Final EP99_Section 8 - Envestra by jianghongl

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              8
8.1         Offer Structure
            The Loan Notes being offered under this Prospectus have been issued to the
            Underwriters prior to the issue of this Prospectus. The Underwriters are selling
            the Loan Notes issued to them to Investors under this Prospectus. Following
            close of the Rights Offer, the Underwriters will transfer the Loan Notes to
            Investors and Envestra will issue Shares to Investors (that will together form the
            New Securities).




8.2         Other Financing Arrangements
            In addition to the financing arrangements put in place to fund the Stratus
            Business (which are described in Section 7.1.3), Envestra at the time of its 1997
            initial public offering entered into two debt funding facilities – a $515 million
            bank debt facility used to fund the acquisition of the Existing Network from Boral
            and for capital expenditure and a $215 million issue of Capital Indexed Bonds.

            Envestra’s $515 million bank debt facility comprises three tranches:

            •   a $345 million term debt facility drawn down to fund the acquisition of the
                Existing Network and repayable in 2002;

            •   a $160 million term debt facility to fund capital expenditure which is
                repayable in 2003; and

            •   a $10 million working capital facility repayable in 2003.

            At the time the bank debt facility was established, Envestra entered into a series
            of swap arrangements under which its interest expense on part of the principal
            in respect of the facility was fixed:

            •   until 2001 - $200 million of the $345 million facility;

            •   until 2002 - $145 million of the $345 million facility; and

            •   until 2003 - $154 million of the $160 million facility.

            The Capital Indexed Bonds comprised two series:

            •   $160 million series one bonds due for repayment in 2007; and

            •   $55 million series two bonds due for repayment in 2012.

            The interest rate on the series one bonds has been fixed for ten years and the
            interest rate on the series two bonds has been fixed for fifteen years.

            The principal component of the bonds is indexed by the quarterly change in the
            CPI (from their issue date). The principal component of the bonds is therefore
            maintained in real terms. A coupon rate is payable on the amount of indexed
            principal at each quarter end.

            Envestra’s obligations under the bank debt facility, the Capital Indexed Bonds and
            the swaps are guaranteed by three of its subsidiaries, Ayers Net Limited, Beta
            Net Limited and Gamma Net Limited. Together Envestra and those three
            subsidiaries own the Existing Network assets. All four companies have provided
            fixed and floating charges over all their present and future assets to secure their
            respective obligations under (in the case of the subsidiaries) their guarantee or
            (in the case of Envestra) the bank debt facility, the Capital Indexed Bonds and the
            swaps.




      108   Envestra
8.3     Continuous Disclosure Statement
        Envestra is listed on ASX and, as required by the Corporations Law, is subject to
        the continuous disclosure requirements of the ASX Listing Rules. In addition,
        Envestra is subject to the periodic reporting requirements of the Corporations
        Law, including annual reports and half yearly reports which are distributed to
        Security Holders. As such, there is a large body of public information available to
        investors and their professional advisers concerning Envestra. This information
        can be obtained by reviewing the files on Envestra available at ASX or inspected
        at an office of ASIC or at the Company’s website at www.envestra.com.au

        Envestra will provide to any person upon request prior to the close of the Offer,
        free of charge, a copy of any or all of the following documents:

        •   Envestra’s annual report for the year ended 30 June 1998;
        •   Envestra’s announcement of its interim results for the six months to
            31 December 1998; and
        •   any other documents lodged with ASX since the date of lodgment of the
            annual report for the year ended 30 June 1998 and ending before the issue of
            this Prospectus, as follows:

            16 July 1999       Envestra to raise $310 million of new capital through the
                               Rights Offer, Convertible Notes issue and Placement
            6 July 1999        Amendments to Loan Note Trust Deed approved
            28 May 1999        Standard & Poor’s credit rating for EnVic and Envestra
            24 May 1999        Envestra presently considering a number of options in
                               respect of its proposed $308 million capital raising
            4 May 1999         Half Yearly Report to Security Holders for the six month
                               period to 31 December 1998
            22 April 1999      Envestra announces distribution to Security Holders of
                               3.26 cents per Security for the six months ended
                               31 March 1999
            31 March 1999      Letter to Security Holders advising of the settlement of
                               the acquisition of the Stratus Business
            26 March 1999      ASX Year 2000 disclosure
            16 March 1999      Analysts presentation on the acquisition of the Stratus
                               Business
            13 March 1999      Envestra and Boral successful joint bidders for the Stratus
                               distribution business and the Energy 21 retail business
            10 March 1999      Contracts let for the Mildura natural gas project
            9 March 1999       Half Yearly Accounts for the six month period to
                               31 December 1998
            8 March 1999       Listing Rule Waiver modified to extend Listing Rule 7.11.3
                               relief until 31 August 1999
            1 March 1999       Access Arrangement for South Australian gas distribution
                               networks lodged with Regulator
            3 February 1999    $30 million gas project for Wide Bay region of Queensland
            22 January 1999    Envestra completes purchase of Palm Valley transmission
                               pipeline in the Northern Territory
            10 December 1998 Change to mailing address
            5 November 1998    Minor adjustment in interest/principal components of
                               distribution for six months to 30 September 1998 (total
                               distribution unchanged)
            26 October 1998    Chairman’s address to Security Holders




  109   Envestra
                 20 October 1998           Envestra to acquire Palm Valley transmission pipeline in
                                           the Northern Territory from Holyman Limited

                 19 October 1998            Envestra announces distribution to Security Holders of
                                            4.89 cents per Security for the six months ended
                                            30 September 1998
                 15 October 1998            Section 235 notice - Director’s interests
                 28 September 1998 1998 Annual Report together with Notice of Annual
                                   General Meeting




8.4         Documents Available for Inspection
            Copies of the following documents may be inspected at the registered office of
            Envestra at Level 10, 81 Flinders Street, Adelaide, during normal office hours free
            of charge for twelve months after lodgement of this Prospectus:

            •    material contracts referred to in Section 7 above and, in the case of a material
                 contract that is not reduced to writing, a memorandum giving full particulars
                 of the contract; and

            •    consents to the issue of this Prospectus.




8.5         Interests of Directors
            The interests of Directors requiring disclosure under section 1021(6) of the
            Corporations Law are included in this Section.


            SHAREHOLDINGS
            Directors are not required to hold any Securities in Envestra. Directors have the
            following beneficial interests in Securities:

            Directors                                                                             Securities
            Mr   Robert Piper    (1)
                                                                                                      15,000
            Mr   John Allpass                                                                         30,000
            Mr   Brian Sallis                                                                         30,000
            Mr   Grant King                                                                           51,000
            Mr   Michael Scobie                                                                       20,000
            Mr   Oliver Clark                                                                        100,000
            1. Mr Piper also holds a non-beneficial interest as a trustee on behalf of unrelated deceased estates in 185,300
               Securities

            Some of the Directors are members of superannuation funds which hold
            Securities. Directors may also acquire Securities under this Prospectus.


            REMUNERATION OF NON-EXECUTIVE DIRECTORS
            The constitution of Envestra provides that the non-executive Directors may be
            paid as remuneration for their services an aggregate sum determined from time
            to time by Envestra shareholders in a general meeting. The maximum amount
            which may presently be paid is $400,000 per annum. The sum is to be divided
            among the Directors in such proportion as the Directors agree.




      110   Envestra
      If a Director performs extra services, Envestra may remunerate that Director by a
      payment of a fixed sum determined by the Directors in addition to the
      remuneration referred to above.

      Directors will be paid travelling and other expenses properly incurred by them in
      attending Directors’ and committee meetings or general meetings of Envestra or
      otherwise in connection with the business of Envestra.


      INDEMNITIES
      Directors have the benefit of a Deed of Access, Insurance and Indemnity granted
      by Envestra.


      NON-EXECUTIVE DIRECTORS
      Mr John Allpass is a non-executive Director of Macquarie Bank Limited
      ("Macquarie"), a director of various subsidiaries of Macquarie and a consultant to
      Macquarie. However, no Directors’ or other fees payable to Mr Allpass by
      Macquarie or its subsidiaries are affected by the acquisition of the Stratus
      Business, the issue of Securities under this Prospectus or the underwriting of the
      Offer. Mr Allpass also owns shares in Macquarie. Macquarie has provided
      financial advice to Envestra in relation to the acquisition of the Stratus Business
      and the Placement (in relation to CKI) and Macquarie Equity Capital Markets
      Limited (a wholly-owned subsidiary of Macquarie) has acted as an Underwriter
      to the Rights Offer, placement to excluded offerees and the Convertible Note
      issue. The underwriting agreement is summarised in Section 7.2 and the
      Convertible Note underwriting agreement is summarised in Section 7.5.

      Mr Grant King and Mr Michael Scobie are each executives of Boral. They will
      continue to be executives of Boral and to be remunerated by Boral for their
      services as executives.

      Each of the Directors beneficially owns Boral shares.


      RETIREMENT ALLOWANCES
      It is common practice for Australian listed companies to provide some retirement
      allowance for their non-executive Directors. This is permitted by Envestra’s
      constitution.

      Each non-executive Director (other than Mr Grant King and Mr Michael Scobie)
      has entered into a standard agreement dealing with retirement payments. This
      agreement provides that the Director, upon retirement or on the Director’s death,
      shall be paid an allowance calculated in accordance with the table set out below,
      less any benefits which the Director is entitled to receive from a complying
      superannuation fund by virtue of payments made to the fund by Envestra.

      LENGTH OF SERVICE AS A NON-EXECUTIVE   AMOUNT OF RETIREMENT ALLOWANCE
      DIRECTOR OF ENVESTRA (EXCLUDING ANY
      PERIOD SERVED ONLY AS AN ALTERNATE
      DIRECTOR)

      Less than 1 year                       Nil
      Between 1 year and 10 years            The proportion of the amount payable at 10
                                             years equal to the ratio that the period served
                                             as a non-executive Director of Envestra bears
                                             to 10 years.
      10 or more years                       3 times the average annual emoluments of the
                                             Director over the 3 years before the retirement
                                             date.




111   Envestra
8.6         Interests of Experts and Advisers
            Except for the fees and amounts paid or agreed to be paid and the interests set
            out below, no expert or firm in which any expert is a partner has any interests or
            has been or agreed to be paid any amount which must be disclosed under
            section 1021(6) of the Corporations Law.

            Except for the advisory services or appointments disclosed below, each expert
            states that neither it nor any of its directors, principals or employees is a director,
            employee of, or professional adviser to, Envestra or, to the knowledge of the
            expert, intends to be.

            •   PricewaterhouseCoopers Securities Limited has acted as Investigating
                Accountant in relation to the Rights Offer, Placement and the Convertible Note
                issue and has prepared the Investigating Accountant’s Report which is
                contained in this Prospectus and PricewaterhouseCoopers has acted as
                Auditor to Envestra (together “PwC”). PwC has also provided assistance to the
                Directors of Envestra in conducting their due diligence. Envestra has paid or
                agreed to pay PwC approximately $135,000 for those services to the date of
                this Prospectus. Those fees are calculated according to PwC normal practices.

            •   Mallesons Stephen Jaques have acted as legal adviser to Envestra in relation
                to the Rights Offer, Placement and the Convertible Note issue. Envestra has
                paid or agreed to pay Mallesons Stephen Jaques approximately $600,000 for
                those services to the date of this Prospectus. Those fees are calculated in
                accordance with Mallesons Stephen Jaques’ normal practices.




8.7         Consents and Expenses of the Offer

            CONSENTS TO BE NAMED
            The following parties have given and have not, before the issue of this
            Prospectus, withdrawn their written consent to be named in this Prospectus in
            the form and context in which they are named:

            •   Perpetual Trustee Company Limited, as Loan Note Trustee and Trustee for the
                Convertible Noteholders;

            •   Mallesons Stephen Jaques, as Solicitors to the Offer;

            •   PricewaterhouseCoopers, as Auditors;

            •   Macquarie Equity Capital Markets and Warburg Dillon Read, as Underwriters;

                and

            •   Perpetual Registrars Limited as Registrar.


            CONSENTS TO BE NAMED AND TO THE INCLUSION OF INFORMATION
            •   PricewaterhouseCoopers has given and has not, before the issue of this
                Prospectus, withdrawn its written consent to the issue of this Prospectus with
                the inclusion of references to audited financial information of Envestra in the
                form and context in which it is included.




      112   Envestra
            •   PricewaterhouseCoopers Securities Limited has given and has not, before the
                issue of this Prospectus, withdrawn its written consent to the issue of this
                Prospectus with the inclusion of the Independent Accountant’s Report and all
                references to that report in this Prospectus in the form and context in which it
                is included.


            DISCLAIMERS OF RESPONSIBILITY
            Each person named above in Section 8.7:

            •   has not authorised or caused the issue of this Prospectus;

            •   does not make, or purport to make, any statement in this Prospectus other
                than, in the case of PricewaterhouseCoopers, a statement included in this
                Prospectus with its consent; and

            •   to the maximum extent permitted by law, expressly disclaims and takes no
                responsibility for any part of this Prospectus other than a reference to its
                name and, in the case of PricewaterhouseCoopers, any statement which has
                been included in this Prospectus with its consent.

            Perpetual Trustee Company Limited (as Loan Note trustee and trustee under the
            deed for Convertible Notes) and Perpetual Registrars Limited (as registrar) are
            each named in the Prospectus for information purposes only. Neither have had
            any involvement in the preparation of any part of this Prospectus.


            EXPENSES OF THE RIGHTS OFFER, PLACEMENT AND CONVERTIBLE NOTE ISSUE
            The total expenses connected with the Rights Offer, Placement and Convertible
            Note issue payable by Envestra including underwriting fees, advisory fees, legal
            fees, accounting fees, printing, advertising, stamp duty and other expenses, are
            estimated to be approximately $10.1 million. The payments to be made by
            Envestra to the Underwriters are summarised in Section 7.2 and Section 7.5.




8.8         ASIC Declarations and Exemptions
            ASIC has granted various relief under sections 1084 and 1113 of the Corporations
            Law in relation to the Offer, including:

            •   modifying section 1043 of the Corporations Law to enable the proceeds of
                sale of the New Securities to be paid into one bank account maintained by
                Envestra;

            •   relief from sections 1023 and 1096 of the Corporations Law so as to permit
                the issue, sale and transfer of the Loan Notes without certificates or other
                documents evidencing the debt by Envestra being prepared, other than the
                issue of a global note to the Trustee (with the Loan Notes being interests in
                that global note);

            •   modifying section 1017 of the Corporations Law so as not to require a
                prospectus for the issue of Securities upon conversion of the Convertible
                Notes;

            •   modifying section 1030(2), 1030(4) and 1030(6) of the Corporations Law so the
                Underwriters are not deemed to be directors of Envestra and are therefore not
                required to sign the Prospectus; and




      113   Envestra
            •   a complete exemption from sections 1056(2) and 1056(5) of the Corporations
                Law in relation to the Trust Deed (those sections would otherwise provide that
                the Trustee would be permitted to apply to ASIC or a court if the property of
                Envestra were or are likely to become insufficient to repay the principal debt
                on the Loan Notes). The effect of these exemptions is that while there is
                Finance Debt and the Trustee forms the opinion that Envestra will be unable
                to discharge its debt obligation to Noteholders, the Trustee will be unable to
                approach ASIC for an order restricting the activities of Envestra or, in certain
                circumstances, apply to a court for various orders; and

            •   modifying section 1054 of the Corporations Law so that Envestra does not
                have to comply with the covenant in section 1054(3)(a) of the Corporations
                Law. That section requires the Trust Deed to contain a covenant by Envestra
                to the Trustee that:

                "… it will strive to carry on and conduct its business in a proper and efficient manner."

                The section 1054 relief granted to Envestra means Envestra does not have to
                comply with this provision in respect of Noteholders while all Loan Notes
                issued under the Trust Deed form part of a Security in accordance with the
                terms of the Trust Deed. However, the Company still owes an obligation to
                Investors, in their capacity as shareholders to carry on and conduct its
                business in a proper and efficient manner. Furthermore, while the section
                1054 relief is in place, the Trustee is not obliged to enforce this covenant, as it
                would usually do, as trustee for debenture holders under the Corporations
                Law.

                Envestra applied for the section 1054 relief at the request of Envestra’s bank
                lenders, who are concerned to ensure that the rights of Investors are as far as
                possible limited to those that a shareholder would have.

                Investors should note that whether or not Envestra must comply with this
                covenant, the Trustee’s rights of enforcement are in any event subordinated in
                the manner described above.




8.9         ASX Waivers
            ASX has granted the following waivers from the requirements of the Listing
            Rules in favour of Envestra.

            •   A waiver from Listing Rule 1.1 Condition 7 to permit shareholders in Envestra
                to each hold a parcel of Shares having a value of less than $2,000, on
                condition that the Shares are stapled to Loan Notes so that the parcel of
                Securities has a value of at least $2,000.

            •   A waiver from Listing Rule 8.10 to allow Envestra to refuse to register a
                transfer of a Loan Note that is stapled to a Share, where the Share is partly
                paid and Envestra has a lien on the Share for an unpaid call in accordance
                with Listing Rule 6.13.

            •   A waiver from Listing Rule 14.4 in relation to Boral’s right to appoint and
                remove directors of Envestra on condition that Envestra includes in each
                annual report, and provides to any person who may subscribe for securities
                pursuant to a prospectus, a prominent statement about the terms of the
                Operating and Management Agreement (Existing Network) and the
                Relationship Agreement and about Boral’s right to appoint and remove
                directors of Envestra.




      114   Envestra
         •   A waiver from Listing Rule 14.11 so as not to disallow sub-underwriters to
             the Rights Offer from voting at the general meeting to approve the Rights
             Offer, Placement and Convertible Note issue.

         •   A waiver from Listing Rule 1.8 Condition 3 to permit EnVic Holdco to have net
             tangible assets of less than $10 million on condition that Envestra guarantees
             EnVic Holdco’s obligations under the Convertible Notes.

         •   A waiver from Listing Rule 2.1 Condition 5 to the extent necessary on
             condition that the Convertible Note trust deed contains a limitation on the
             amount that EnVic Holdco may borrow under the trust deed.




8.10     Allocation of New Securities
         Application will be made for quotation of the New Securities offered under this
         Prospectus on ASX within three days after the date of issue of the Prospectus.
         It is expected that New Securities will be quoted as part of the same class as
         existing Securities.

         Envestra participates in the Clearing House Electronic Subregister System
         ("CHESS") in accordance with the ASX Listing Rules and the Business Rules of
         the Securities Clearing House ("SCH"). Envestra maintains an electronic issuer
         sponsored subregister and an electronic CHESS subregister.

         Investors have the option to hold Securities either on the CHESS subregister
         under sponsorship of a broker or non-broker participant, or the issuer sponsored
         subregister. The two subregisters together will make up the Australian
         subregister of Securities of Envestra. Everyone acquiring Securities will have
         their holding of Securities recorded on one of these subregisters.

         Investors who elect to hold their Securities on the issuer sponsored subregister
         will be provided with a holding statement (similar to a bank account statement)
         on allocation that sets out the number of Securities allocated to them.
         This statement will be issued as soon as practicable after the allocation.

         For an Investor who holds Securities on the CHESS subregister, Envestra will, on
         allocation of New Securities, issue an advice that sets out the number of New
         Securities allocated to them under this Prospectus. This advice will be issued as
         soon as practicable after allocation.

         At the end of the month of allocation, SCH will provide each investor who holds
         Securities on the CHESS subregister with a holding statement that confirms the
         number of Securities allocated.

         Holding statements (whether issued by SCH or the Registrar on behalf of
         Envestra) will also provide details of an Investor’s Holder Identification Number
         (HIN) in the case of a holding on the CHESS subregister or Security Holder
         Reference Number (SRN) in the case of a holding on the issuer sponsored
         subregister.




   115   Envestra
         A new statement will be sent to an Investor at the end of the month if the
         balance of the Investor’s holding of Securities changes.

         None of the advice or statements of holding referred to in this Section 8.10 is a
         certificate of title or an acknowledgment of debt.




8.11     New Zealand Regulatory Disclosure
         Securities are intended to be offered in New Zealand only to existing Security
         Holders under the Securities Act (Overseas Companies) Exemption Notice 1997.

         Investors should satisfy themselves as to the tax implications of investing in the
         Securities.

         An investment in Securities may carry with it a currency exchange risk.

         The financial reporting requirements applying in New Zealand and those
         applying to Envestra may be different and Envestra’s financial statements may
         not be compatible in all respects with financial statements prepared in
         accordance with the New Zealand Securities Act 1978 and the New Zealand
         Financial Reporting Act 1993.

         The Rights Offer and allotment of the New Securities will be governed by this
         Prospectus and will be made in accordance with the Corporations Law of
         Australia under which this Prospectus has been lodged.

         Envestra may not be subject in all respects to New Zealand law.

         The contract in respect of the Securities may not be enforceable in New Zealand
         courts.

         This Prospectus has not been registered in New Zealand under and in
         accordance with New Zealand law and may not contain all the information that a
         New Zealand registered prospectus is required to contain.

         It is not a condition of the exemption notice or notices that Envestra be listed on
         the New Zealand Stock Exchange. Consequently New Zealand resident investors
         may not have access to information concerning Envestra in the same way as
         investors have in relation to an issuer listed on the New Zealand Stock Exchange.




8.12     Taxation for Foreign Security Holders
         Foreign Security Holders should be aware of the operation of Australia’s thin
         capitalisation rules under Division 16F of Part III of the Income Tax Assessment
         Act 1936 (Cth). These provisions may operate to deny Envestra a deduction for
         all or part of the interest paid on a Loan Note (or any other loan) to a Security
         Holder, who is a non-resident of Australia for tax purposes, where that Security
         Holder, together with its associates, holds a 15% or greater interest in Envestra.
         A Security Holder will hold an interest in Envestra where it holds either
         Securities, Rights or Convertible Notes. In such circumstances, Envestra will not
         pay interest on the Loan Notes to the Security Holder. Section 7.3.2 (Conditions
         2.4 to 2.6) details the restrictions on payment of interest where the Division 16F
         provisions will or may operate to deny Envestra a deduction for interest paid to
         foreign Security Holders.




   116   Envestra
                             *




      *signed by his authorised agent




117   Envestra
      THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY




118   Envestra

								
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