Notice of Special Meeting of Shareholders
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is given that WasteCo Group Limited will hold a special meeting of shareholders at PwC Centre,
Level 3, 60 Cashel Street, Christchurch Central City, Christchurch on Friday, 13 December 2024,
commencing at 11am.
Dear Shareholder,
On 22 November 2024 WasteCo Group Limited (Company or WasteCo) announced to the NZX that it had
entered into a conditional agreement to acquire all the shares in Civic Waste Limited for a purchase price of
$9 million, together with an earn out component based on the achievement of certain financial performance
milestones during the course of the 12-month period following the completion of the transaction.
The Company also announced that it had entered into a conditional subscription agreement with Empire
Waste Technology Limited (Empire) for the issue of $15 million of convertible notes (Notes).
This notice of special meeting of shareholders (notice) contains a resolution for the approval of the issue of
the Notes, and the conversion of the Notes into quoted ordinary shares in the Company (Shares).
The notice also contains a resolution permitting the issue of up to 250 million Shares at an issue price of
$0.02 each under a share purchase plan to be offered by the Company in December 2024.
Accompanying this notice is an independent adviser’s report (IAR) prepared by Simmons Corporate Finance
Limited required under the Takeovers Code relating to the conversion of Notes into Shares.
Each of the directors unanimously recommend that shareholders approve the resolutions. Each director has
represented to WasteCo that he will vote or procure the voting of all shares in the Company held or
controlled by the director or any of their associates in favour of the resolution to approve the issue and
conversion of the Notes.
If you are unable to attend the meeting, we encourage you to complete and lodge the proxy form in
accordance with the instructions on the back of that form and to vote in favour of the resolution. Otherwise,
we look forward to welcoming you to the m eeting.
Yours sincerely
Shane Edmond
Chairman
Important Dates and Times
Latest time for receipt of proxy forms and questions: 11am on Wednesday 11 December 2024
Time for determining voting entitlement at the Meeting: 5pm on Thursday 12 December 2024
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AGENDA
To consider, and if thought fit, pass the following ordinary resolutions:
Resolution 1 : To approve, for the purposes of NZX Listing Rule 4.2.1 and Rule 7(d) of the Takeovers Code,
the issue of $15 million principal amount of convertible notes (Notes) to Empire Waste Technology Limited
(Empire), and up to 750 million ordinary shares to Empire (subject to adjustment in accordance with the
terms of the Notes), on conversion of the Notes, on the essential terms described in the notice of meeting.
Resolution 2: Subject to resolution 1 being passed, to approve, for the purposes of NZX Listing Rules 4.2.1,
the issue of up to 250 million shares at an issue price of $0.02 under the share purchase plan to be offered
in December 2024, as more particularly described in the explanatory notes.
Further information relating to the resolutions is set out in the Explanatory Notes.
By order of the Board of Directors
Shane Edmond
Chairman
27 November 2024
EXPLANATORY NOTES
Resolution 1: issue of convertible notes
Background
As explained on the first page, WasteCo seeks shareholder approval to the issue of $15 million of Notes to
Empire in connection with the acquisition of Civic Waste. The acquisition of Civic Waste does not require
shareholder approval but more information about that acquisition is available in WasteCo’s market announcement
of 22 November 2024 at https://www.nzx.com/companies/WCO/announcements
.
Use of proceeds
The funds raised through the issue of Notes will be applied towards:
• Satisfying payment of the $9 million purchase price payable to acquire Civic Waste; and
• Providing growth capital for the Company, including but not limited to funding future acquisition opportunities.
Impact on financial position
At its most recent balance date of 31 March 2024, WasteCo had consolidated assets of $67.66m, consolidated
liabilities of $51.27m and total equity of $16.39m. Kiwibank is WasteCo’s external bank lender with facilities of
$35.45m as described in more detail at note 29 of WasteCo’s financial statements on page 65 of its 2024 annual
report which can be found at https://www.nzx.com/announcements/433557
. At 19 November 2024, WasteCo had
approximately $30.5m of borrowings drawn under its bank facilities with Kiwibank.
WasteCo intends to release its unaudited financial statements for the six months ended 30 September 2024 on
29 November 2024, which will be available at https://www.nzx.com/companies/WCO/announcements
.
The issue of the Notes will increase WasteCo’s assets by $15m and also increase its non-current liabilities by
$15m. Should Empire convert Notes, WasteCo’s liabilities would reduce by $1, and its equity increase by $1, for
every $1 of Notes converted.
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Essential terms of the Notes
The essential terms of the Notes are:
Issuer WasteCo Group Limited (WasteCo)
Subscriber Empire Waste Technology Limited (Empire), an entity which is ultimately under the
control of Simon and Paula Herbert
Issue size 15 million Notes issued at $1.00 principal amount each for a total issue size of
$15 million
Term 5 years from the subscription date. The subscription date is the date of settlement under
the Civic Waste sale and purchase agreement
Interest Rate 6% per annum
Interest Payments Payable in cash in arrears three business days before the end of each calendar month
Default Rate 12% per annum. Interest is payable at the default rate if for any reason, other than the
default of Empire, WasteCo fails to make a payment on the date that it is due, until the
late payment is made
Conversion Empire may elect to convert all or part of the Notes into WasteCo ordinary shares at any
time during the Term. The conversion occurs 10 business days after Empire serves a
notice on WasteCo electing to convert Notes. The number of shares to be issued is
determined in accordance with the following formula:
OS = PA ÷ A
In the above formula:
OS = the number of ordinary shares in the Company to be issued on
conversion of the Notes.
PA = the principal amount of the Notes to be converted into ordinary shares
(as specified in the relevant election notice).
A = $0.02 (subject to any adjustments).
“A” is adjusted proportionately if there is any consolidation or subdivision of shares
or other alteration in the share capital prior to the conversion.
In the event that all Notes are converted, Empire would be issued 750 million new
WasteCo ordinary shares (assuming there is no adjustment in the share capital for
the purposes of “A” above).
Any ordinary shares issued on conversion of Notes will rank equally with all other
shares then on issue in WasteCo.
Redemption If conversion of all of the Notes has not occurred at expiry of the Term, the company
must redeem the remaining Notes for cash
Transferability Empire may transfer its Notes subject to the approval of WasteCo (not to be
unreasonably withheld or delayed), although a transferee would need to comply with the
Takeovers Code to convert the Notes.
Security The obligations of WasteCo to Empire are secured by a second-ranking general
security deed over the present and after-acquired property of WasteCo. Empire ranks
behind the general security agreement held by WasteCo’s external lender Kiwibank (or
any replacement of Kiwibank as senior secured lender).
Governance rights While the Notes are outstanding, WasteCo agrees to use its best endeavours to:
• maintain a board with a maximum size of 5 directors of which two directors will be
nominated by Empire and appointed by the Board (Nominated Director);
• ensure that when a Nominated Director is up for re-election by shareholders at a
subsequent annual meeting the Board will recommend that person for re-election;
and
• ensure that if a Nominated Director retires or is not re-elected, Empire has a right to
nominate a replacement for appointment by the Board and the Board will procure
that such replacement is appointed.
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Warranties and
Covenants
WasteCo has provided Empire with a number of standard warranties, including on the
accuracy and completeness of due diligence information provided to Empire.
WasteCo has also provided Empire with a number of standard covenants, such as not
to grant security interests over WasteCo outside its ordinary course of business, to
comply with laws and to maintain a listing of the WasteCo’s shares.
WasteCo has also agreed not to undertake any Material Transaction (as defined in the
NZX Listing Rules, and regardless of whether the counterparty is a related party)
without the written consent of Empire.
Events of Default The following circumstances are events of default which would entitle Empire to require
WasteCo to redeem remaining Notes for $1.00 each by notice in writing by Empire to
WasteCo:
• non-payment of any amount due to Empire (including in accordance with a deed of
priority between Kiwibank (or a replacement senior lender) and Empire)
• a breach of any representation, warranty or undertaking in the Notes subscription
agreement, general security agreement or deed of priority (Transaction
document), in a material respect
• a breach of a Transaction document which is not capable or remedy in the opinion
of Empire or is not remedied within 20 business days
• an insolvency event occurring in respect of WasteCo
• a cross-default of any obligation for WasteCo to make a payment to another party
in respect of borrowed money in excess of $100,000
Exit Event If an Exit Event Occurs, Empire is entitled to require WasteCo to redeem remaining
Notes for $1.00 each by notice in writing by Empire to WasteCo. An Exit Event occurs if
a person (other than Empire) acquires control of WasteCo (defined as direct or indirect
ownership of at least 50% of WasteCo or the right to appoint at least 50% of the board
of WasteCo) or the whole or substantially the whole of the assets of WasteCo.
Anti-dilution WasteCo has agreed that, except in relation to the share purchase plan (covered by
resolution 2), it will use its best endeavours to offer Empire the right to participate in
future capital raisings by WasteCo to the extent that, immediately following the capital
raising, Empire could maintain the same percentage holding it would hold on conversion
of the Notes (had it converted the Notes immediately prior to that capital raise), subject
to compliance with all applicable laws.
To give effect to this provision, unless Empire agrees otherwise in writing, WasteCo will
use its best endeavours to seek all necessary consents and authorisations to permit
Empire to participate in the future capital raising, including to seek an exemption from
the Takeovers Panel or to seek shareholder approval.
Conditions
precedent
The subscription agreement between Empire and WasteCo is conditional on:
• the WasteCo board and shareholders approving the issue of the Notes, the potential
issue of shares in WasteCo upon conversion of the Notes, and the grant of the
second-ranking general security deed over the present and after-acquired property
of WasteCo to Empire, in each case to the extent required by the NZX Listing Rules
and the Takeovers Code
• The agreement for sale and purchase relating to Civic Waste becoming
unconditional (other than completion of the subscription for Notes)
• Kiwibank agreeing to the grant of second ranking security and a deed of priority with
WasteCo and Empire
• the composition of the board from the time of subscription for the Notes being
acceptable to Empire. Empire has acknowledged that WasteCo intends to elect a
new chair by 31 January 2025
• No material adverse change arising between entry into the subscription agreement
and subscription for the Notes. A material adverse change is defined as an adverse
event or circumstance (or a series of events or circumstances) arising which has
the effect, or is reasonably likely to have the effect, of reducing EBITDA (or forecast
EBITDA) for WasteCo and its subsidiaries in the 12 month period following the
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event by $500,000 or more, or by reducing the net tangible assets of WasteCo and
its subsidiaries by $500,000 or more.
Empire released a substantial product holder disclosure notice to the market on Friday 22 November 2024, which
included a full copy of the Convertible Notes Agreement. That disclosure can be found at:
https://www.nzx.com/announcements/442478
.
Choice of funding structure
As discussed, in section 3.9 of the IAR, in the past three financial years WasteCo has funded business and asset
acquisitions through a mixture of debt and equity.
The Board considered alternative capital raising options to enable completion of the Civic Waste acquisition,
including a rights issue, share placement or debt funding, but concluded none of these options provided the same
certainty that the required level of capital would be raised.
WasteCo also aims to raise up to $5m under the share purchase plan (the subject of resolution 2), to enable
existing shareholders to apply for shares at $0.02 each. While WasteCo obtained shareholder approval at its
annual meeting to place up to 127,255,915 new shares to wholesale investors at a volume weighted issue price
prior to the time of issue, it does not currently intend to act on that authority.
Information required by Takeovers Code
For the purposes of Rule 16 of the Takeovers Code set out in the Schedule to the Takeovers Regulations
2000 (Takeovers Code):
• Allottee: Empire Waste Technology Limited (Empire) is the allottee of ordinary shares (and therefore the
holder of the voting rights) in WasteCo that would be issued if Notes convert
• Controllers: Simon and Paula Herbert would have effective control of the voting rights held by Empire
• Particulars of voting securities: In accordance Schedule 5 of the Takeovers Code:
o up to 750 million of ordinary shares in WasteCo could be issued to the allottee (approved maximum
number)
o the percentage of the aggregate of all existing securities (848,372,765) and all voting securities that
could be allotted (750,000,000) that the approved maximum number represents is 88.405%
o the maximum percentage of all voting securities that could be held or controlled by the allottee after
completion of the allotment is 46.922%
o the maximum aggregate percentages of all voting securities that could be held or controlled by the
allottee and the allottee’s associates after completion of the allotment is 46.922%
o the date used for these calculations is 26 November 2024 (calculation date). These calculations
have been made on the assumptions that:
the number of voting securities is the number of WasteCo shares on issue on the calculation date
(being, 848,372,765)
there is no change in the total number of voting securities on issue between the allotment date
and the end of the allotment period other than as a result of the allotment (this is unlikely to be
the case, including because WasteCo expects to make allotments under the share purchase
plan offer contemplated by resolution 2)
the allottee is allotted the approved maximum number of shares under the allotment (the allottee
is entitled to decide to only convert some of the Notes during the Term or on expiry of the Term
may require repayment in cash instead of converting remaining Notes)
the allottee is allotted the maximum number of shares under the allotment,
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that there is no proportionate consolidation or subdivision of shares in WasteCo during the term
(were there to be a consolidation that would proportionately reduce the number of shares issued
on allotment; were there to be a subdivision that would proportionately increase the number of
shares issued on allotment).
neither the allottee nor any associate of the allottee currently holds any shares in WasteCo.
• the issue price for shares issued on conversion of Notes is $0.02 each (subject to proportionate
adjustment on any consolidation or subdivision of WasteCo shares or other alteration in the share
capital prior to the conversion). Empire will contribute cash on subscription for the Notes, which is
currently expected to occur on 16 December 2024. No further amount will be payable on conversion
of the Notes.
• the reasons for the allotment are described above
• the allotment, if approved, will be permitted under rule 7(d) of the Takeovers Code as an exception
to rule 6 of the Takeovers Code
• there is no agreement or arrangement (whether legally enforceable or not) that has been, or is
intended to be, entered into by Empire or the controllers of Empire stated above (other than under
the subscription agreement entered into between Empire and WasteCo) relating to the allotment,
holding or control of the voting securities to be issued to Empire, or to the exercise of any voting
rights in WasteCo.
Simmons Corporate Finance has prepared an independent adviser’s report (IAR) under rule 18 of the
Takeovers Code that accompanies this notice of meeting. Section 2.2 of the IAR summarises Simmons
Corporate Finance’s evaluation of the merits of the Notes issue. Simmons Corporate Finance concludes that
the positive aspects of the allotment of Notes to Empire outweighs the negative aspects from the perspective
of non-associated shareholders.
Each of the current directors of WasteCo, Shane Edmond, Roger Gower and James Redmayne recommend
that shareholders of WasteCo vote in favour of the resolution. Each director has represented to WasteCo that
it will vote or procure the voting of all shares in the Company held or controlled by the director or any of their
associates in favour of the resolution.
The directors consider the issue of the Notes is in the best interests of WasteCo, and to be fair and reasonable
to WasteCo and its shareholders, as the Notes issue has been agreed on an arms’ length commercial basis.
The proceeds of the Notes issue will enable the Company to complete the acquisition of Civic Waste and
provide funding for other growth opportunities.
Requirement for Resolution 1
In addition to the requirements of Rule 7(d) of the Takeovers Code discussed above, NZX Listing Rule
4.9.1(b)(i) allows the issue of shares on conversion of convertible notes where the issue of the convertible
notes is approved in the manner set out in NZX Listing Rule 4.2.1.
NZX Listing Rule 4.2.1 provides for shareholder approval of an issue of equity securities (such as shares) by
an ordinary resolution of shareholders. An ordinary resolution is a resolution passed by a majority of
shareholders voting in person or by proxy.
Under NZX Listing Rule 6.3.1, Empire and any Associated Person (as defined in the Listing Rules) or any
Associate (as defined in the Takeovers Code) are prohibited from voting on resolution 1. However, neither
Empire nor any Associated Person or Associate currently hold any shares in WasteCo.
Consequences if resolution 1 is not passed
If resolution 1 is not passed then WasteCo would not be able to complete the acquisition of Civic Waste as
the conditions of the Civic Waste acquisition would not be satisfied. WasteCo would also need to seek
alternative funds to pursue other growth opportunities.
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Resolution 2: share purchase plan
Introduction
WasteCo also seeks shareholder approval to issue up to 250 million shares at an issue price of $0.02 payable
in cash under a share purchase plan (SPP) to be offered in early December 2024 to existing shareholders.
The record date to determine entitlements for the share purchase plan (record date) will be announced to
NZX once finalised but is currently anticipated to be at 5pm on 29 November 2024.
Under the SPP, shareholders (or, in the case of shares held through a custodian, each beneficial owner),
with an address in New Zealand on the record date may apply for up to $50,000 of new shares at the issue
price of $0.02 each, provided that Directors of the Company and their Associated Persons (as defined in the
Listing Rules) are not eligible to participate in the SPP.
If more than 250 million shares are applied for in the SPP, WasteCo will scale back the applications by
reference to the number of shares held on the record date.
If there is a shortfall in applications under the SPP, the Board of WasteCo will have a discretion to place the
shortfall at the same issue price of $0.02 each with allocations to be made at the Board’s discretion provided
that Directors of the Company and their Associated Persons (as defined in the Listing Rules) are not eligible
to be allocated any shortfall shares.
The new shares issued under the share purchase plan will rank equally with existing shares in WasteCo from
the time of issue.
The Company currently has 848,372,765 quoted ordinary shares on issue, so the new shares would comprise
29.47% of the current shares on issue if all 250 million shares were issued. NZX Listing Rules 4.3 and 4.4
allow an offer of shares under a share purchase plan of up to 10% of the current shares on issue, without
shareholder approval. In this case the offer has been structured in a similar manner to a share purchase plan
under NZX Listing Rules 4.3 and 4.4 but since the offer size exceeds 10% of the current shares on issue,
and the directors also wish to have discretion to place any shortfall, shareholder approval is instead required
under NZX Listing Rule 4.2.1 (and NZX Listing Rules 4.3 and 4.4 do not apply to the offer).
If all 250 million shares were issued, Empire’s maximum percentage holding of voting rights on conversion of
all Notes would reduce from 46.922% to 40.576%.
The offer is expected to close on 17 December 2024 and new shares (including any shares issued in the
shortfall) are expected to be issued on 23 December 2024.
Use of proceeds
The proceeds from the share purchase plan will be used to provide further growth capital for WasteCo.
Requirement for Resolution 2
NZX Listing Rule 4.2.1 provides for shareholder approval of an issue of equity securities (such as shares) by
an ordinary resolution of shareholders. An ordinary resolution is a resolution passed by a majority of
shareholders voting in person or by proxy.
There are no voting restrictions on resolution 2 under Listing Rule 6.3.1, since the Directors of the Company
and their Associated Persons (as defined in the Listing Rules) are not eligible to participate in the SPP or to
be allocated any SPP shortfall shares.
Consequences if resolutions 1 or 2 are not passed
If resolution 2 is not passed then WasteCo would not be able to issue shares under the share purchase plan
and the Company would not be able to raise the additional capital sought. Resolution 2 is also subject to
resolution 1 (the issue of $15m of convertible notes) being approved by shareholders.
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IMPORTANT INFORMATION
ATTENDING THE MEETING
Shareholders will be able to attend the Special Meeting in person in Christchurch.
If you are attending the Special Meeting, please bring the proxy form or your CSN/Holder number with you to
help make registration quick and simple with the team at MUFG Pension & Market Services (previously known
as Link Market Services).
VOTING
The only persons entitled to vote at the Special Meeting are registered shareholders (or their proxies or
representatives) as at 5.00pm on Thursday 12 December 2024. Only the shares registered in those
shareholders’ names at that time may be voted at the Special Meeting.
Voting can be done in two ways: By attending the Special Meeting and submitting your vote; or by appointing
a proxy to vote on your behalf at the Special Meeting.
PROXIES, CORPORATE REPRESENTATIVES AND POWER OF ATTORNEY
Any shareholder may appoint another person or persons as proxy to attend, and vote on their behalf at the
Special Meeting. If a shareholder wishes to appoint a proxy to attend and vote in their place, that shareholder
should complete the proxy form which is enclosed with this Notice or follow the instructions on the proxy form.
Either of the joint holders of a share may sign the proxy form. A proxy does not have to be a shareholder in
the Company.
The Chairman, the Directors and Chief Executive Officer offer themselves as proxy to shareholders and, if
given discretion, will vote in favour of the Resolutions.
A proxy is able to vote on motions from the floor and/or any resolutions put before the meeting to amend the
resolution stated in this notice.
A corporation that is a shareholder may appoint a representative to attend the Meeting on its behalf in the
same manner as that which it could appoint a proxy. Corporate representatives should bring along to the
Meeting evidence of their authority to act for the relevant corporation. Any person representing a shareholder(s)
by virtue of a power of attorney must bring evidence of their authority to vote on behalf of the shareholder(s)
and power of attorney.
Proxy forms and corporate representatives must be received by MUFG Pension & Market Services by 11am
on Wednesday 11 December 2024 (being 48 hours before the commencement of the Special Meeting).
Proxy forms can be lodged by:
• Online lodgment at https://investorcentre.linkgroup.nz/voting/WCO
• Post to MUFG Corporate Markets, PO Box 91976, Auckland 1142, New Zealand
• Delivery in person to MUFG Pension & Market Services, Level 30, PwC Tower, 15 Customs
Street West, Auckland 1010
• Email to meetings@linkmarketservices.com
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page 1
LODGE YOUR PROXY
Online
https://investorcentre.linkgroup.nz/voting/WCO
Scan & Email
meetings@linkmarketservices.com
Deliver in person
MUFG Corporate
Markets
Level 30, PwC Tower
15 Customs Street
West, Auckland 1010
Mail
Address to:
MUFG Corporate
Markets PO Box 91976
Auckland 1142
New Zealand
PROXY FORM FOR THE 2024 SPECIAL MEETING OF SHAREHOLDERS
A special meeting of shareholders (Special Meeting) of WasteCo Group Limited (WasteCo) will be held on Friday 13 December 2024 at
11am at PwC Centre, Level 3, 60 Cashel Street, Christchurch Central City, Christchurch.
If you propose NOT to attend the Special Meeting physically but wish to vote by appointing a proxy please complete and return this form
(please keep it intact) to MUFG Corporate Markets (previously known as Link Market Services) no later than 11am on Wednesday 11
December 2024 (being 48 hours before the commencement of the Special Meeting). Please read the instructions overleaf before
completing this form.
Alternatively, you can go online to
https://investorcentre.linkgroup.nz/voting/WCO to appoint your proxy.
APPOINTMENT OF PROXY
A shareholder entitled to attend and vote at the Special Meeting
is entitled to appoint a proxy or, in the case of a corporate
shareholder, a representative to attend and vote on behalf of
them and that proxy or representative need not also be a
shareholder of WasteCo. A proxy appointment may be completed
in accordance of one of the methods listed above. If you do not
name a person as your proxy but have indicated on this form how
you wish to vote, the Chair of the Meeting will vote in accordance
to your express instructions only. A proxy is able to vote on
motions from the floor and/or any resolutions put before the
meeting to amend the resolutions stated in this form.
Appointing the Chair of the Meeting or a Director as your
proxy
If you wish, you may appoint the Chair of the Meeting, any of the
Directors or the Chief Executive Officer as your proxy. To do so,
please write their position in the box marked “full name of proxy”
e.g. “Chair of Meeting”. If given discretion, they will vote in favour
of the resolutions. If you return this form without directing the
proxy how to vote on any particular resolution, you will be deemed
to have given your proxy discretion as to whether and how to vote
on that resolution, unless specifically restricted from voting.
VOTING RESTRICTIONS
Empire Waste Technology Limited (Empire) and any Associated
Person (as defined in the Listing Rules) or any Associate (as
defined in the Takeovers Code) are prohibited from voting on
resolution 1. However, neither Empire nor any Associated Person
or Associate currently hold any shares in WasteCo.
There are no voting restrictions on resolution 2.
ATTENDING THE MEETING
If you propose to attend the Special Meeting without
appointing a proxy, please bring this Proxy Form intact to the
Special Meeting, as the barcode is required for registration.
SIGNING INSTRUCTIONS FOR PROXY FORMS
Individual
This Proxy Form must be signed by the shareholder or his/ her/
its attorney duly authorised in writing.
Joint holding
This Proxy Form may be signed by, or on behalf of, either of
the joint shareholders (or their duly authorised attorney).
Power of Attorney
If this Proxy Form is signed under a power of attorney, a copy
of the power of attorney and a signed certificate of non-
revocation of the power of the attorney, under which it is signed,
must be produced to WasteCo with this Proxy Form (but cannot
be done online).
Company
This Proxy Form must be signed by a Director or a duly
authorised Officer acting under the express or implied authority
of the shareholder, or an attorney duly authorised by the
shareholder
Turn over to complete the Proxy Form
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PROXY FORM
STEP 1: APPOINT A PROXY TO VOTE ON YOUR BEHALF
I/We being a shareholder of WasteCo Group Limited
Hereby appoint of
(e-mail address)
or failing him/her of
(e-mail address)
as my/our proxy to vote for me/us on my/our behalf at the Special Meeting of shareholders of WasteCo Group Limited to be held at PwC
Centre, Level 3, 60 Cashel Street, Christchurch Central City, Christchurch at 11am on Friday 13 December 2024, and at any
adjournment of that meeting. Please indicate with a tick in the appropriate boxes below how you wish your proxy to vote. If you
wish, you may appoint as your proxy the Chair of the Meeting, any other Director or the Chief Executive Officer.
STEP 2: ITEMS OF BUSINESS – VOTING INSTRUCTIONS
Tick ( ) in box to vote
ORDINARY RESOLUTIONS For Against Proxy Abstain
Discretion
1. To approve, for the purposes of NZX Listing Rule 4.2.1 and Rule 7(d)
of the Takeovers Code, the issue of $15 million principal amount of
convertible notes (Notes) to Empire Waste Technology Limited
(Empire), and up to 750 million ordinary shares to Empire (subject to
adjustment in accordance with the terms of the Notes), on conversion
of the Notes, on the essential terms described in the notice of meeting.
2. Subject to resolution 1 being passed, to approve, for the purposes of
NZX Listing Rules 4.2.1, the issue of up to 250 million shares at an
issue price of $0.02 under the share purchase plan to be offered in
December 2024, as more particularly described in the explanatory
notes.
STEP 3: 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.
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www.simmonscf.co.nz
WasteCo Group Limited
Independent Adviser’s Report
In Respect of the Issue of
$15 Million of Convertible Notes
to Empire Waste Technology
Limited and the Conversion of
the Convertible Notes into
Ordinary Shares
November 2024
Statement of Independence
Simmons Corporate Finance Limited 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 the cash fee for providing
this report.
Simmons Corporate Finance Limited has satisfied the Takeovers Panel, on the basis of the material provided to the
Takeovers Panel, that it is independent under the Takeovers Code for the purposes of preparing this report.
WasteCo Group Limited Independent Adviser’s Report
Index
Section Page
1.
Introduction ........................................................................................................................ 1
2. Evaluation of the Merits of the Empire Allotment ............................................................... 4
3. Profile of WasteCo Group Limited ................................................................................... 15
4. Valuation of the Convertible Notes .................................................................................. 22
5. Sources of Information, Reliance on Information, Disclaimer and Indemnity .................. 25
6. Qualifications and Expertise, Independence, Declarations and Consents ...................... 27
WasteCo Group Limited Page 1 Independent Adviser’s Report
1. Introduction
1.1 Background
WasteCo Group Limited (WasteCo or the Company) is a leading South Island waste
solution company, processing and diverting liquid and solid waste from landfill. It
provides comprehensive solutions for household, commercial, industrial and local
authority customers.
WasteCo’s shares are listed on the main equities securities market (the NZX Main
Board) operated by NZX Limited (NZX) with a market capitalisation of approximately
$23.8 million as at 22 November 2024. Its audited total equity as at 31 March 2024
was approximately $16.4 million.
A profile of WasteCo is set out in section 3.
1.2 Issue of Convertible Notes
WasteCo has entered into a Convertible Note Subscription Agreement dated
22 November 2024 (the Subscription Agreement) with Empire Waste Technology
Limited (Empire) under which Empire will subscribe for $15 million of convertible
notes (CNs) at an issue price of $1.00 per CN (the Face Value) (the CNs Issue).
Empire may at its discretion elect to convert all or some of the CNs at a conversion
price of $0.02 for each ordinary share (the Conversion Price) at any time up to and
including the date which is the end of the 5 year term of the CNs (the Redemption
Date).
1.3 Empire Waste Technology Limited
Empire is wholly owned by Empire Holdings (Waste) Limited, a company which is
ultimately under the control of Paula Herbert and Simon Herbert.
Empire’s directors are Paula Herbert and Simon Herbert, who also own Empire
Capital Limited (Empire Capital).
Empire Capital is an investment vehicle for Mrs Herbert and Mr Herbert. Mrs Herbert
and Mr Herbert ultimately control significant commercial property and marina assets
as well as investments in certain technology and other business operations.
We understand that none of Empire, Empire Capital, Mrs Herbert or Mr Herbert
currently hold any shares in WasteCo at present.
1.4 Impact on Shareholding Levels
The Company’s shareholders not associated with Empire (the Non-associated
Shareholders) currently collectively hold 100% of the Company’s 848,372,765
ordinary shares on issue.
If all 15,000,000 CNs issued to Empire under the CNs Issue are converted into
750,000,000 ordinary shares (the Empire Allotment), then:
Empire will hold 46.92% of the Company’s shares
the Non-associated Shareholders will collectively hold 53.08% of the
Company’s shares.
WasteCo Group Limited Page 2 Independent Adviser’s Report
Maximum Impact of the Empire Allotment on Shareholding Levels
Current
Empire
Allotment
Post the Empire Allotment
Shares % Shares Shares %
Empire - 0.00% 750,000,000 750,000,000 46.92%
Non-associated Shareholders 848,372,765 100.00% - 848,372,765 53.08%
Total
848,372,765 100.00% 750,000,000 1,598,372,765 100.00%
1.5 Summary of Opinion
Our evaluation of the merits of the Empire Allotment as required under the Takeovers
Code (the Code) is set out in section 2.
In our opinion, after having regard to all relevant factors, the positive aspects of the
Empire Allotment outweigh the negative aspects from the perspective of the
Non-associated Shareholders.
1.6 Special Meeting
The Company’s shareholders will vote at the Company’s special meeting of
shareholders on 13 December 2024 on an ordinary resolution in respect of the CNs
Issue and the Empire Allotment (resolution 1 - the Allotment Resolution).
The Allotment Resolution is an ordinary resolution which is passed by a simple
majority of votes of those shareholders entitled to vote and who vote on the
resolutions.
If Empire holds any shares in WasteCo at the date of the special meeting, neither it
nor any of its associates (as defined in the Code) will be permitted to vote on the
Allotment Resolution.
If the Allotment Resolution is approved, the Company’s shareholders will also vote
on an ordinary resolution in respect of a share purchase plan (the SPP) to be offered
in December 2024 to the Company’s shareholders to raise up to $5 million (resolution
2).
1.7 Regulatory Requirements
WasteCo is a code company as defined by the Code and is subject to the provisions
of the Code.
Rule 6 of the Code prohibits:
a person who holds or controls no voting rights or less than 20% of the voting
rights in a code company from holding or controlling an increased percentage
of the voting rights in the code company unless, after that event, that person
and that person’s associates hold or control in total not more than 20% of the
voting rights in the code company
a person who holds or controls 20% or more of the voting rights in a code
company from holding or controlling an increased percentage of the voting
rights in the code company
unless done in compliance with exceptions to this fundamental rule.
WasteCo Group Limited Page 3 Independent Adviser’s Report
One of the exceptions, set out in Rule 7(d) of the Code, enables a person to become
a holder or controller of an increased percentage of voting rights by an allotment of
voting securities in the code company if the allotment is approved by an ordinary
resolution of the code company (on which neither that person, nor any of its
associates, may vote).
If Empire converts all or some of its CNs into ordinary shares, it will increase its
control of the voting rights in WasteCo from nil to up to 46.92%.
Accordingly, in accordance with the Code, the Non-associated Shareholders will vote
at the Company’s special meeting on the Allotment Resolution in accordance with
the Code.
Rule 18 of the Code requires the directors of a code company to obtain an
Independent Adviser’s Report on the merits of an allotment under Rule 7(d).
This Independent Adviser’s Report is to be included in, or accompany, the notice of
meeting pursuant to Rule 16(h).
1.8 Purpose of the Report
The Company’s board of directors (the Board) has engaged Simmons Corporate
Finance Limited (Simmons Corporate Finance) to prepare an Independent
Adviser’s Report on the merits of the Empire Allotment in accordance with Rule 18 of
the Code.
Simmons Corporate Finance was approved by the Takeovers Panel on 3 September
2024 to prepare the Independent Adviser’s Report.
Simmons Corporate Finance issues this Independent Adviser’s Report to the Board
for the benefit of the Non-associated Shareholders to assist them in forming their own
opinion on whether to vote for or against the Allotment Resolution.
This Independent Adviser’s Report is not to be used for any other purpose without
our prior written consent.
WasteCo Group Limited Page 4 Independent Adviser’s Report
2. Evaluation of the Merits of the Empire Allotment
2.1 Basis of Evaluation
Rule 18 of the Code requires an evaluation of the merits of the Empire Allotment,
having regard to the interests of the Non-associated Shareholders.
There is no legal definition of the term merits in either the Code or in any statute
dealing with securities or commercial law in New Zealand.
In the absence of an explicit definition of merits, guidance can be taken from:
the Takeovers Panel Guidance Note on Independent Advisers dated
1 November 2023
definitions designed to address similar issues within New Zealand regulations
which are relevant to the proposed transaction
overseas precedents
the ordinary meaning of the term merits.
We are of the view that an assessment of the merits of the Empire Allotment should
focus on:
the rationale for the CNs Issue and the Empire Allotment
the terms and conditions of the CNs Issue
the impact of the CNs Issue and the Empire Allotment on WasteCo’s financial
position
the impact of the Empire Allotment on the control of the Company
the dilutionary impact of the Empire Allotment
the impact of the CNs Issue and the Empire Allotment on WasteCo’s share
price
the benefits and disadvantages to the Non-associated Shareholders and
Empire of the CNs Issue and the Empire Allotment
the likelihood of the Allotment Resolution being approved
the implications if the Allotment Resolution is not approved.
Our opinion should be considered as a whole. Selecting portions of the evaluation
without considering all the factors and analyses together could create a misleading
view of the process underlying the opinion.
WasteCo Group Limited Page 5 Independent Adviser’s Report
2.2 Summary of the Evaluation of the Merits of the Empire Allotment
Our evaluation of the merits of the Empire Allotment is set out in detail in sections 2.3
to 2.14.
The CNs Issue will provide $15 million of funding to WasteCo, which the Board
considers sufficient to fund the Company’s proposed acquisition of 100% of the
shares of Civic Waste Limited (Civic) for $9.0 million, together with an earnout
component (the Civic Acquisition) as well as providing growth capital for the
Company.
The Empire Allotment will enable Empire to convert its CNs into ordinary shares, in
which case WasteCo will not need to redeem those CNs in cash when they mature
at the end of the 5 year term.
Empire currently does not hold any of the Company’s shares on issue. Following the
Empire Allotment, Empire will hold up to 46.92% of the Company’s shares on issue
(depending on how many CNs are converted into ordinary shares).
In summary, the key positive aspects of the Empire Allotment are:
the rationale for the CNs Issue is sound. The CNs Issue will provide $15 million
of capital to fund the Civic Acquisition as well as future acquisition opportunities
the rationale for the Empire Allotment is sound. It will preserve WasteCo’s cash
resources by converting interest bearing debt (in the form of the CNs) into
equity
the terms of the CNs Issue are reasonable:
the 6.0% coupon is favourable to the Company as it is lower than what we
expect WasteCo would have to pay on a $15 million subordinated loan
the Conversion Price of $0.02 per ordinary share is slightly below the
Company’s current share price. It is equivalent to the issue price of the
SPP that WasteCo plans to offer to the Non-associated Shareholders
(subject to shareholder approval) to raise up to $5 million in conjunction
with the CNs Issue and the Civic Acquisition
we assess the value of each $1 CN to be in the range of $0.985 to $1.094
the CNs Issue will have a positive impact on the Company's financial position,
raising $15 million of interest bearing debt which may be partially or fully
converted into equity (at Empire’s discretion) via the Empire Allotment.
In summary, the key negative aspects of the Empire Allotment are:
Empire’s shareholding in WasteCo will be up to 46.92% following the Empire
Allotment (depending on the number of CNs it converts into ordinary shares),
resulting in Empire holding a significant degree of influence over the outcome
of shareholder voting. Furthermore, WasteCo has agreed not to undertake any
Material Transaction (as defined in the NZX Listing Rules) without the written
consent of Empire
a condition of the Subscription Agreement is that the composition of the Board
is acceptable to Empire from the time of its subscription for the CNs. Empire
will also have the right to appoint 2 (out of 5) directors to the Board as well as
the right to approve the appointment of an independent chair of the Board,
giving it a degree of influence over the Board
WasteCo Group Limited Page 6 Independent Adviser’s Report
the Empire Allotment will dilute Non-associated Shareholders’ proportionate
shareholdings in the Company by up to 46.9% (if all 15,000,000 CNs are
converted into ordinary shares) prior to the issue of any shares under the SPP.
Non-associated Shareholders will be able to reduce this dilutionary impact to
some extent by participating in the SPP
the attraction of WasteCo as a takeover target may diminish to a degree.
The Empire Allotment is unlikely to have any significant impact in the near term on:
WasteCo’s share price as the Conversion Price is close to (but slightly below)
the current share price
the liquidity of WasteCo’s shares as trading in the Company’s shares is
extremely thin.
If the Allotment Resolution is not approved, then neither the CNs Issue nor the Civic
Acquisition can proceed. WasteCo would need to seek alternative funds to pursue
other growth opportunities.
There are a number of positive and negative features associated with the Empire
Allotment. In our view, when the Non-associated Shareholders are evaluating the
merits of the Empire Allotment, they need to carefully consider whether the negative
aspects of the Empire Allotment, including the level of control that Empire will hold
over the Company and the dilutionary impact, could justify voting against the
Allotment Resolution with the outcome that neither the CNs Issue nor the Civic
Acquisition can proceed and the Company would need to seek alternative sources of
capital in order to pursue other growth opportunities.
In our opinion, after having regard to all relevant factors, the positive aspects
of the Empire Allotment outweigh the negative aspects from the perspective of
the Non-associated Shareholders.
2.3 Rationale for the CNs Issue and the Empire Allotment
WasteCo had cash and cash equivalents of $1.8 million, a bank overdraft of
$2.3 million and $31.5 million of borrowings as at 31 March 2024.
The intended use of funds raised under the CNs Issue is:
to fund the Civic Acquisition that WasteCo intends to undertake in December
2024 at a cost of $9.0 million
to provide growth capital for the Company, including, but not limited to, funding
future acquisition opportunities.
We consider the rationale for the CNs Issue to be sound. The CNs will provide
$15 million of capital to fund the Civic Acquisition and other potential acquisitions in
the future.
We consider the rationale for the Empire Allotment to be sound as it will preserve the
Company’s cash resources by converting interest bearing debt (in the form of the
CNs) into equity.
WasteCo Group Limited Page 7 Independent Adviser’s Report
2.4 Terms of the CNs Issue
Size of the CNs Issue
We are advised that the $15 million of CNs was based on the Board’s assessment of
the capital required to fund the Civic Acquisition and future acquisition opportunities
in the near term in conjunction with the capital raised from the SPP.
CNs
The principal terms of the CNs are set out in the Explanatory Note of the notice of
special meeting and are summarised below:
a total commitment of $15 million
a Face Value of $1 per CN
a term of 5 years
a Redemption Date of 15 December 2029 (assuming the CNs are subscribed
for on 16 December 2024)
an interest coupon of 6.0% per annum, payable monthly in arrears
Empire may elect to convert some or all of the CNs into ordinary shares at any
time up to or on the Redemption Date at the Conversion Price of $0.02 per
share
if the CNs are not converted into ordinary shares on the Redemption Date,
WasteCo must repay the Face Value of the CNs in cash
Empire may transfer its CNs subject to the approval of WasteCo (which is not
to be unreasonably withheld or delayed)
the CNs are secured by a second-ranking general security deed over the
present and after acquired property of WasteCo (the Empire GSD). The
Empire GSD shall rank behind Kiwibank Limited’s (Kiwibank) existing general
security agreement
WasteCo has agreed that, except in relation to the SPP, it will use its best
endeavours to offer Empire the right to participate in future capital raisings by
the Company to the extent that, immediately following the capital raising,
Empire could maintain the same percentage holding it would hold on
conversion of the CNs (had it converted the CNs immediately prior to that
capital raise), subject to compliance with all applicable laws. To give effect to
this provision, unless Empire agrees otherwise in writing, WasteCo will use its best
endeavours to seek all necessary consents and authorisations to permit Empire to
participate in the future capital raising, including to seek an exemption from the
Takeovers Panel or to seek shareholder approval
the CNs Issue is conditional on:
WasteCo obtaining any required approvals of its shareholders in respect
of the CNs Issue, the Empire Allotment and the grant of the Empire GSD
the Civic Acquisition becoming unconditional
Kiwibank agreeing to the grant of the Empire GSD
the composition of the Board being acceptable to Empire
WasteCo Group Limited Page 8 Independent Adviser’s Report
no material adverse change (as detailed in the Explanatory Notes) arising
prior to Empire subscribing for the CNs.
Interest Rate
The interest rate payable on the CNs is 6.0% per annum, paid monthly in arrears.
WasteCo is currently paying interest rates of 9.19% and 9.25% on its long term
finance facilities and 12.1% on its overdraft facility provided by Kiwibank.
We consider the 6.0% per annum interest rate payable on the CNs to be favourable
to the Non-associated Shareholders as a company with a similar financial position to
WasteCo issuing a subordinated bond would likely have to offer a coupon in the
vicinity of at least 13% to 15%.
Conversion Price
A summary of WasteCo’s closing share price since 6 December 2022 is set out in
section 3.10.
The Conversion Price of $0.02 is slightly below the most recent trading price of
WasteCo’s shares on the NZX Main Board:
the shares last traded on 22 November 2024 at $0.028
the one month volume weighted average share price (VWAP) up to
22 November 2024 was $0.029
the 3 months VWAP up to 22 November 2024 was $0.031.
However, it should be noted that trading in the Company’s shares is extremely thin,
with only 2.6% of the Company’s shares trading in the last year.
In conjunction with the CNs Issue and the Civic Acquisition, WasteCo plans to offer
the SPP to all existing shareholders (subject to shareholder approval). The planned
SPP will allow Non-associated Shareholders to acquire additional shares in the
Company at the same issue price of $0.02 per share as per the Conversion Price.
Individual shareholders will be able to apply for up to $50,000 in new shares in the
planned SPP.
The SPP aims to raise up to $5 million in fresh equity.
Valuation
As set out in section 4, we assess the value of each $1 CN to be in the range of
$0.985 to $1.094.
Conclusion
The Face Value of $1 sits within the assessed value range of $0.985 to $1.094 per
CN. Accordingly, we consider the terms of the CNs Issue to be fair, from a financial
point of view, to the Non-associated Shareholders.
WasteCo Group Limited Page 9 Independent Adviser’s Report
2.5 Alternatives to the CNs Issue
As an alternative to the CNs Issue, WasteCo could have considered different forms
of raising capital including:
undertaking a pro rata rights issue to all shareholders
making a series of share placements to other investors
the sale of assets
seeking alternative debt funding.
We are advised by the Board that it considered a rights issue, share placements and
further debt funding as alternative capital raising options but concluded that none of
those options provided certainty that the required level of capital would be raised.
We are of the view that the alternative funding sources are not realistic alternatives
at this point in time. The $15 million of capital to be raised under the CNs Issue
represents approximately 63% of WasteCo’s current market capitalisation. Such a
proportionately large capital raising is unlikely to be successful via a rights issue
(unless it was fully underwritten) or via a series of placements of shares. Given the
nature of the Company’s asset base, we do not consider that it could realise any level
of significant capital from the sale of assets. WasteCo’s current earnings levels and
finance facilities already provided by Kiwibank restrict the Company from accessing
any additional significant levels of external debt funding on commercially viable
terms.
2.6 Impact on Financial Position
A summary of WasteCo’s recent financial position is set out in section 3.8.
For illustrative purposes, the table below shows WasteCo’s financial position
assuming the $15 million CNs Issue is raised from Empire and the Empire Allotment
occurred on 31 March 2024.
Illustrative Financial Impact of the CNs Issue and the Empire Allotment
As at
31 March 24
$000
CNs Issue
$000
Empire
Allotment
$000
Post the
Empire
Allotment
$000
Current assets 9,672 15,000 - 24,672
Non current assets 57,987 - - 57,987
Total assets 67,659 15,000 - 82,659
Current liabilities (17,661) - - (17,661)
Non current liabilities (33,611) (15,000) 15,000
1
(33,611)
Total liabilities (51,272) (15,000) 15,000 (51,272)
Total equity 16,387 - 15,000
1
31,387
No. of shares (000) 848,373 - 750,000
2
1,598,373
Net assets per share $0.019 $0.020 $0.020
Net tangible assets (NTA) per share $0.012 $0.020 $0.016
1 Assumes the maximum amount of the CNs Issue of $15 million is converted into ordinary shares
2 Based on the Conversion Price of $0.02 per ordinary share
Source: WasteCo 2024 annual report
WasteCo Group Limited Page 10 Independent Adviser’s Report
The illustrative financial position shows that following the Empire Allotment,
WasteCo’s total equity would increase by $15 million from approximately
$16.4 million to approximately $31.4 million.
Net assets per share would increase by 2% from $0.019 to $0.020 per share and
NTA per share of $0.012 would increase by 31% to $0.016 (due to the Conversion
Price being $0.02 per share).
2.7 Impact on Control
Share Capital and Shareholders
WasteCo currently has 848,372,765 shares on issue held by 1,444 shareholders.
The names, number of shares and percentage holding of the Company’s 10 largest
shareholders as at 8 November 2024 are set out in section 3.6.
WasteCo currently has 4 shareholders holding more than 5% of the Company’s
shares:
Cullinane Steel Trustees (2003) Limited, Laurence Redmayne and Samantha
Redmayne – 19.88%
C & F Trustees 35776 Limited, Carl Storm and Dawn Storm – 18.62%
Shane Edmond – 6.21%
Glendarvie Holdings Limited – 5.94%.
The 10 largest shareholders collectively hold 69.49% of the Company’s shares.
Shareholding Voting
Empire currently holds no shares in WasteCo. It will control up to 46.92% of the
Company’s voting rights following the Empire Allotment. Empire can convert all or
some of the CNs at any time up to the Redemption Date, which is 5 years from the
date of subscription for the CNs. Accordingly, the time at which Empire may hold
shares in the Company is uncertain over the next 5 years.
At the maximum level of 46.92% of voting rights, Empire’s ability to influence
shareholding voting will be relatively significant as it will be able to singlehandedly
block special resolutions (which require the approval of 75% of the votes cast by
shareholders). However, Empire will technically not be able to singlehandedly pass
or block ordinary resolutions (which require the approval of more than 50% of the
votes cast by shareholders) or pass special resolutions.
We note that while the control of 46.92% of the voting rights is technically not
sufficient to singlehandedly pass or block an ordinary resolution, it most probably can
as a number of shareholders in widely held companies (such as WasteCo with over
1,400 shareholders) tend not to vote on resolutions and hence the relative weight of
the 46.92% interest increases.
The ability for any shareholder to influence the outcome of voting on the Company’s
ordinary resolutions or special resolutions may be reduced by external factors such
as the Company’s constitution, the Code, the NZX Listing Rules and the Companies
Act 1993 (eg if the shareholder is precluded from voting on the resolution because it
is a party to the transaction which the resolution relates to).
We note that WasteCo has agreed not to undertake any Material Transaction (as
defined in the NZX Listing Rules) without the written consent of Empire.
WasteCo Group Limited Page 11 Independent Adviser’s Report
Ability to Creep
Following the Empire Allotment, Empire will not be able to utilise the creep provisions
of Rule 7(e) of the Code. The creep provisions enable entities that hold more than
50% and less than 90% of the voting securities in a code company to buy up to a
further 5% of the code company’s shares per annum without the need for shareholder
approval.
Board Control
As set out in section 3.5, the Company currently has 3 directors, none of whom are
deemed to be an associate of Empire.
A condition of the Subscription Agreement is that the composition of the Board is
acceptable to Empire from the time of its subscription for the CNs.
The Subscription Agreement grants Empire the right to appoint 2 out of 5 directors to
the Board as well as the right to approve the appointment of an independent chair of
the Board.
Accordingly, the CNs Issue will provide Empire with a degree of influence at Board
level. We note that Empire will hold this level of Board control at the date of the CNs
Issue and it is not affected by whether it converts any CNs under the Empire
Allotment.
Operations
We are advised by the Board that Empire’s influence over WasteCo’s operations will
be predominantly through its Board representation and that the Empire Allotment will
not change Empire’s level of influence over the Company’s operations.
2.8 Dilutionary Impact
The Empire Allotment will result in the shareholdings of Non-associated
Shareholders being diluted by up to 46.9%, depending on the number of CNs that
Empire converts into ordinary shares (prior to the issue of any shares under the SPP).
Non-associated Shareholders will be able to reduce this dilutionary impact to some
extent by participating in the SPP (which is subject to shareholder approval).
While the potential dilutionary impact is significant, we are of the view that the
Non-associated Shareholders’ main focus should be on whether there is any
dilutionary impact on the value of their respective shareholdings rather than on their
level of voting rights. As stated in section 2.4, we are of the view that the terms of
the CNs Issue are fair to the Non-associated Shareholders from a financial point of
view and therefore should not result in any material transfer of value from the
Non-associated Shareholders to Empire.
2.9 Impact on Share Price and Liquidity
Share Price
A summary of WasteCo’s closing share price since 6 December 2022 is set out in
section 3.10.
The ordinary shares issued under the Empire Allotment will be issued at the
Conversion Price of $0.02 per share. As discussed in section 2.4, the Conversion
Price is slightly below WasteCo’s current share price.
WasteCo Group Limited Page 12 Independent Adviser’s Report
In our view, the CNs Issue and the Empire Allotment are unlikely to have any
significant impact on the Company’s share price in the near term. However, on the
basis that the capital raised from the CNs Issue is being used to invest in WasteCo’s
growth initiatives and / or if WasteCo undertakes a change of control transaction, this
may result in an appreciation in the Company’s share price over the longer term.
Liquidity
The analysis in section 3.10 shows that WasteCo’s shares are extremely thinly traded
on the NZX Main Board, with only 2.6% of the shares being traded in the past year.
The Empire Allotment will not improve the liquidity of the Company’s shares in the
near term as the number of shares held by the Non-associated Shareholders will not
change.
However, should Empire seek to dispose of some of its WasteCo shares following
the Empire Allotment, this may result in increased trading in the Company’s shares,
thereby possibly improving liquidity. We note however that the Redemption Date is
some 5 years away.
2.10 Key Benefits to Empire
The Empire Allotment provides Empire with the opportunity to increase its
shareholding in WasteCo from nil at present to up to 46.92% by converting up to
$15 million of interest bearing debt (in the form of the CNs) into ordinary shares at
any time up to or on the Redemption Date.
2.11 Disadvantages to Empire
The key issues and risks that are likely to impact upon the business operations of
WasteCo are summarised in section 3.4. As Empire’s ownership in WasteCo
increases, so does its exposure to these risks.
2.12 Other Issues
Benefits to WasteCo of Empire as a Cornerstone Shareholder
The CNs Issue and the Empire Allotment will position Empire as an important
cornerstone strategic investor in the Company, signalling its confidence in the future
prospects of WasteCo.
Non-associated Shareholders Approval is Required
Pursuant to the Code, the Non-associated Shareholders must approve by ordinary
resolution the Empire Allotment.
The CNs Issue and the Empire Allotment will not proceed unless the Allotment
Resolution is approved.
WasteCo Group Limited Page 13 Independent Adviser’s Report
May Reduce the Likelihood of a Takeover Offer to a Degree
If the Empire Allotment is approved, Empire will not be able to increase the level of
its shareholding unless it complies with the provisions of the Code. Empire will only
be able to acquire more shares in the Company prior to the conversion of all of the
CNs if:
it enters into an approved scheme of arrangement with WasteCo
the acquisition is approved by way of an ordinary resolution of the Company’s
shareholders excluding Empire
the Company makes an allotment of shares which is approved by way of an
ordinary resolution of the Company’s shareholders excluding Empire.
If Empire holds up to 46.92% of the Company’s shares, this may reduce the likelihood
of a takeover offer for the Company from Empire to a degree as it may consider that
it has sufficient control over the Company.
It is possible that if Empire did make a takeover offer for further shares in the
Company, it may offer a control premium that is lower than would otherwise be
expected as it may value its offer on the basis that it already had a degree of control
of the Company and hence does not need to pay a control premium of any
significance.
Empire’s shareholding of up to 46.92% may also reduce the attraction of WasteCo
as a takeover target to other parties to a degree, as any bidder looking to fully or
partially take over the Company would need to ensure that Empire would accept its
offer.
In the event that a person (other than Empire) acquires control of WasteCo (defined
as direct or indirect ownership of at least 50% of WasteCo or the right to appoint at
least 50% of the Board) or the whole (or substantially the whole) of the Company’s
assets, Empire is entitled to require WasteCo to redeem all of its CNs at their Face
Value.
2.13 Likelihood of the Allotment Resolution Being Approved
If Empire or any of its associates hold any shares in WasteCo at the date of the
special meeting, neither it nor any of its associates will be permitted to vote on the
Allotment Resolution. Accordingly, the outcome of the Allotment Resolution will be
determined by the voting of the Non-associated Shareholders.
The Board has unanimously recommended the approval of the Allotment Resolution.
Each director has represented to WasteCo that he will vote or procure the voting of
all shares in the Company held or controlled by the director or any of their associates
in favour of the Allotment Resolution. The directors collectively have interests in
29.97% of the Company’s shares.
The Company’s top 10 shareholders collectively hold 69.49% of the Company’s
shares and will therefore significantly influence the outcome of the voting on the
Allotment Resolution if they vote.
We are not aware of how these major shareholders – other than the directors – will
vote in respect of the resolutions.
WasteCo Group Limited Page 14 Independent Adviser’s Report
2.14 Implications of the Allotment Resolution not Being Approved
If the Allotment Resolution is not approved, then neither the CNs Issue nor the Civic
Acquisition can proceed. WasteCo will not gain access to $15 million of capital and
would need to seek alternative funds to pursue other growth opportunities.
The non-approval of the Allotment Resolution will likely have negative implications
for future capital raising initiatives as potential investors may be hesitant to invest in
the Company – especially if shareholder approval is required. As discussed in
section 2.5, we consider the alternative capital raising options for WasteCo to be
limited if a comparable amount of capital needs to be raised within a relatively short
timeframe.
2.15 Voting For or Against the Allotment Resolution
Voting for or against the Allotment Resolution is a matter for individual shareholders
based on their own views as to value and future market conditions, risk profile and
other factors. Shareholders will need to consider these consequences and consult
their own professional adviser if appropriate.
WasteCo Group Limited Page 15 Independent Adviser’s Report
3. Profile of WasteCo Group Limited
3.1 Background
The Company was incorporated on 24 November 2010 as Rec No.1 Limited. It
subsequently changed its name to:
Snakk Media Limited (Snakk) on 18 July 2011
Goodwood Capital Limited on 20 October 2020
WasteCo Group Limited on 5 December 2022.
Snakk provided mobile phone enabled promotions and marketing services in
Australia, New Zealand and Singapore. It had 2 wholly owned subsidiary companies:
Snakk Media Pty Limited (Snakk Aust)
Snakk Media Pte. Limited (Snakk Sing).
Snakk’s shares were initially listed on the Alternative Market operated by NZX (the
NZAX) on 6 March 2013.
Snakk ceased operations in December 2018:
Snakk was placed into voluntary administration on 7 February 2019 and into
liquidation on 14 March 2019
Snakk Aust was placed into voluntary administration on 10 December 2018 and
deregistered on 15 December 2020
Snakk Sing ceased operations in 2019 and was removed from the Singapore
Companies Register on 16 December 2020.
The Company was restored from liquidation on 9 October 2020 by order of the High
Court and the restoration was completed on 19 October 2020.
The Company was a shell company listed on the NZX Main Board until it undertook
a reverse listing on 5 December 2022 by acquiring WasteCo for $29.2 million in
exchange for the issue of 584,000,000 ordinary shares issued at $0.05 per share (the
Reverse Listing).
3.2 Nature of Operations
The WasteCo group was formed by Carl Storm and James Redmayne and
commenced operations in 2013.
WasteCo is a leading South Island waste solution company, processing and diverting
liquid and solid waste from landfill.
It provides comprehensive solutions for household, commercial, industrial and local
authority customers.
WasteCo is New Zealand’s only diamond certified Toitū Enviromark waste solutions
provider and delivers outcomes that ensure its customers are at the leading edge of
the sustainability frontier.
WasteCo Group Limited Page 16 Independent Adviser’s Report
The Company provides waste and sorting options as well as waste remediation,
sweeping and industrial cleaning services – all delivered using leading edge
technology and highly trained customer-focussed staff.
waste collection via front load bins,
hook bins, skip bins and wheelie bins
from both commercial and private
customers
a large gantry collection operation in
Christchurch
road sweeping for councils and
commercial customers. WasteCo
operates an extensive sweeping
operation in the South Island
waste sorting and diversion. WasteCo
operates a 3,600m
2
dedicated sorting
facility in Christchurch with a strong
focus on diversion from landfill
a new specialised facility for the
collection and treatment of medical
and quarantine waste.
high pressure water blasting, urgent
spill response services, vacuum
loading, septic tank cleaning and
portaloos. These services are offered
on a 24/7/365 basis. WasteCo is one
of the largest providers of industrial
services in the South Island
port services - WasteCo provides
maintenance, cleaning and auxiliary
services to several ports and shipping
companies in the South Island.
WasteCo’s activities are domiciled in the South Island, primarily in:
Nelson
Christchurch
Ashburton
Timaru
Oamaru
Dunedin
Balclutha
Cromwell
Invercargill.
During the 2024 financial year, WasteCo acquired 3 businesses:
Cleanways and related businesses Enviro South and Wastech Services
Bond Contracts
Central Suction Cleaners.
Environmental ServicesIndustrial Services
WasteCo Group Limited Page 17 Independent Adviser’s Report
3.3 Corporate Strategy
The 4 pillars to WasteCo’s strategy are:
focus on the Company’s team, culture and health and safety
acquisitions in its core areas
optimise the current business and introduce operational improvements
reducing the Company’s carbon emissions.
3.4 Key Business Risks
The key business risks that WasteCo faces include:
reliance on certain key personnel. Failure to retain any of the key personnel
could adversely affect WasteCo’s operations
reliance on significant contracts. There is no guarantee that the existing
significant business contracts will be renewed at the end of the contract terms,
or if they do, that these contracts will continue to be successful
the waste, refuse and industrial services sectors in New Zealand are highly
competitive. One or more of WasteCo’s competitors could seek to offer
comparable services at lower prices and / or which are preferred by the market
management of growth opportunities, which if not successfully managed could
lead to adverse operational and financial performance
WasteCo may fail to successfully execute its expansion strategy into new
geographical markets and new verticals
a large part of WasteCo’s business comprises the collection, recycling and
disposal of waste and refuse, which may be subject to new regulations. There
is also risk regarding potential government intervention in the manner in which
certain recycling / diversion is subsidised
WasteCo’s operations are subject to significant environment regulation and any
non compliance with these requirements may have a material adverse impact
on WasteCo’s operations from both a reputational perspective and from an
economic perspective through the imposition of fines or restrictions on
WasteCo’s commercial operations
WasteCo operates heavy machinery, often on public roads and industrial sites,
giving rise to the risk of injury or even death to the WasteCo staff who operate
the equipment or to members of the public or third party contractors in the event
of an accident occurring.
3.5 Directors and Senior Management
The Board consists of 3 directors:
Shane Edmond, independent chair
Roger Gower, independent director
James Redmayne, non-executive director.
Carl Storm resigned as an executive director on 16 August 2024 and Angus Cooper
resigned as an independent director on 31 October 2024.
WasteCo Group Limited Page 18 Independent Adviser’s Report
The Company’s senior management team consists of:
David Peterson, chief executive officer
Nigel Franklin, chief financial officer
Chris Brown, chief operating officer
Chanelle Sefont, head of people, safety and wellbeing
Luke Brown, chief sales officer.
3.6 Capital Structure and Shareholders
WasteCo currently has 848,372,765 fully paid ordinary shares on issue held by 1,444
shareholders.
The names, number of shares and percentage holding of the 10 largest shareholders
as at 8 November 2024 are set out below.
WasteCo’s 10 Largest Shareholders
Shareholder No. of Shares %
Cullinane Steel Trustees (2003) Limited, Laurence Redmayne and
Samantha Redmayne 168,640,923 19.88%
C & F Trustees 35776 Limited, Carl Storm and Dawn Storm 158,004,000 18.62%
Shane Edmond 52,667,692 6.21%
Glendarvie Holdings Limited (Glendarvie) 50,400,000 5.94%
Lloyd Phillips, Wayne Phillips and Craig Phillips 31,850,353 3.75%
Forsyth Barr Custodians Limited 28,460,887 3.35%
Malcolm Bailey 27,216,000 3.21%
Robert Baan and Rowena Baan-Mathias 25,331,842 2.99%
New Zealand Central Securities Depository Limited 24,081,435 2.84%
Ashvegas Limited (Ashvegas) 22,867,692 2.70%
Top 10 shareholders 589,520,824 69.49%
Others (1,434 shareholders) 258,851,941 30.51%
Total
848,372,765 100.00%
Source: NZX Company Research
The 3 largest shareholders and Ashvegas are associated with current or recently
resigned directors of the Company.
Glendarvie is owned by Robert Baan and Rowena Baan-Mathias.
3.7 Financial Performance
A summary of WasteCo’s recent financial performance is set out below.
Summary of WasteCo Financial Performance
Year to
31 Mar 22
(Audited)
$000
Year to
31 Mar 23
(Audited)
$000
Year to
31 Mar 24
(Audited)
$000
Revenue 18,777 34,392 48,233
Other income 713 98 99
Expenses (18,661) (32,941) (51,120)
Profit / (loss) from operations 829 1,549 (2,788)
Other items (971) (3,705) (2,955)
(Loss) before income tax (142) (2,156) (5,743)
Income tax benefit 138 236 1,608
(Loss) for the year
(4) (1,920) (4,135)
Source: WasteCo audited financial statements
WasteCo Group Limited Page 19 Independent Adviser’s Report
WasteCo’s revenue is derived from:
waste collection and recycling (53% of 2024 financial year revenue)
sweeping services (23% of 2024 financial year revenue)
industrial cleaning services (24% of 2024 financial revenue).
Revenue grew by 40% to $48.2 million in the 2024 financial year through a
combination of organic business growth and acquisition growth.
Expenses consist mainly of:
employee benefits expenses (42% of 2024 financial year expenses)
collection, recycling and waste disposal expenses (18% of 2024 financial year
expenses)
fleet operating expenses (13% of 2024 financial year expenses)
depreciation and amortisation (12% of 2024 financial year expenses).
Non-recurring costs of approximately $1 million were incurred in the 2024 financial
year in respect of the 3 acquisitions completed, capital raising costs to finance the
acquisitions and restructuring costs.
3.8 Financial Position
A summary of WasteCo’s recent financial position is set out below.
Summary of WasteCo Financial Position
As at
31 Mar 22
(Audited)
$000
As at
31 Mar 23
(Audited)
$000
As at
31 Mar 24
(Audited)
$000
Current assets 4,467 6,241 9,672
Non current assets 29,978 36,873 57,987
Total assets 34,445 43,114 67,659
Current liabilities (14,676) (11,686) (17,661)
Non current liabilities (17,486) (21,569) (33,611)
Total liabilities (32,162) (33,255) (51,272)
Total equity
2,283 9,859 16,387
Source: WasteCo audited financial statements
WasteCo’s current assets as at 31 March 2024 consisted mainly of trade receivables,
cash at bank and prepayments.
Non current assets as at 31 March 2024 consisted of property, plant and equipment
(mainly vehicles and plant and equipment), right-of-use assets (leased premises and
vehicles) and intangible assets (mainly customer contracts and goodwill).
Current liabilities as at 31 March 2024 comprised trade and other payables and lease
liabilities.
Non current liabilities as at 31 March 2024 represented borrowings and lease
liabilities.
WasteCo Group Limited Page 20 Independent Adviser’s Report
The Company had equity of $16.4 million as at 31 March 2024, comprising:
share capital – $19.9 million
reserves – $0.9 million
accumulated losses – negative $4.4 million.
3.9 Cash Flows
A summary of WasteCo’s recent cash flows is set out below.
Summary of WasteCo Cash Flows
Year to
31 Mar 22
(Audited)
$000
Year to
31 Mar 23
(Audited)
$000
Year to
31 Mar 24
(Audited)
$000
Net cash inflow from operating activities 3,744 3,587 1,197
Net cash (outflow) from investing activities (12,107) (13,009) (16,754)
Net cash inflow from financing activities
8,445 9,597 14,095
Net increase / (decrease) in cash held 82 175 (1,462)
Opening cash balance 616 698 873
Closing cash balance
698 873 (589)
Source: WasteCo audited financial statements
WasteCo has recorded cash positive inflows from its operations over the past 3
financial years.
Investing cash outflows have mainly been in respect of the acquisition of fixed assets
and the acquisition of businesses.
The Company has funded its investing activities by raising equity and debt:
approximately $9.5 million in the 2022 financial year from borrowings
approximately $8.3 million in the 2023 financial year from borrowings and
$4.0 million from the issue of approximately 90.6 million ordinary shares
approximately $10.7 million in the 2024 financial year from borrowings and
approximately $7.8 million (net of costs) from the issue of approximately
160.4 million ordinary shares.
WasteCo Group Limited Page 21 Independent Adviser’s Report
3.10 Share Price History
Set out below is a summary of WasteCo’s daily closing share price and monthly
volumes of shares traded from 6 December 2022 (the day after the Reverse Listing
was approved) up to 22 November 2024.
Source: NZX Company Research
During the period, WasteCo’s shares have traded between $0.027 and $0.085 at a
VWAP of $0.058.
An analysis of WasteCo’s recent VWAP, traded volumes and liquidity (measured as
traded volumes as a percentage of shares outstanding) up to 22 November 2024 is
set out below.
Share Trading up to 22 November 2024
Period Low
($)
High
($)
VWAP
($)
Volume
Traded
(000)
Liquidity
1 month 0.027 0.032 0.029 3,072 0.4%
3 months 0.027 0.040 0.031 7,758 0.9%
6 months 0.027 0.042 0.033 11,950 1.4%
12 months 0.027 0.064 0.042 21,814 2.6%
Source: NZX Company Research
The analysis highlights the thin trading in the Company’s shares. Only 2.6% of
WasteCo’s shares have traded in the past year on 236 days.
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
0.09
6 Dec 226 Apr 236 Aug 236 Dec 236 Apr 246 Aug 24
Volumes Traded
Share Price ($)
WasteCo Share Price
Monthly volume (rhs)Closing price (lhs)
WasteCo Group Limited Page 22 Independent Adviser’s Report
4. Valuation of the Convertible Notes
4.1 CNs Methodology and Valuation Approach
The CNs represent a WasteCo security which are a combination of a bond and an
embedded option:
the bond component carries an interest coupon of 6.0% per annum
the embedded option component provides the noteholder with the ability to
benefit if the share price of WasteCo is above $0.02 when the CNs are
converted.
To assess the value of the CNs, it is necessary to assess the value of the bond
component and the embedded option component.
Valuation of Bonds
The value of the bond is a function of the interest rate on the bond and the value of
the principal returned.
Each $1 CN carries a 6.0% coupon and repayment of $1 of principal when it is repaid.
A required rate of return higher than the coupon will result in a bond value lower than
the principal and vice versa.
In our view, the required rate of return on a “plain vanilla” subordinated bond offered
by WasteCo at this point in time would be in the range of 13.0% to 15.0% per annum.
Valuation of Options
The Binomial option-valuation model (Binomial Model) and the Black-Scholes
option-valuation formula (Black-Scholes Formula) are commonly used in
commercial practice to value options. The Binomial Model is more appropriate for
the valuation of American options (which can be exercised at any time during their
life, as opposed to European options which can only be exercised on one particular
day) and options over shares which are expected to pay dividends during the
exercise period, although variants of the Black-Scholes Formula exist to handle the
valuation of such options.
The key variables in determining the value of an American option are:
the exercise price of the option
the risk free rate
the current spot price or market value of the underlying instrument
the volatility of the returns on the underlying instrument
the time to expiry
the expected distributions to be made on the underlying instrument.
The value derived represents the value of options over existing shares. The CNs are
in effect warrants and hence WasteCo will issue new ordinary shares when the CNs
are converted. Accordingly, an adjustment must be made to the value derived from
the Black-Scholes Formula to take into account the dilutionary effect of the
conversion of the CNs.
WasteCo Group Limited Page 23 Independent Adviser’s Report
4.2 Valuation of the Bond Component of the CNs
Valuation Parameters
The key variables applied in our assessment of the value of the bond component of
the CNs are:
valuation date – 16 December 2024, being the expected date that the CNs will
be issued
coupon – 6.0% per annum
repayment date – 15 December 2029, being the expected Redemption Date
principal repayment – $1
required yield – 13.0% to 15.0% per annum.
Conclusion
Based on the above, we assess the fair value of the bond component of the CNs to
be in the range of $0.685 to $0.744 per $1 of Face Value.
4.3 Valuation of the Option Component of the CNs
Valuation Parameters
Each $1 of CN can be converted into 50 ordinary shares at the Conversion Price of
$0.02.
The key variables applied in our assessment of the value of the embedded option
component of the CNs are:
valuation date – 16 December 2024, being the expected date that the CNs will
be issued
exercise price – $0.02 per share, being the Conversion Price
the risk free rate – 4.3%, based on the current yield on New Zealand
Government May 2030 bonds
the current market value of WasteCo shares – $0.029, being the one month
VWAP up to 22 November 2024
volatility – 40% to 50%, based on the observed volatility levels of movements
in WasteCo's share price and for overseas comparable companies
the time to expiry – 15 December 2029, being the expected Redemption Date
expected distributions – nil, based on the Company’s recent dividend history.
Conclusion
Based on the above, we assess the fair value of an embedded option to be in the
range of $0.006 to $0.007.
WasteCo Group Limited Page 24 Independent Adviser’s Report
4.4 Valuation of the CNs
We assess the fair value of each $1 CN to be in the range of $0.985 to $1.094.
Valuation of CNs
Low
$
High
$
Value of bond component of $1 CN 0.685 0.744
Value per option 0.006 0.007
Number of options per $1 CN x 50 x 50
Value of option component of $1 CN 0.300 0.350
Fair value of $1 CN
0.985 1.094
WasteCo Group Limited Page 25 Independent Adviser’s Report
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 main
sources of information:
the draft notice of special meeting
the Subscription Agreement
the WasteCo annual reports for the years ended 31 March, 2023 and 2024
WasteCo share price data from NZX Company Research
publicly available information regarding WasteCo.
During the course of preparing this report, we have had discussions with and / or
received information from the Board and WasteCo’s legal advisers.
The Board has confirmed that we have been provided for the purpose of this
Independent Adviser’s Report with all information relevant to the Empire Allotment
that is known to them and that all the factual information provided by Company
contained in this report is true and accurate in all material respects 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 Independent Adviser’s Report.
In our opinion, the information set out in this Independent Adviser’s Report is
sufficient to enable the Board and the Company’s shareholders to understand all the
relevant factors and to make an informed decision in respect of the Empire Allotment.
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 WasteCo and its
advisers.
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 WasteCo. We do not warrant that our enquiries would reveal any matter
which an audit, due diligence review or extensive examination might disclose.
WasteCo Group Limited Page 26 Independent Adviser’s Report
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
warrant that any forecasts of future profits, cash flows or financial position of
WasteCo 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 WasteCo and its Board and management team.
Actual results will vary from the forecasts and these variations may be significantly
more or less favourable.
We assume no responsibility arising in any way whatsoever for errors or omissions
(including responsibility to any person for negligence) for the preparation of the report
to the extent that such errors or omissions result from our reasonable reliance on
information provided by others or assumptions disclosed in the report or assumptions
reasonably taken as implicit.
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 this report.
We have had no involvement in the preparation of the notice of special meeting
issued by WasteCo and have not verified or approved the contents of the notice of
special meeting. We do not accept any responsibility for the contents of the notice
of special meeting except for this report.
5.4 Indemnity
WasteCo has agreed that, to the extent permitted by law, it will indemnify Simmons
Corporate Finance 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, wilful misconduct or breach
of law. WasteCo has also agreed to indemnify Simmons Corporate Finance and its
directors and employees for time incurred and any costs in relation to any inquiry or
proceeding initiated by any person. Where Simmons Corporate Finance or its
directors and employees are found liable for or guilty of negligence, wilful misconduct
or breach of law, Simmons Corporate Finance shall reimburse such costs.
WasteCo Group Limited Page 27 Independent Adviser’s Report
6. Qualifications and Expertise, Independence, Declarations and
Consents
6.1 Qualifications and Expertise
Simmons Corporate Finance is a New Zealand owned specialist corporate finance
advisory practice. It advises on mergers and acquisitions, prepares independent
expert's reports and provides valuation advice.
The person in the company responsible for issuing this report is Peter Simmons,
B.Com, DipBus (Finance), INFINZ (Cert).
Simmons Corporate Finance and Mr Simmons have significant experience in the
independent investigation of transactions and issuing opinions on the merits and
fairness of the terms and financial conditions of the transactions.
6.2 Independence
Simmons Corporate Finance does not have at the date of this report, and has not
had, any shareholding in or other relationship with WasteCo or Empire or any
conflicts of interest that could affect our ability to provide an unbiased opinion in
relation to the Empire Allotment.
Simmons Corporate Finance has not had any part in the formulation of the CNs Issue
or the Empire Allotment or any aspects thereof. Our sole involvement has been the
preparation of this report.
Simmons Corporate Finance 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 on the Allotment Resolution. We will receive no other benefit from the
preparation of this report.
6.3 Declarations
An advance draft of this report was provided to the Board for its comments as to
factual accuracy of the contents of the report. Changes made to the report as a result
of the circulation of the draft have not changed the methodology or our conclusions.
Our terms of reference for this engagement did not contain any term which materially
restricted the scope of the report.
6.4 Consents
We consent to the issuing of this report in the form and context in which it is to be
included in the notice of special meeting to be sent to WasteCo’s 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.
Peter Simmons
Director
Simmons Corporate Finance Limited
25 November 2024
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.