.1 of this booklet, a reference in this booklet to "Relevant
Bonds" does not include Kiwi Property's $125,000,000 fixed-rate senior secured green
Bonds maturing on 27 September 2029 which are quoted on the NZX Debt Market under ticker
code KPG060 (KPG060 Bonds).
What are you being asked to do?
1.3 In summary, Kiwi Property is proposing to amend the Gearing Ratio set out in the Master Trust
Deed by increasing the ratio from 45% to 50% (Gearing Ratio Amendment). Read this
booklet for further information on the Gearing Ratio Amendment.
1.4 We are asking you to vote on a Special Resolution at a meeting of Relevant Holders (Meeting)
to approve the Gearing Ratio Amendment, as described further below.
1.5 The Special Resolution is set out in the Notice of Meeting (see section 9 of this booklet).
1.6 The Meeting will be held at 1.00pm on Friday, 20 October 2023 at the following location:
Russell McVeagh
Level 30, Vero Centre
48 Shortland Street
Auckland 1010
New Zealand
1.7 You can attend the Meeting and vote in person at the above location, or you can appoint a
representative known as a "proxy" (including the Chairperson of the Meeting) to attend and
vote on your behalf using the Proxy Form enclosed with this booklet or online at
investorcentre.linkgroup.nz/voting/KPG.
Consent Fee paid to Relevant Holders that vote in favour
1.8 If the Special Resolution is passed, Relevant Holders that vote (including by proxy) in favour
of the Special Resolution will receive a Consent Fee equal to 0.50% of the Principal Amount
of the Relevant Bonds they held as at 5.00pm on Wednesday, 18 October 2023.
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1.9 The Consent Fee is a one-off fee which will be paid to those entitled to receive the Consent
Fee within 10 Working Days of the Special Resolution being passed.
1.10 See section 4 of this booklet for further information about the Consent Fee.
Other information
1.11 This booklet sets out the terms, purpose and effect of the Gearing Ratio Amendment,
the process for passing the Special Resolution and other information that may be
relevant to you in deciding how to vote on the Special Resolution. Accordingly, you
should read this booklet in full before making any decision on how to vote on the
Special Resolution.
1.12 This booklet and any other material prepared in respect of the matters set out in this
booklet may not be published, delivered or distributed in or from any country or
jurisdiction except under circumstances which will result in compliance with all
applicable laws and regulations. Kiwi Property has not and will not take any action
which would permit possession or distribution of this booklet or any other related
material in any country or jurisdiction where action for that purpose is required (other
than New Zealand). This booklet does not constitute a solicitation or offer in any
country or jurisdiction in which it is unlawful to make such solicitation or offer under
any applicable laws or regulations.
3
2. CHAIRPERSON'S LETTER
Dear Holders of our KPG030 Bonds, KPG040 Bonds and KPG050 Bonds (Relevant Bonds)
We are writing to you in relation to Kiwi Property's proposal to amend the Master Trust Deed to increase
the maximum Gearing Ratio from 45% to 50%.
The Gearing Ratio Amendment must be approved by a Special Resolution of Holders of Relevant
Bonds.
If the Special Resolution is passed, Kiwi Property will pay Holders who voted (including by proxy) in
favour of the Special Resolution a Consent Fee equal to 0.50% of the principal amount of the Relevant
Bonds ($1.00 per Relevant Bond) they hold as at 5.00pm on Wednesday, 18 October 2023.
Why does Kiwi Property want to make these changes?
The Gearing Ratio Amendment, if approved, will ensure Kiwi Property's Gearing Ratio covenant is
consistent across its funding arrangements. In November 2022, we agreed with our bank lenders to
increase the maximum gearing ratio under our bank lending documentation to 50% (from 45%) once we
no longer have any Bonds outstanding with a maximum Gearing Ratio of 45%. Kiwi Property then
issued a new series of Bonds (KPG060) in March this year with a maximum Gearing Ratio of 50%.
The Gearing Ratio Amendment will also better align our financial covenant arrangements with other
comparable listed property companies in the New Zealand market.
What are you being asked to do?
We are asking you to vote (in person or by appointing a proxy) on the Special Resolution at a Meeting
to be held on Friday, 20 October 2023 at 1.00pm at:
Russell McVeagh
Level 30, Vero Centre
48 Shortland Street
Auckland 1010
New Zealand
You are entitled to vote if you are a Holder of one or more of the Relevant Bonds as at 1.00pm on
Wednesday, 18 October 2023. For the avoidance of doubt, Holders of Kiwi Property's KPG060 Bonds
are not entitled to vote on the Special Resolution (unless they also hold one of the Relevant Bonds).
The Kiwi Property Board supports the Gearing Ratio Amendment and strongly encourages you
to vote at the upcoming Meeting, either by proxy (using the enclosed form or online at
investorcentre.linkgroup.nz/voting/KPG) or in person.
The accompanying booklet sets out the terms, purpose and effect of the Gearing Ratio
Amendment, the process for passing the Special Resolution and other information that may be
relevant to you in deciding how to vote on the Special Resolution. Please read the booklet in full
before making any decision on how to vote on the Special Resolution.
Thank you for investing with Kiwi Property – we value your support.
Yours faithfully
Simon Shakesheff, Chair
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3. GEARING RATIO AMENDMENT
Background – Gearing Ratio
3.1 The Master Trust Deed contains a financial covenant, called the Gearing Ratio, which limits
the amount of money the Consolidated Group may borrow. The Gearing Ratio is set out in
clause 11.6 of the Master Trust Deed and reads as follows:
The Issuer undertakes to the Holders of Bonds and the Supervisor in
respect of such Holders that it will, for so long as any Bonds of the Issuer
are outstanding, ensure that at all times, total Finance Debt of the
Consolidated Group does not exceed 45% of the Total Tangible Assets
of the Consolidated Group.
. . .
3.2 For the purpose of the Gearing Ratio, in summary:
(a) "Finance Debt" means all indebtedness of the Consolidated Group in respect of
money borrowed or raised by any means (including bonds and bank debt), but
excluding subordinated debt;
(b) "Total Tangible Assets" means the total amount of all assets of the Consolidated
Group as disclosed in its latest financial statements, but excluding intangible assets;
and
(c) any unrealised exposures or gains under the Consolidated Group's derivative
contracts (for example, interest rate hedging) are excluded from Finance Debt and
the Total Tangible Assets respectively.
The above is a summary only. See the Master Trust Deed for full details of the Gearing Ratio
and the related definitions. A copy of the Master Trust Deed is available at
kiwiproperty.com/corporate/about-us/corporate-governance/ under the heading "trust deed".
3.3 An Event of Default will occur under the Master Trust Deed if the Gearing Ratio is breached
and not remedied within the timeframe set out in the Master Trust Deed.
3.4 The maximum Gearing Ratio of 45% set out in the Master Trust Deed applies to three of Kiwi
Property's existing Series of Bonds, being each Series of Relevant Bonds (the KPG030 Bonds,
the KPG040 Bonds and the KPG050 Bonds).
3.5 Kiwi Property's fourth existing Series of Bonds (the KPG060 Bonds) was issued in March 2023
with an increased maximum Gearing Ratio of 50%. This increased maximum Gearing Ratio
was contained in the Supplemental Trust Deed for the KPG060 Bonds and therefore only
applied to the KPG060 Bonds.
Gearing Ratio Amendment and its effect if the Special Resolution is passed
3.6 Kiwi Property is proposing to amend the Gearing Ratio set out in the Master Trust Deed by
increasing the ratio from 45% to 50%.
3.7 Once the Gearing Ratio Amendment is effective:
(a) the maximum Gearing Ratio set out in the Master Trust Deed will increase from 45%
to 50%; and
(b) as a result, the Consolidated Group will be permitted to have more Finance Debt
compared to the amount of Finance Debt that is permitted under the current
maximum Gearing Ratio of 45%.
5
3.8 In all other respects, the existing terms and conditions of the Master Trust Deed will continue.
3.9 See sections 6 and 7 of this booklet for more information about the steps necessary to bring
the Gearing Ratio Amendment into effect.
Reason for the Gearing Ratio Amendment
3.10 Kiwi Property is proposing to amend the Gearing Ratio because it considers that a maximum
Gearing Ratio of 50% is a more appropriate financial covenant (compared to a ratio of 45%)
for its business as one of New Zealand's largest listed property companies, including for the
following reasons:
(a) Alignment across funding arrangements: In November 2022, Kiwi Property
agreed with its bank lenders to increase the maximum gearing ratio to 50% under its
bank funding documents once Kiwi Property no longer has any Bonds with a
maximum Gearing Ratio of 45%. In March 2023, Kiwi Property issued the KPG060
Bonds with a maximum Gearing Ratio of 50%. Accordingly, the Gearing Ratio
Amendment will ensure consistency across Kiwi Property's debt portfolio.
(b) Alignment with the market: A maximum Gearing Ratio of 50% is generally
consistent with the approach adopted by most other comparable listed property
companies in the New Zealand market. Accordingly, the Gearing Ratio Amendment
will align Kiwi Property more closely with market precedent.
Gearing Ratio reporting
3.11 Kiwi Property is required to report the Gearing Ratio to the Supervisor as at Kiwi Property's
interim and year-end financial reporting dates (30 September and 31 March respectively).
3.12 The Gearing Ratio was 35.0% as at 31 March 2023 (being the most recent reporting date).
This is calculated on the basis of:
(a) $1,131 million of Finance Debt; and
(b) $3,229 million of Total Tangible Assets,
in each case, as at 31 March 2023.
3.13 Kiwi Property's average Gearing Ratio for the last five financial years is 32.3% (using the
average 31 March Gearing Ratios for the 2019 to 2023 financial years).
3.14 Kiwi Property's previously reported Gearing Ratio levels should not be construed as an
assurance of future gearing.
3.15 The Gearing Ratio would be 35.8% based on the Consolidated Group's Finance Debt as at 31
August 2023 (being the date of the most recent unaudited management accounts available as
at the date of this booklet) and with the Consolidated Group's Total Tangible Assets as at 31
March 2023 adjusted to reflect the September 2023 Draft Valuations.
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4. CONSENT FEE
Consent Fee if you vote in favour of the Special Resolution and the Special Resolution
is passed
4.1 Kiwi Property will pay you a Consent Fee if (and only if):
(a) you cast a valid vote (including by your representative or proxy) at the Meeting in
favour of the Special Resolution; and
(b) the Special Resolution is passed.
4.2 Kiwi Property will not pay you a Consent Fee if:
(a) you abstain from voting or cast a valid vote (including by your representative or
proxy) at the Meeting against the Special Resolution; or
(b) the Special Resolution does not pass (regardless of how you may vote).
4.3 If you are entitled to receive the Consent Fee, the amount of the Consent Fee will be equal to
0.50% of the aggregate Principal Amount of the Relevant Bonds ($1.00 per Relevant Bond)
you held as at 5.00pm on Wednesday, 18 October 2023. For example, if:
(a) you hold Relevant Bonds having an aggregate Principal Amount of $25,000;
(b) you cast a valid vote (including by your representative or proxy) at the Meeting in
favour of the Special Resolution; and
(c) the Special Resolution is passed,
Kiwi Property will pay you a Consent Fee of $125.00.
4.4 Kiwi Property will pay you the Consent Fee within 10 Working Days of the Special Resolution
being passed. The Consent Fee is a one-off fee.
Consent Fee – tax implications
4.5 The information set out below is of a general nature and does not constitute tax advice to any
Relevant Holder. The information is based on New Zealand law in force as at the date of this
booklet and is limited to New Zealand taxation only.
4.6 Kiwi Property does not assume any liability to you in relation to the tax treatment of any amount
paid to you. You should seek advice from a tax adviser if you have any questions regarding
the tax consequences of the Consent Fee. This includes in determining whether the Consent
Fee should be included in a New Zealand income tax return.
4.7 The Consent Fee is not interest. Accordingly, New Zealand resident and non-resident
withholding tax should not be applicable and will not be deducted from any Consent Fee paid
to you. Instead, if you are a New Zealand resident, it is likely that you will be required to
include the Consent Fee as income in your New Zealand income tax return. This should be
confirmed with your tax adviser.
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5. OTHER RELEVANT INFORMATION
Holders KPG060 Bonds will not vote on the Special Resolution
5.1 Holders of KPG060 Bonds are not entitled to vote on the Special Resolution as these Bonds
will not be adversely affected by the Gearing Ratio Amendment. This is because, as described
above, the KPG060 Bonds are already subject to a maximum Gearing Ratio of 50%.
5.2 For the avoidance of doubt, a Holder of KPG060 Bonds that also has a holding of Relevant
Bonds is entitled to vote on the Special Resolution in relation to those Relevant Bonds.
Key dates
5.3 The key dates for the Meeting are:
Proxy Close Time – latest time and date at
which Proxy Forms (or online appointment)
can be received by Link Market Services
1.00pm on Wednesday, 18 October 2023
Meeting 1.00pm on Friday, 20 October 2023
Payment of Consent Fee to Relevant
Holders that vote (including by
representative or proxy) in favour of the
Special Resolution (if the Special
Resolution is passed)
Within 10 Working Days after the Special
Resolution is passed
Date the Gearing Ratio Amendment is
made to the Master Trust Deed if the
Special Resolution is passed
On or about the date the Special Resolution
is passed
Grant Samuel Report
5.4 Kiwi Property has engaged Grant Samuel & Associates Limited to provide an independent
report to assist Relevant Holders in evaluating the proposal set out in this booklet. A copy of
the report accompanies this booklet.
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6. ACTIONS FOR RELEVANT HOLDERS
Carefully read this booklet
6.1 You should read this booklet in full before making any decision on how to vote on the
Special Resolution.
6.2 If you have any general questions about this booklet or the Special Resolution, please call our
Investor Services Team on +64 9 359 4000.
6.3 If you have any questions about how you should vote on the Special Resolution, you can seek
advice from a financial advice provider or solicitor to help you make a decision.
Vote on the Special Resolution
6.4 In general, you are entitled to vote at the Meeting if you are recorded on the Register as a
holder of a Relevant Bond as at 1.00pm on Wednesday, 18 October 2023 (being the Proxy
Closing Time). There are some exceptions to this which affect who is entitled to vote (see
section 7.4 of this booklet).
Voting in person
6.5 If you are entitled to vote and wish to do so in person, you should attend the Meeting.
6.6 A corporation or a corporation sole that is entitled to vote may appoint a person to attend the
meeting as its representative, being a person authorised by the directors of the corporation, a
person appointed as a proxy, a person appointed under a power of attorney, or (in the case of
a corporate sole only) a person authorised by the corporation's constitution.
Voting by proxy
6.7 If you are entitled to vote, but cannot or do not wish to attend the Meeting, you can appoint a
proxy to attend and vote at the Meeting on your behalf. Your proxy does not need to be a
Relevant Holder and can be the Chairperson of the Meeting.
6.8 If you appoint a proxy, you can direct your proxy how to vote for you or you can give the proxy
discretion to vote as they see fit. If you appoint the Chairperson of the Meeting as your
proxy, the Chairperson will vote in favour of the Special Resolution on your behalf
unless you direct otherwise on the Proxy Form.
6.9 If you intend to appoint a proxy, you must complete the Proxy Form enclosed with this booklet
and return it to Link Market Services, either by email or post to:
(a) by email: meetings@linkmarketservices.com (please add "Kiwi Property Proxy" in
the email subject line)
(b) by post:
Kiwi Property Group Limited
c/- Link Market Services Limited
PO Box 91976,
Auckland 1142
New Zealand
6.10 Alternatively, you can appoint a proxy online at investorcentre.linkgroup.nz/voting/KPG. You
will require your CSN/Holder Number and Authorisation Code (FIN).
6.11 The completed Proxy Form (or online proxy appointment) must be received by Link Market
Services no later than 1.00pm on Wednesday, 18 October 2023 (being the Proxy Closing
Time).
9
6.12 No proxy will be effective (unless the Supervisor and Kiwi Property otherwise agree) unless a
Proxy Form (or online proxy appointment) is completed and returned in accordance with the
instructions contained on the Proxy Form.
6.13 A validly appointed proxy is entitled to attend, vote and speak at the Meeting and (other than
to the extent the proxy is expressly directed to vote for or against a proposal) has powers
generally to act at the Meeting on behalf of the Relevant Holder as if the proxy was the
Relevant Holder.
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7. HOW IS THE SPECIAL RESOLUTION PASSED?
Who can pass the Special Resolution?
7.1 The Special Resolution must be passed by persons who are the Relevant Holders (and entitled
to vote) as at 1.00pm on Wednesday, 18 October 2023 (being the Proxy Closing Time).
Quorum
7.2 In order to hold the vote on the Special Resolution at the Meeting, there must be a quorum of
Relevant Holders present (either in person or by their representatives, including persons
holding proxies).
7.3 The quorum requirement will be satisfied if Relevant Holders (or their proxies) are present at
the Meeting who hold Relevant Bonds with a combined Principal Amount of no less than 25%
of the Principal Amount of Relevant Bonds held by all Relevant Holders who are entitled to
vote on the Special Resolution.
7.4 In general, all persons who are Relevant Holders as at 1.00pm on Wednesday, 18 October
2023 (being the Proxy Closing Time) are entitled to vote at the Meeting. The exceptions to
this are as follows:
(a) If you hold a Relevant Bond jointly with one or more other persons, only one person
is entitled to vote, with priority given to the joint holder named in the Register first.
(b) If the Relevant Holder is deceased, his or her legal personal representative will be
entitled to vote.
(c) If the Relevant Holder has been adjudicated bankrupt, the assignee in bankruptcy
will be entitled to vote.
(d) If Kiwi Property or any other member of the Consolidated Group holds any Relevant
Bonds, they are not entitled to vote.
7.5 If the required quorum is not present within 30 minutes of the time appointed for the Meeting,
the Special Resolution cannot be voted on and the Meeting will be adjourned to the time and
date that is 10 Working Days after the Meeting (or such later time or date as Kiwi Property and
the Supervisor may agree).
7.6 If the Meeting is adjourned because there was no quorum, the quorum requirement at the
adjourned meeting can be satisfied by a single Relevant Holder (or their proxy) being present,
regardless of the Principal Amount of Relevant Bonds held by the Relevant Holder.
Accordingly, if it is necessary to adjourn the Meeting, the Special Resolution will be voted on
at the adjourned meeting, provided at least one Relevant Holder is present at that meeting
and entitled to vote (either in person or represented by proxy). Any valid proxy given for the
Meeting will be valid for the adjourned meeting (if required).
Voting process
7.7 To pass the Special Resolution, Relevant Holders holding at least 75% of the Principal Amount
of the Relevant Bonds who are entitled to vote and are voting must vote in favour of the Special
Resolution.
7.8 In order to satisfy the requirements to pass the Special Resolution as described above, the
vote must be determined by a poll.
7.9 On a poll, each Relevant Holder who is present in person or by a representative and entitled
to vote will have one vote for every $1.00 of Principal Amount of the Relevant Bonds of which
that person is the Relevant Holder.
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Appointment of the Chairperson of the Meeting
7.10 The Supervisor has the right to appoint the Chairperson of the Meeting. The Supervisor has
nominated Liz Lim (Partner, Dentons Kensington Swan) to be Chairperson of the Meeting. If
the Chairperson of the Meeting is not present within 15 minutes after the time appointed for
the Meeting to commence, Relevant Holders (including representatives) present and entitled
to vote at the Meeting shall choose a person as Chairperson of the Meeting.
What happens if the Special Resolution is not passed?
7.11 If, when the vote is held, the outcome of the vote is that the Special Resolution is not passed,
the Gearing Ratio Amendment will not be made.
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8. SUPERVISOR'S LETTER
Public Trust Corporate Office
Level 16, 151 Queen Street, Auckland 1010
Private Bag 5902, Wellington 6140
P 0800 371 471 W publictrust.co.nz
To: Each holder of Kiwi Property's Relevant Bonds (as defined in the accompanying booklet)
Public Trust is the appointed Supervisor of your Relevant Bonds under Kiwi Property's Master Trust
Deed. We are writing to you, as Supervisor, in relation to the accompanying proposal by Kiwi Property
to consider and, if thought fit, pass a Special Resolution at a meeting of Relevant Holders on Friday, 20
October 2023 at 1.00pm.
In summary, the Special Resolution will approve an amendment to the Master Trust Deed to increase
the maximum Gearing Ratio from 45% to 50%.
We confirm that Kiwi Property has consulted with us in relation to the proposed amendment and that we
have had the opportunity to review and comment on the accompanying booklet.
We are satisfied that the Special Resolution has been properly put to holders of the Relevant Bonds in
accordance with the Master Trust Deed. We are also satisfied that the accompanying booklet presents
a fair and accurate summary of the amendment and its effect so that you can make a reasonably
informed voting decision.
We encourage you to read the accompanying booklet in full in order to make an informed decision before
voting on the Special Resolution. If you are unable to attend the meeting but would like to vote, please
complete the Proxy Form included in the accompanying booklet and forward it in accordance with the
instructions set out in the Proxy Form. Alternatively, you can appoint a proxy online at
investorcentre.linkgroup.nz/voting/KPG.
While we strongly encourage you to vote on the Special Resolution, we do not comment on how you
should vote. You must decide how you wish to vote, based on your assessment of the proposal.
If the Special Resolution is passed in accordance with the voting process described in the accompanying
booklet, please note the amendment will be binding on all holders of Relevant Bonds (including if they
have voted against the resolution or taken no action at all).
If you have any questions about how you should vote, you can seek advice from a financial advice
provider or solicitor to help you make a decision.
Finally, we note that Public Trust and New Zealand Permanent Trustees Limited (a subsidiary company
of Public Trust) each hold Relevant Bonds during the ordinary course of business activities. Such
holdings have no bearing on the independence of the role of the Supervisor.
Public Trust
Elena Vinton, Head of Client Services
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9. NOTICE OF MEETING
NOTICE OF A MEETING of the Holders of the following Bonds issued by Kiwi Property Group Limited
(Kiwi Property or the Issuer) under and pursuant to the master trust deed (Master Trust Deed)
originally dated 30 June 2014 (as amended from time to time) between the Issuer and Public Trust as
supervisor (Supervisor):
(a) $125,000,000 fixed-rate senior secured green Bonds maturing on 19 December 2024 which
are quoted on the NZX Debt Market under ticker code KPG030;
(b) $100,000,000 fixed-rate senior secured green Bonds maturing on 12 November 2025 which
are quoted on the NZX Debt Market under ticker code KPG040; and
(c) $150,000,000 fixed-rate senior secured green Bonds maturing on 19 July 2028 which are
quoted on the NZX Debt Market under ticker code KPG050,
together, the Relevant Bonds.
Unless provided otherwise, all capitalised terms in this notice have the meaning given to those terms in
the Master Trust Deed.
Kiwi Property hereby gives notice to Holders of Relevant Bonds that, pursuant to the provisions of
Schedule 1 to the Master Trust Deed, a meeting of Holders of Relevant Bonds has been convened by
Kiwi Property and will be held on:
Friday, 20 October 2023 at 1.00pm
at the following location:
Russell McVeagh
Level 30, Vero Centre
48 Shortland Street
Auckland 1010
New Zealand
for the purposes of considering and, if thought fit, passing the resolution below which will be proposed
as a Special Resolution in accordance with the Master Trust Deed.
The proposed Special Resolution will approve an amendment to the Master Trust Deed which increases
the maximum Gearing Ratio from 45% to 50%.
Further information about the terms, purpose and effect of the amendment, the process for passing the
Special Resolution and other information that may be relevant to you in deciding how to vote on the
Special Resolution is set out in the booklet in which this Notice of Meeting is included.
Special Resolution
RESOLVED by the Holders of the Relevant Bonds under the Master Trust Deed that the Supervisor be
authorised and directed to enter into an amendment deed with the Issuer to effect an amendment to
clause 11.6 (Gearing Ratio) of the Master Trust Deed by deleting the reference to "45%" therein and
replacing it with "50%".
14
10. GLOSSARY
In this booklet, unless the context otherwise requires:
Bond means a bond issued by Kiwi Property and constituted by, and subject to the terms and conditions
set out in, the Master Trust Deed (as supplemented by the relevant Supplemental Trust Deed for each
Series of Bonds)
Chairperson of the Meeting means the person appointed by the Supervisor to be the Chairperson of
the Meeting (or a replacement Chairperson appointed in accordance with the Master Trust Deed)
Consent Fee means the fee (as described further in sections 4.1 to 4.4 of this booklet) payable by Kiwi
Property to each Relevant Holder:
(a) who casts a valid vote (including by representative or proxy) at the Meeting in favour of the
Special Resolution; and
(b) if the Special Resolution is passed
Consolidated Group means Kiwi Property and its subsidiaries
Event of Default has the meaning given to that term in the Master Trust Deed
Finance Debt has the meaning given to that term in the Master Trust Deed, as summarised in paragraph
3.2 of this booklet
Gearing Ratio Amendment means the proposed amendment to the Gearing Ratio set out in the Master
Trust Deed to increase the ratio from 45% to 50%, as described in this booklet and contained in the
Notice of Meeting
Gearing Ratio means the gearing ratio set out in clause 11.6 of the Master Trust Deed, as further
described in paragraphs 3.1 to 3.5 of this booklet
Holder means a person recorded on the Register as holding Bonds
Kiwi Property, we or us means Kiwi Property Group Limited
KPG030 Bonds has the meaning given to that term in paragraph 1.1 of this booklet
KPG040 Bonds has the meaning given to that term in paragraph 1.1 of this booklet
KPG050 Bonds has the meaning given to that term in paragraph 1.1 of this booklet
KPG060 Bonds has the meaning given to that term in paragraph 1.2 of this booklet
Link Market Services means Link Market Services Limited
Master Trust Deed means the master trust deed dated originally dated 30 June 2014 (as amended
from time to time) between Kiwi Property as issuer and the Supervisor
Meeting means the meeting of Relevant Holders to be convened by Kiwi Property as set out in the
Notice of Meeting
Notice of Meeting means the notice of meeting in section 9 of this booklet
Principal Amount means $1.00 per Bond
proxy means, in relation to you, a person you appoint to be your representative at the Meeting and to
vote on your behalf in accordance with the Master Trust Deed
15
Proxy Closing Time means 48 hours before the day and time at which the Meeting is due to be held
Proxy Form means the proxy form enclosed with this booklet
Register means the register of Bonds maintained by Link Market Services (as registrar) in accordance
with the Master Trust Deed
Relevant Bonds has the meaning given to that term in paragraph 1.1 of this booklet
Relevant Holder means a Holder of Relevant Bonds
September 2023 Draft Valuations means the Consolidated Group's draft real property valuations for
the half financial year ending 30 September 2023 as disclosed by Kiwi Property via NZX on or about
Monday, 25 September 2023, which can be found at www.nzx.com/companies/KPG/announcements
The draft real property valuations include full independent draft valuations for all investment properties
other than The Base, Centre Place North, Sylvia Park Lifestyle, Resido Lynton (BTR1), Drury
development land and other adjoining industrial assets within the Sylvia Park Precinct where
independent desktop reviews were performed. The desktop reviews were completed by the same
independent valuers who completed full independent valuations at 31 March 2023. No valuations were
performed for the adjoining residential properties within the Sylvia Park Precinct. The final valuations
will be confirmed in Kiwi Property's financial statements for the half financial year ending 30 September
2023, scheduled for release in November 2023
Series means a series of Bonds
Special Resolution means the proposed resolution set out in the Notice of Meeting
Supervisor means Public Trust
Supplemental Trust Deed means, in relation to a Series of Bonds, the deed that is supplemental to the
Master Trust Deed, which constitutes and sets out the terms and conditions of that Series of Bonds
Total Tangible Assets has the meaning given to that term in the Master Trust Deed, as summarised in
paragraph 3.2 of this booklet
Working Day has the meaning given to that term in the Master Trust Deed and means, in summary, a
day other than a Saturday, a Sunday, a national public holiday (including if that holiday is observed on
a Monday) or a day falling in the period between 25 December and 2 January
---
INDEPENDENT REPORT
IN RELATION TO THE PROPOSAL BY KIWI PROPERTY GROUP LIMITED
TO RELEVANT BOND HOLDERS
GRANT SAMUEL & ASSOCIATES LIMITED
21 SEPTEMBER 2023
TABLE OF CONTENTS
1 Introduction ____________________________________________________________________________ 1
1.1 Background to the KPG Proposal ______________________________________________________ 1
1.2 Details of the KPG Proposal __________________________________________________________ 2
2 Scope of the Report ______________________________________________________________________ 3
2.1 Purpose of the Report ______________________________________________________________ 3
2.2 Basis of Evaluation _________________________________________________________________ 3
3 Profile of KPG’s Capital Structure ___________________________________________________________ 4
3.1 Financial Position __________________________________________________________________ 4
3.2 Security and Event of Default _________________________________________________________ 7
3.3 Forecast Gearing Ratio Analysis _______________________________________________________ 8
3.4 Gearing Ratio Sensitivity Analysis ______________________________________________________ 9
4 Comparable Analysis ____________________________________________________________________ 10
4.1 Gearing Ratios/LTV ratios of Comparable Listed Companies _______________________________ 10
4.2 Covenant Terms of Comparable Listed Companies _______________________________________ 10
4.3 Comparable Transaction Evidence ____________________________________________________ 12
5 Evaluation of the KPG Proposal ____________________________________________________________ 13
APPENDIX A – Transactive Evidence ____________________________________________________________ 15
APPENDIX B – Qualifications, Declarations and Consents ____________________________________________ 17
GLOSSARY
TERM DEFINITION
AFFO Adjusted funds from operations
Bank Facilities
Bank debt facilities provided by ANZ, BNZ, CBA, Westpac, CCB, HSBC and MUFG
Bonds
Green Bonds traded on the NZDX (KPG030, KPG040, KPG050 and KPG060)
FY22
Financial year ending 31 March 2022
FY23
Financial year ending 31 March 2023
FY24
Financial year ending 31 March 2024
Gearing Ratio Total Finance Debt of the KPG Consolidated Group divided by Total Tangible Assets of the KPG
Consolidated Group
Gearing Ratio Amendment
Amend the Gearing Ratio covenant set out in the Master Trust Deed from 45% to 50%
Grant Samuel
Grant Samuel & Associates Limited
GSD
Global security deed dated 5 November 1998, as amended from time to time
Interest Bearing Liabilities
The Bonds and the amounts outstanding under the Bank Facilities
KPG or the Company
Kiwi Property Group Limited
KPG Consolidated Group
KPG and its subsidiaries
KPG Proposal If the Special Resolution is passed and the Gearing Ratio Amendment is therefore approved, KPG will pay
a Consent Fee to those Relevant Bond holders that vote in favour of the Special Resolution. The Consent
Fee payable to such Relevant Bond holders will be equal to 0.50% of the aggregate principal amount of
the Relevant Bonds ($1.00 per Relevant Bond) they held as at 5.00pm on 18 October 2023
Master Trust Deed
Master trust deed dated 30 June 2014, as amended from time to time
Relevant Bonds
KPG030, KPG040 and KPG050 Bonds
S&P
S&P Global Ratings Australia Pty Limited
Security Trust Deed
Security trust deed dated 30 June 2014, as amended from time to time
Supplemental Trust Deed In relation to a series of Bonds, the deed that is supplemental to the Master Trust Deed, which constitutes
and sets out the terms and conditions of that series of Bonds
Westgate
Westgate Lifestyle Shopping Centre
1
1 Introduction
1.1 Background to the KPG Proposal
Kiwi Property Group Limited (KPG or the Company) is a New Zealand listed company that owns and manages
approximately $3.1 billion
1
of high quality property assets in New Zealand including Sylvia Park (Auckland),
the Vero Centre (Auckland), ASB North Wharf (Auckland) and a 50% interest in The Base (Waikato). As at 21
September 2023 KPG had a market capitalisation of approximately $1.35 billion.
KPG typically funds the development and acquisition of property assets with a mix of equity and debt. As at
31 March 2023 KPG had approximately:
§
$1.0 billion of bank debt facilities provided by ANZ, BNZ, CBA, Westpac, CCB, HSBC and MUFG (the Bank
Facilities); and
§
$625 million of Bonds (KPG020
2
, KPG030, KPG040, KPG050 and KPG060 (the Bonds)),
collectively,
the Interest Bearing Liabilities
.
The financial covenants that apply to the Bonds are:
§
a maximum Gearing Ratio of 45% for the KPG030, KPG040 and KPG050 Bonds; and
§
a maximum Gearing Ratio of 50% for the KPG060 Bonds
.
The Gearing Ratio is defined as:
§
total Finance Debt of the KPG Consolidated Group divided by Total Tangible Assets of the KPG Consolidated
Group (the Gearing Ratio).
3
In November 2022, KPG agreed with its bank lenders to increase the maximum gearing ratio in the bank
lending documentation to 50% (from 45%) once KPG no longer has any Bonds outstanding with a maximum
Gearing Ratio of 45%. KPG issued the KPG060 Bonds in March 2023 with a maximum gearing ratio of 50%.
KPG is requesting that holders of KPG030, KPG040 and KPG050 Bonds (the Relevant Bonds) vote on a Special
Resolution to amend the Gearing Ratio covenant set out in the Master Trust Deed from 45% to 50% (the
Gearing Ratio Amendment).
To pass the Special Resolution at a meeting at which the requisite quorum
4
is present, Relevant Bond holders
holding at least 75% of the principal amount of the Relevant Bonds who are entitled to vote and are voting
at the meeting (either in person or by proxy) must vote in favour of the Special Resolution.
Holders of the KPG060 Bonds are not entitled to vote on the Special Resolution. This is because the KPG060
Bonds are already subject to a maximum Gearing Ratio of 50%.
________________________________________________________________________________________________________________________________________________________
1
Estimated as at 30 September 2023.
2
The KPG020 Bonds were repaid on 7 September 2023.
3
For the purposes of the Gearing Ratio, in summary, (a) Finance Debt means all indebtedness of the KPG Consolidated Group in respect of
money borrowed or raised by any means (including bonds and bank debt) but excluding subordinated debt; (b) Total Tangible Assets
means the total amount of all assets of the KPG Consolidated Group as disclosed in its latest financial statements but excluding intangible
assets; and (c) unrealised exposures or gains under the KPG Consolidated Group's derivative contracts (for example, interest rate hedging)
are excluded from Finance Debt and the Total Tangible Assets respectively.
4
The quorum requirement will be satisfied if Relevant Bond holders (or their proxies) are present at the Meeting who hold Relevant Bonds
with a combined principal amount of no less than 25% of the principal amount of Relevant Bonds held by all Relevant Bond holders who
are entitled to vote on the Special Resolution.
2
1.2 Details of the KPG Proposal
If the Special Resolution is passed and the Gearing Ratio Amendment is therefore approved, KPG will pay a
Consent Fee to those Relevant Bond holders that vote (including by proxy) in favour of the Special Resolution.
For those Relevant Bond holders who are entitled to the Consent Fee, the amount of the Consent Fee will
be equal to 0.50% of the aggregate principal amount of the Relevant Bonds ($1.00 per Relevant Bond) they
held as at 5.00pm on Wednesday, 18 October 2023 (the KPG Proposal). For example, if a Relevant Bond
holder owns Relevant Bonds with an aggregate principal amount of $25,000, KPG will pay that Relevant Bond
holder a Consent Fee of $125 if the:
- Relevant Bond holder casts a valid vote at the Meeting in favour of the Special Resolution; and
- Special Resolution is passed.
KPG will pay the Consent Fee within 10 Working Days of the Special Resolution being passed.
The Consent Fee is not payable to any Relevant Bond holder who votes against the Special Resolution or who
does not cast a valid vote. The Consent Fee is also not payable to any Relevant Bond holders (regardless of
how they voted) if the Special Resolution does not pass.
KPG’s notice of meeting includes general information regarding the New Zealand tax implications of the
Consent Fee
5
. The Consent Fee is not interest. Accordingly, New Zealand resident and non-resident
withholding tax should not be applicable and will not be deducted from any Consent Fee paid to the Relevant
Bond holder. If the Relevant Bond holder is a New Zealand resident, it is likely that the Consent Fee will be
required to be included in their New Zealand income tax return. Relevant Bond holders should confirm this
with their own professional tax adviser.
________________________________________________________________________________________________________________________________________________________
5
The tax information is of a general nature and does not constitute tax advice to any Relevant Bond holder. The information is based on
New Zealand law in force as at the date of this report and is limited to New Zealand taxation only.
3
2 Scope of the Report
2.1 Purpose of the Report
KPG’s Directors have requested that Grant Samuel & Associates Limited (Grant Samuel) prepare an
Independent Report to assist the holders of the Relevant Bonds in evaluating the KPG Proposal.
Grant Samuel is independent and appropriately qualified and does not believe that there are any facts or
circumstances which could give rise to a conflict of interest, or which would otherwise affect its ability to
provide the requested Independent Report. Grant Samuel did not participate in setting the terms of the KPG
Proposal.
A copy of this report will be sent to the Relevant Bond holders. This report is for the benefit of the Relevant
Bond holders. The report should not be used for any purpose other than as an expression of Grant Samuel’s
opinion as to the evaluation of the KPG Proposal. This report should be read in conjunction with the
Qualifications, Declarations and Consents outlined at Appendix B.
2.2 Basis of Evaluation
Grant Samuel has evaluated the KPG Proposal by reviewing the following factors:
§
analysing KPG’s gearing ratios relative to the gearing/LTV ratios of comparable listed property
companies;
§
analysing the terms of comparable transactions;
§
analysing KPG’s bond terms relative to comparable listed companies;
§
reviewing KPG’s historical and forecast cash flow and financial metrics;
§
reviewing the costs of the Consent Fee;
§
considering any other identified advantages and disadvantages of the KPG Proposal; and
§
considering the implications of accepting or rejecting the KPG Proposal.
Grant Samuel’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, could 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, appendices A and B form part of this
report.
4
3 Profile of KPG’s Capital Structure
3.1 Financial Position
The financial position of KPG as at 31 March 2022 and 2023 is summarised below:
FINANCIAL POSITION ($ MILLIONS)
6
AS AT 31 MARCH 2022 31 MARCH 2023
Investment properties 3,359 3,064
Investment properties held for sale 209 130
Total Investment properties 3,568 3,194
Cash and cash equivalents 12 18
Other assets 15 27
Total assets 3,595 3,238
Interest bearing liabilities (1,136) (1,131)
Deferred tax liabilities (108) (104)
Other liabilities (78) (70)
Total liabilities (1,323) (1,305)
Net assets 2,272 1,933
Gearing Ratio 31.6% 35.0%
Pro forma Gearing Ratio after the sale of Westgate which settled May 2023 - 33.3%
KPG Annual Accounts
The following comments are relevant when reviewing the table above:
§
The value of investment properties declined by approximately 9.6% over the twelve month period to
31 March 2023 and KPG invested approximately $163.5 million in the portfolio through the period. The
following table summarises the movement in the book value of investment properties over the twelve
month period to 31 March 2023.
MOVEMENTS IN INVESTMENT PROPERTIES ($ MILLIONS)
Investment properties - March 22 3,359
Westgate Lifestyle (settled in May 2023) (95)
44 The Terrace (55)
Investment properties - March 23 before revaluation 3,209
Investment 163
Fair value gain / (loss) (309)
Investment properties - March 23 3,064
§
As at 31 March 2023 KPG had Interest Bearing Liabilities of approximately $1.1 billion and undrawn
bank facilities of $494 million.
INTEREST BEARING LIABILITIES AS AT 31 MARCH 2023
DRAWN UNDRAWN TOTAL
Bank loans 506 494 1,000
Fixed rate - Bonds 625 - 625
Interest bearing liabilities 1,131 494 1,625
________________________________________________________________________________________________________________________________________________________
6
Figures in the financial tables are subject to rounding adjustments and therefore may not tally.
5
§
As at 31 March 2023 KPG had five series of Bonds on issue with a face value of $625 million. On 7
September 2023 KPG repaid its KPG020 Bonds in full. The total value of the Relevant Bonds is $375
million.
FIXED RATE – BONDS PROFILE AS AT 31 MARCH 2023
FACE VALUE
($M) DATE ISSUED
DATE OF
MATURITY INTEREST RATE
MAXIMUM
GEARING RATIO
COVENANT
KPG030 125 19 Dec 17 19 Dec 24 4.33% 45%
KPG040 100 12 Nov 18 12 Nov 25 4.06% 45%
KPG050 150 19 Jul 21 19 Jul 28 2.85% 45%
Total – Relevant Bonds 375
KPG020 125 07 Sep 16 07 Sep 23 4.00% 45%
KPG060 125 27 Mar 23 27 Sep 29 6.24% 50%
Total – All Green Bonds 625
§
As at 31 March 2023 the weighted average term to maturity for the Interest Bearing Liabilities was
approximately 3.8 years. On the repayment of KPG020 in September 2023 the weighted average term
to maturity increased to 4.2 years. Approximately 90% of the Bank Facilities volume has a date of
maturity falling in either FY27 or FY28.
INTEREST BEARING LIABILIITIES VALUE BY MATURITY DATE AS AT 31 MARCH 2023 ($ MILLIONS)
§
The weighted average interest rate for the Interest Bearing Liabilities (inclusive of Bank Facilities, Bonds,
active interest rate derivatives, margins and line fees) increased from 3.85% in FY22 to 5.18% in FY23
which reflected the rising interest rate environment that occurred through the period.
§
KPG sold Westgate Lifestyle Shopping Centre (Westgate) on 1 May 2023. KPG’s pro forma Gearing Ratio
after the sale of Westgate declined to 33.3%. Over the last five years KPG’s Gearing Ratio has been
between 31.0% and 35.0%, within KPG’s target gearing range during that time of 25-35% and below the
Gearing Ratio threshold covenant of 45%. KPG’s target gearing range is not a contractual term of the
Bonds. KPG's target gearing range is determined by KPG at its discretion (subject to the threshold
covenant) and may be changed at any time.
0
100
200
300
400
500
600
FY24FY25FY26FY27FY28FY29FY30
$ millions
Bo ndsBank loans
6
HISTORICAL GEARING RATIOS
§
As at 31 March 2023 S&P has assigned a corporate credit rating of BBB (stable) to the Company and an
issue credit rating of BBB+ to each of the Bonds. On 26 June 2023 S&P announced that it had revised its
outlook for KPG from stable to negative and it noted the following:
“The negative outlook reflects our view that KPG's credit metrics will be constrained by diminished
earnings, high interest rates, and elevated capex requirements over the next 12 months. That said, we
expect the company will pursue capital management initiatives to restore weakened credit metrics
without compromising its asset portfolio quality.”
It also noted:
“KPG is making progress on its development program while trying to improve balance sheet flexibility
amid tough operating conditions, in our assessment. We also believe KPG is committed to maintaining
a financial profile consistent with the current 'BBB' rating and that it will deploy capital management
initiatives to improve credit metrics.”
§
The Bank Facilities financial covenants also includes a net rental income ratio, which measures the ratio
of the KPG Consolidated Group's net rental income to its net interest expense in any 12-month (the
ratio must be no less than 2.25 when tested) (Net Rental Income Cover ratio). The terms of the Bonds
do not include the Net Rental Income Cover ratio. However, the Net Rental Income Cover ratio
regulates the amount of interest bearing debt the KPG Consolidated Group may incur and therefore
provides indirect benefit for the Bond holders (in that KPG is required to comply with it under the bank
documentation). Over the last five years KPG’s Net Rental Income Cover ratio has ranged between 3.4
and 4.2 times, which is materially above the Bank Facilities financial covenant of 2.25 times. Rising
interest rates are expected to progressively impact this ratio over the next three years. As at 31 March
2023 KPG had several favourable financial attributes that will minimise the risk of the net rental interest
cover ratio falling below 2.25 times. This includes:
• KPG property portfolio occupancy sitting is at 99.3%;
• the weighted average lease expiry is at 4.4 years; and
• 84% of drawn finance debt is at fixed rates as at 31 March 2023 with an average term to maturity of
2.8 years which will partially mitigate rising interest rates.
31.0%
32.0%
31.2%
31.6%
Pro
forma
33.3%
35.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
FY19FY20FY21FY22FY23
Grating Ratio (%)
7
HISTORICAL NET RENTAL INCOME COVER RATIOS
3.2 Security and Event of Default
The documents that create or govern the security given by KPG and its subsidiaries that are party to a global
security deed dated 5 November 1998 (GSD) as guarantors (the Guarantors) are the:
§
GSD;
§
Mortgages; and
§
Security Trust Deed.
Kiwi Property's obligations for the Interest Bearing Liabilities are:
§
guaranteed by its subsidiaries that are party to the GSD as Guarantors; and
§
secured against all of the assets of the Guarantors, together with Mortgages over substantially all of the
real property (being land and the buildings and other fixtures on that land) owned by the Guarantors.
Under the Security Trust Deed, each Guarantor undertakes that the total assets held by the Guaranteeing
Group must not be less than 90% of the total assets of the Group.
Each series of Relevant Bonds will only become repayable before the relevant maturity date if an "Event of
Default" occurs and the supervisor under the Master Trust Deed then declares the Bonds to be immediately
due and payable. The Events of Default are set out in the Master Trust Deed and include the Gearing Ratio
in the Master Trust Deed being breached and not remedied within the grace period. The grace period is
approximately 13 months from the date of the event of default which is intended to provide KPG with
sufficient time to remedy the breach.
3.9
4.0 4.0
4.3
3.8
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
FY19FY20FY21FY22FY23
Interest Cover Ratio (times)
Interest c over ratioInterest c over ratio c oven an t
8
3.3 Forecast Gearing Ratio Analysis
The following table provides a high level forecast Gearing Ratio analysis over the 19 months (from 31 August
2023
7
) after factoring in: an estimation of property devaluation for the six month period to 30 September
2023; and the estimated capital to be spent over the next two years on existing developments at Sylvia Park
(Auckland), ASB North Wharf (Auckland), The Plaza (Palmerston North) and Drury (Auckland):
FORECAST GEARING RATIO ANALYSIS
DEBT
TANGIBLE
ASSETS
GEARING
RATIO
As at 31 August 2023 (Unaudited)
1,124 3,217 34.9%
Estimated 2.4% property devaluation as at 30 September 2023
- (77)
Pro forma position after property devaluation
1,124 3,140 35.8%
Committed capital expenditure as at 30 September 2023
86 86
Pro forma position as at 31 March 2025
(assuming no further movement in property valuations)
1,210 3,226 37.5%
The following comments are relevant when reviewing the table above:
§
KPG’s management have indicated the potential for a property devaluation of approximately 2.4% for
the six month period ending 30 September 2023. KPG’s Gearing Ratio is forecast to increase to
approximately 35.8%.
§
When factoring the committed capital expenditure on existing projects as at 30 September 2023 and
no further movements in property values, KPG’s gearing ratio would increase to approximately 37.5%.
It should also be noted that actual capital expenditure over the period to 31 March 2025 may differ
significantly from the estimated capital expenditure as at the date of this report.
§
Future movements in property valuations will have the most material impact on the Gearing Ratio (see
3.4 below for sensitivity analysis).
§
The analysis above and in section 3.4 below does not include the potential impact of retained profits
over the next 24 months. KPG’s target payout range is 90-100% of adjusted funds from operations
(AFFO) so the impact of retained AFFO would be minimal. The AFFO for KPG for the twelve months
ending 31 March 2022 (FY22) and 2023 (FY23) is summarised below:
AFFO ($ MILLIONS)
YEAR ENDING 31 MARCH 2022 31 MARCH 2023
Funds from operations 106.8 121.5
Maintenance capital expenditure (3.0) (6.6)
Tenant incentives and leasing fees (3.4) (2.2)
One off costs - 3.8
AFFO 100.4 116.5
Cash Dividend payment 87.9 89.5
Cash dividend payout ratio to AFFO 88% 77%
KPG Annual Accounts
§
Over the last two years, KPG has paid cash dividends of $87.9 and $89.5 million in FY22 and FY23
respectively. Although the retention of dividend would assist in debt reduction it is not a key lever to
mitigate risk from property value declines.
________________________________________________________________________________________________________________________________________________________
7
This is based on the unaudited management accounts as at 31 August 2023, which includes the impact of the sale of Westgate.
9
3.4 Gearing Ratio Sensitivity Analysis
The following table summarises the potential impact on the forecast Gearing Ratio from hypothetical
movements in KPG’s property values and assuming there is no change in the amount of KPG’s debt from the
forecast position in the table in section 3.3 above:
GEARING RATIO SENSITIVITY ANALYSIS
8
DEBT
TANGIBLE
ASSETS
MOVEMENT
IN VALUE
TANGIBLE
ASSETS AFTER
VALUE
MOVEMENT
ESTIMATED
GEARING
RATIO
-10% movement in KPG’s property value 1,132 3,074 (310) 2,916 41.5%
-5% movement in KPG’s property value 1,132 3,074 (155) 3,071 39.4%
Pro forma position as at 31 March 2025 1,210 3,226 - 3,226 37.5%
+5% movement in KPG’s property value 1,132
3,074
155 3,381 35.8%
+10% movement in KPG’s property value 1,132 3,074 310 3,536 34.2%
The following comments are relevant when reviewing the graph and table above:
§
If KPG’s property value declined by 10% over the next two years, the estimated Gearing Ratio would be
41.5%, approximately 3.5% below the existing maximum Gearing Ratio (45%) covenant for Relevant
Bonds and 8.5% below the proposed maximum Gearing Ratio of 50%.
§
For KPG to exceed a Gearing Ratio threshold of 45%, which is the current Gearing Ratio covenant of the
Relevant Bonds, the pro forma property value would have to decline by more than 17%. As summarised
in section 3.1, in the twelve months to 31 March 2023, property values declined by approximately 10%
and the analysis in section 3.3 assumes a further 2.4% decline in the six months to 30 September 2023.
The above focuses on the impact of property valuations only and assumes that there is no further change in
the amount of KPG's debt over any relevant period.
________________________________________________________________________________________________________________________________________________________
8
Grant Samuel selected the percentage movements in property value for purposes of the sensitivity analysis.
10
4 Comparable Analysis
4.1 Gearing Ratios/LTV ratios of Comparable Listed Companies
The following graph provides a comparison of comparable listed property companies most recently published
gearing/LTV ratios :
COMPARISON OF COMPARABLE LISTED COMPANIES GEARING/LTV RATIOS
KPG’s Gearing Ratio of 35% (33.3% on a pro forma basis after the sale of Westgate in May 2023) is generally
in line with the gearing/LTV of comparable listed property companies.
4.2 Covenant Terms of Comparable Listed Companies
The following table provides a summary of comparable listed property companies:
§
Gearing/LTV ratio covenants for bank borrowings and public bonds; and
§
Gearing range target.
SUMMARY OF NEW ZEALAND LISTED COMPANIES GEARING RATIO/LTV COVENANTS
CURRENT RANGE TARGET BANK COVENANT BOND COVENANT
KPG 25-35% Gearing Ratio Gearing Ratio must not exceed
45% (until all Bonds are subject
to a maximum Gearing Ratio of
50%)
The Gearing Ratio will increase
to 50% once KPG no longer has
any Bonds with a 45% Gearing
Ratio
Gearing ratio must not exceed
45% for the Relevant Bonds
Gearing ratio must not exceed
50% for the KPG060 Bond
Argosy
9
30-40% Debt to Total Assets Loan value does not exceed
50% of the fair value of property
(LTV)
LTV does not exceed 50% of
mortgage property value
________________________________________________________________________________________________________________________________________________________
9 Argosy Annual Report 2023 & Argosy Product Disclosure Statement dated February 2019
Pro forma
33.3%
35%
Pro Forma
35%
35%
29%
26%
35.0%
38.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
KPGArgosyPrecinctVital HealthcareProperty for industryGoodman Property
Group
Gearing Ratio (%)
11
RANGE TARGET BANK COVENANT BOND COVENANT
Precinct
10
Ensure no capital commitment
is entered into without funding
in place
Maintain adequate headroom
in relation to gearing covenants
to withstand portfolio
devaluations which may be
anticipated through the
property cycle
Total liabilities (excluding
deferred tax, derivative
financial instruments and sub-
ordinated debt liability) to not
exceed 50% of total assets
Loan does not exceed 50% of
the mortgage property value.
Vital Healthcare
11
Total borrowings do not exceed
50% of the gross value of the
Trust Fund
LTV does not exceed 55% Not applicable
Property for Industry
12
LTV does not exceed 40% LTV does not exceed 50% LTV does not exceed 50%
Goodman Property
Group
13
LTV between 20% 30% LTV does not exceed 50% LTV does not exceed 50%
Stride
14
Not available LTV does not exceed 50% Not applicable
Investore
15
Not available LTV does not exceed 52.5% LTV does not exceed 52.5%
16
Source: Comparable Company’s Annual Accounts and Recent Bond Product Disclosure Statements
The comparable listed companies have reasonably consistent gearing ratio/LTV covenants. The definitions
are slightly different, but due to the nature of the balance sheets are relatively comparable. With the
exception of KPG’s Relevant Bonds the gearing ratio or LTV ratio threshold is 50% (with the exception of Vital
Healthcare and Investore which is 55% and 52.5% respectively). The Gearing Ratio Amendment is generally
consistent with the gearing/LTV ratios of comparable listed property companies in New Zealand.
The gearing/LTV covenant target ranges of comparable listed property companies in New Zealand are not
consistent. Overall KPG’s current target range is towards the centre of the five comparable companies, with
a target gearing ratio being 10-15% below the gearing ratio covenant.
Relevant Bond holders should note that the target gearing range is not a contractual term of the Relevant
Bonds. KPG's target gearing range is determined by KPG at its discretion (subject to the threshold covenant)
and may be changed at any time. There are no consequences under the Master Trust Deed if KPG's actual
gearing is outside its target range.
________________________________________________________________________________________________________________________________________________________
10 Precinct Annual Report 2023 & Precinct Indicative Terms Sheet dated April 2022.
11
Vital Healthcare Annual Report 2023.
12
Property for Industry Annual Report 2022 & Property for Industry Indicative Terms Sheet dated September 2018.
13
Goodman Property Group Annual Report 2023.
14
Stride Property Group Annual Report 2023.
15
Investore Annual Report 2023 & Property for Investore Final Terms Sheet dated February 2022.
16
In FY23 as part of Investore's refinancing, Investore renegotiated its banking covenants with its banking syndicate, removing the covenant relating to the
weighted average lease term of Investore’s portfolio, and reducing the LVR covenant from 65% to 52.5%. Grant Samuel is not aware of this change also being
made to the covenant for the bonds.
12
4.3 Comparable Transaction Evidence
The amendment of terms of publicly listed bonds has not been very common in Australia and New Zealand.
In most situations, the amendment of terms required approval of debt or bond holders by way of a Special
Resolution. A summary of recent transaction evidence is summarised below:
CONSENT FEES OF COMPARABLE TRANSACTIONS
YEAR COMPANY EVENT
CONSENT FEE AS A PERCENTAGE
OF THE BOND’S FACE VALUE
2011 Telecom
Demerger, major transaction
0.50%
2016 NAB Alignment of terms 0.05%
2017 UDC Company divestment condition 0.10%
2017 Transurban Alignment of terms with market and business operations 0.10%
2018 Barminco Company divestment condition 0.25%
2021 Stockland Alignment of terms 0.10%
Average
0.18%
Average (exc Telecom) 0.12%
Median 0.10%
Source: Grant Samuel analysis
17
Further details on these transactions are set out in Appendix A.
KPG’s Proposed Consent Fee is higher than the transaction evidence where the primary purpose of the
transaction was to amend terms to align with existing covenants or to update the terms to better align
with the market.
The consent fees paid by:
§
Telecom reflected the complexity of the transaction, which included a material change in the underlying
business and the assets providing security. If Telecom’s domestic debt security holders did not vote in
favour of Telecom’s proposal, the separation of Telecom into Spark and Chorus may not have proceeded.
§
Barminco reflected that the noteholders consenting to amend the terms of the notes to remove a
condition of Ausdrill’s acquisition of Barminco.
________________________________________________________________________________________________________________________________________________________
17
Grant Samuel’s analysis is based on company announcements.
13
5 Evaluation of the KPG Proposal
In Grant Samuel’s opinion the KPG Proposal is fair and reasonable. A summary of key areas of assessment
to form this opinion are summarised in the points below.
5.1 Aligns the Financial Covenants across KPG’s Interest Bearing Liabilities
§
The Gearing Ratio Amendment will generally align the Gearing Ratio of the Relevant Bonds with the
gearing/LTV covenant ratios that are adopted by comparable listed companies in the New Zealand
market.
§
The Gearing Ratio Amendment will also mean that a maximum Gearing Ratio of 50% will apply to all of
KPG’s Interest Bearing Liabilities.
5.2 KPG operates well withing its existing Financial Covenants
§
Over the last five years KPG’s Gearing Ratio has been between 31.0% and 35.0%, within KPG’s current
target Gearing Ratio range of 25-35% and below the Gearing Ratio threshold covenant of 45%.
§
There is no certainty that KPG will retain this target gearing range band indefinitely in the future. This
target ratio is not a contractual term and is determined by KPG at its discretion. The target Gearing
Ratio is a key variable for S&P’s credit rating for the Relevant Bonds. If KPG elected to increase its target
Gearing Ratio and the capital expenditure outlook remained unchanged, we would expect this would
most likely result in a credit rating downgrade for the Bonds. The KPG Proposal does not trigger an S&P
credit rating review.
§
In the event KPG was at material risk of breaching the Gearing Ratio, we expect that KPG would seek to
implement a range of initiatives to reduce the Gearing Ratio. KPG’s initiatives may include a capital
raise, a reduction in dividend payments and the selling of assets.
§
Based on KPG's forecast Gearing Ratio analysis for the next two years, it would require a material decline
in property values for KPG to exceed the existing 45% Gearing Ratio covenant of the Relevant Bonds.
§
In our opinion, the Gearing Ratio Amendment is unlikely to have any discernible impact on the
tradability and pricing of the Relevant Bonds on the NZX Debt Market.
§
The Gearing Ratio Amendment provides KPG with some additional headroom, including to manage any
further property value declines.
§
In our opinion, the Gearing Ratio Amendment does not materially change the risk profile of the
Relevant Bonds.
5.3 The Consent Fee provides Relevant Bond holders with some compensation for the
change to the Gearing Ratio covenant.
§
If the Special Resolution is passed, KPG will pay a Consent Fee to those Relevant Bond holders that vote
(including by proxy) in favour of the Special Resolution. For those Relevant Bond holders who are
entitled to the Consent Fee, the Consent Fee will be equal to 0.50% of the aggregate principal amount
of the Relevant Bonds ($1.00 per Relevant Bond) they held as at 5.00pm on Wednesday, 18 October
2023.
§
The total cost to KPG of the Consent Fee if the Special Resolution is passed will not exceed $1,875,000
18
.
This cost is ultimately borne by KPG and it does not increase KPG’s credit risk profile.
________________________________________________________________________________________________________________________________________________________
18
Based on 100% voting in favour.
14
§
The Consent Fee is designed to encourage Relevant Bond holders to vote in favour of the Special
Resolution. KPG’s Proposed Consent Fee is higher than the transaction evidence where the primary
purpose of the transaction was to amend terms to align with existing debt facilities or to align the
terms with the market.
KPG’S PROPOSED CONSENT FEE VERSUS THE TRANSACTION EVIDENCE
5.4 Voting for, not voting or voting against the Special Resolution
§
If Relevant Bond holders elect to vote for the Special Resolution and the Special Resolution is passed,
the Relevant Bond holders that voted for the Special Resolution will receive the Consent Fee.
§
If Relevant Bond holders elect to vote against the Special Resolution and the Special Resolution is passed,
the Relevant Bond holders that voted against will not receive the Consent Fee. In this situation the
Relevant Bond holders that elect to vote against the Special Resolution will still be impacted by the
proposed amendments but they will not receive the Consent Fee. The same outcome will apply to
Relevant Bond holders that do not vote.
§
If Relevant Bond holders elect to vote against the Special Resolution and the Special Resolution is not
passed, the status quo will remain and Relevant Bond holders that voted for the Special Resolution will
not receive the Consent Fee.
§
Acceptance or rejection of the KPG Proposal is a matter for individual holders of Relevant Bonds based
on their own views regarding the terms of the KPG Proposal. Holders of Relevant Bonds will need to
consider the consequences of voting for or against the KPG Proposal and, if appropriate, consult their
own professional adviser(s).
GRANT SAMUEL & ASSOCIATES LIMITED
21 September 2023
0.00%
0.05%
0.10%
0.15%
0.20%
0.25%
0.30%
0.35%
0.40%
0.45%
0.50%
NAB
2016
UDC
2017
Transurban
2017
Stockland
2021
Barminco
2018
Telecom
2011
KPG
2023
Consent Fee (%)
AverageAverage (exc Telecom)
15
APPENDIX A – TRANSACTIVE EVIDENCE
2011 – Telecom
On 24 May 2011 Telecom Corporation of New Zealand Limited (Telecom) announced that it was proposing a
demerger of its fixed line access and network infrastructure business to create two separately listed
companies Chorus and Telecom
19
. The demerger was a requirement of entering into an agreement with
Crown Fibre Holdings Limited in relation to the Government’s Ultra Fast Broadband Initiative.
TCNZ Finance Limited, a wholly owned subsidiary of Telecom, was the funding arm for Telecom and its
subsidiaries and had a number of debt instruments on issue denominated in various currencies (the Domestic
Debt Securities).
The demerger was subject to a number of conditions including the approval of Domestic Debt Securities
holders.
Under the proposed demerger, the Domestic Debt Securities became the obligations of Telecom and the
asset base of the guaranteeing group changed significantly when the existing copper and fibre network, the
majority of the exchanges and network electronics were transferred to Chorus. However, offsetting this, the
indebtedness of the guaranteeing group also reduced as a proportion of debt obligations were repaid and/or
transferred to Chorus.
Initially Telecom proposed to pay a one off consent fee of 0.25% of the face value of the debt securities to
Domestic Debt Security holders that vote in favour of the extraordinary resolution, if it is approved and the
proposed demerger subsequently takes place.
After negotiations with Domestic Debt Security holders Telecom increased its Consent fee to 0.50% and
added the following terms to address the potential impact on pricing for a rating downgrade:
§
Spark’s credit ratings from Standard & Poor’s falls to BBB+ and Telecom’s credit rating from Moody’s
falls to Baa1, the interest rate applicable to the bonds existing at the date of the demerger increased by
0.50% per annum; and
§
If Spark’s credit ratings from Standard & Poor’s falls to BBB (or lower) and Telecom’s credit rating from
Moody’s falls to Baa2 (or lower), Telecom proposes that the interest rate applicable to the bonds
existing at the date of the demerger increased by a further 0.50% per annum.
2016 – National Australian Bank
In September 2016 National Australia Bank (NAB) announced that it wanted to align the terms and conditions
of a US$150 million bond with comparable bonds in the market to ensure ongoing cost efficiency of this
funding programme. The changes to the terms and conditions required approval by an Extraordinary
Resolution. Eligible bondholders that voted in favour of the Extraordinary Resolution were paid 0.05% of the
face value of the eligible bonds.
2017 – UDC Finance
In January 2017 ANZ Bank announced it agreed to sell its New Zealand asset finance business, UDC Finance
for NZ$660 million to HNA Group (ultimately, the sale transaction did not complete due to New Zealand's
Overseas Investment Office (OIO) rejecting HNA Group's application). The UDC sale was subject to closing
steps and conditions including engaging with investors on the repayment of UDC secured investments and
regulatory approvals.
The repayment of UDC secured investments was to enable HNA Group to fund UDC using alternative sources
of capital.
________________________________________________________________________________________________________________________________________________________
19
After the Demerger the company name was Telecom. The name of the company changed to Spark in 2014.
16
In 21 June 2017 ANZ held a meeting with UDC secured investment holders to vote on a special resolution to
amend the UDC trust deed which would enable the UDC secured investments to be repaid. The special
resolution was passed and the UDC secured investment holders were given the option to:
§
roll their UDC secured investments into a comparable ANZ product;
§
have their UDC secured investments repaid; or
§
apply the proceeds of the UDC secured investments to subscribe for any new investment that might be
offered by UDC under its HNA ownership.
ANZ paid a success based participation fee of 0.10% of the face value of secured investments on the date on
which the special resolution was passed to UDC secured investment holders that voted at the meeting.
2017 – Transurban
In 2017 Transurban sought the consent of noteholders to amend the security trust deed related to a series
of notes with a face value of approximately NZ$4.7 billion. The Transurban group had undertaken a review
of its corporate financing arrangements and had proposed the relevant amendments to reflect its current
business and to align with market terms. The note documentation contained various impractical and
administratively burdensome provisions, which were no longer considered appropriate for the scale of the
Transurban’s business and operations. The noteholders that approved the amendments received a consent
fee of 0.10% of the face value.
2018 – Barminco
On 15 August 2018, Ausdrill announced the proposed strategic acquisition of Barminco for approximately
A$700 million. The acquisition was subject to several conditions, including the consent of Barminco
noteholders to amend the terms of Barminco’s senior secured notes.
The terms of the notes were changed so that the proposed acquisition of Barminco by Ausdrill would not
constitute a “change of control” event. The consent was conditional on completion of the acquisition and
payment by Barminco of a 0.25% consent fee to noteholders.
2021 - Stockland Trust Management Limited
In early 2019 Australian listed property company Stockland announced that it intended to modify the terms
and conditions of its debt securities. The intention of these changes was to align the terms and conditions
with Stockland’s new bank debt documentation and covenant package which was more closely with market
precedents.
Stockland offered note holders that voted in favour of the extraordinary resolution an early consent fee of
0.10%. Note holders that voted against the extraordinary resolution did not receive any payment.
17
APPENDIX B – QUALIFICATIONS, DECLARATIONS AND CONSENTS
1. Qualifications
The Grant Samuel group of companies provides corporate advisory services in relation to mergers and acquisitions,
capital raisings, corporate restructuring and financial matters generally. One of the primary activities of Grant
Samuel is the preparation of corporate and business valuations and the provision of independent advice and
expert’s reports in connection with mergers and acquisitions, takeovers and capital reconstructions. Since
inception in 1988, Grant Samuel and its related companies have prepared more than 400 public expert and
appraisal reports.
The persons responsible for preparing this report on behalf of Grant Samuel are Michael Lorimer, BCA, Simon
Cotter, BCom, MAppFin, and Christopher Smith, BCom, PGDipFin, MAppFin. Each has a significant number of years
of experience in relevant corporate advisory matters.
2. Limitations and Reliance on Information
Grant Samuel’s opinion is based on economic, market and other conditions prevailing at the date of this report.
Such conditions can change significantly over relatively short periods of time. The report is based upon financial
and other information provided by the director and management of KPG. Grant Samuel has considered and relied
upon this information. Grant Samuel believes that the information provided was reliable, complete and not
misleading and has no reason to believe that any material facts have been withheld.
The information provided has been evaluated through analysis, enquiry, and review for the purposes of forming
an opinion as to the KPG Proposal. However in such assignments time is limited and Grant Samuel does not
warrant that these inquiries have identified or verified all of the matters which an audit, extensive examination or
“due diligence” investigation might disclose.
Grant Samuel has not undertaken a due diligence investigation of KPG. In addition, preparation of this report does
not imply that Grant Samuel has audited in any way the management accounts or other records of KPG. It is
understood that, where appropriate, the accounting information provided to Grant Samuel was prepared in
accordance with generally accepted accounting practice and in a manner consistent with methods of accounting
used in previous years.
An important part of the information base used in forming an opinion of the kind expressed in this report is the
opinions and judgement of the management of the relevant enterprise. That information was also evaluated
through analysis, enquiry and review to the extent practicable. However, it must be recognised that such
information is not always capable of external verification or validation.
The information provided to Grant Samuel included projections of future revenues, expenditures, profits and cash
flows of KPG prepared by the management of KPG. Grant Samuel has used these projections for the purpose of
its analysis. Grant Samuel has assumed that these projections were prepared accurately, fairly and honestly based
on information available to management at the time and within the practical constraints and limitations of such
projections. It is assumed that the projections do not reflect any material bias, either positive or negative. Grant
Samuel has no reason to believe otherwise.
However, Grant Samuel in no way guarantees or otherwise warrants the achievability of any projections for KPG.
Projections are inherently uncertain. Projections are predictions of future events that cannot be assured and are
necessarily based on assumptions, many of which are beyond the control of management. The actual future
results may be significantly more or less favourable.
18
To the extent that there are legal issues relating to assets, properties, or business interests or issues relating to
compliance with applicable laws, regulations, and policies, Grant Samuel assumes no responsibility and offers no
legal opinion or interpretation on any issue. In forming its opinion, Grant Samuel has assumed, except as
specifically advised to it, that:
§
the title to all such assets, properties, or business interests purportedly owned by KPG is good and
marketable in all material respects, and there are no material adverse interests, encumbrances, engineering,
environmental, zoning, planning or related issues associated with these interests, and that the subject assets,
properties, or business interests are free and clear of any and all material liens, encumbrances or
encroachments other than those created by the GSD and the other security documents described in this
report);
§
there is compliance in all material respects with all applicable national and local regulations and laws, as well
as the policies of all applicable regulators other than as publicly disclosed, and that all required licences,
rights, consents, or legislative or administrative authorities from any government, private entity, regulatory
agency or organisation have been or can be obtained or renewed for the operation of the business of KPG,
other than as publicly disclosed; and
§
there are no material legal proceedings regarding the business, assets or affairs of KPG, other than as publicly
disclosed.
3. Disclaimers
It is not intended that this report should be used or relied upon for any purpose other than as an expression of
Grant Samuel’s opinion that the KPG Proposal is fair and reasonable.
Grant Samuel expressly disclaims any liability to any Relevant Bond holder who relies or purports to rely on the
report for any other purpose and to any other party who relies or purports to rely on the report for any purpose
whatsoever.
This report has been prepared by Grant Samuel with care and diligence and the statements and opinions given by
Grant Samuel in this report are given in good faith and in the belief on reasonable grounds that such statements
and opinions are correct and not misleading. However, no responsibility is accepted by Grant Samuel or any of its
officers or employees for errors or omissions however arising in the preparation of this report, provided that this
shall not absolve Grant Samuel from liability arising from an opinion expressed recklessly or in bad faith.
Grant Samuel has had no involvement in the preparation of the Notice of Meeting issued by KPG and has not
verified or approved any of the contents of the Notice of Meeting. Grant Samuel does not accept any responsibility
for the contents of the Notice of Meeting (except for this report).
4. Independence
Grant Samuel and its related entities do not have any shareholding in or other relationship or conflict of interest
with KPG that could affect its ability to provide an unbiased opinion in relation to the KPG Proposal. Grant Samuel
had no part in the formulation of the KPG Proposal. Its only role has been the preparation of this report. Grant
Samuel will receive a fixed fee for the preparation of this report. This fee is not contingent on the outcome of the
KPG Proposal. Grant Samuel will receive no other benefit for the preparation of this report.
5. Information
Grant Samuel has obtained all the information that it believes is desirable for the purposes of preparing this report.
Grant Samuel confirms that in its opinion the information provided by KPG and contained within this report is
sufficient to enable Relevant Bond holders to understand all relevant factors and make an informed decision in
respect of the KPG Proposal. The following information was used and relied upon in preparing this report:
19
5.1 Publicly Available Information
§
KPG Annual Reports 2019 to 2023;
§
KPG Investor Presentations;
§
KPG060 Bond Product Disclosure Statement;
§
Master Trust Deed;
§
S&P Global Ratings Research Update KPG 27 June 2023;
§
Annual Reports of comparable listed companies; and
§
Broker research, industry reports and press articles.
5.2 Non Public Information
§
Notice of Meeting for the KPG Proposal;
§
KPG cash flow forecast analysis;
§
Security Trust Deed;
§
Supplemental Trust Deeds;
§
Terms of Mortgage; and
§
Global Security Deed.
6. Declarations
KPG has agreed to indemnify Grant Samuel and its employees and officers for time spent producing documents
for, giving evidence in, responding to, or defending, and reasonable legal costs and expenses incurred in relation
to, any inquiry or proceeding initiated by any person as a result of or in connection with this report or the services
provided by Grant Samuel in connection with this report. Where Grant Samuel is found to have been negligent
or engaged in misconduct Grant Samuel shall reimburse KPG the proportion of such amount paid by KPG that is
attributable to the negligence or misconduct. Any claims by KPG or Grant Samuel are limited to an amount equal
to the fees paid to Grant Samuel.
Advance drafts of this report were provided to the executive management of KPG. Certain changes were made to
the drafting of the report as a result of the circulation of the draft reports. There was no alteration to the
methodology, evaluation, conclusions or opinions as a result of issuing the drafts.
7. Consents
Grant Samuel consents to the issuing of this report in the form and context in which it is to be included with the
Notice of Meeting to be sent to Relevant Bond holders. Neither the whole nor any part of this report nor any
reference thereto may be included in any other document without the prior written consent of Grant Samuel as
to the form and context in which it appears.
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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