OBMVL: Oyster Bay Marlborough Vineyards Limited

20 May, 2004 Decision on OBV's Application for Waiver

NZXR Regulation has provided the following decision on Oyster Bay Marlborough Vineyards Limited Application for Waiver from NZAX Listing Rule B4.1:

Background

1. Oyster Bay Marlborough Vineyards Limited ("Oyster Bay") are undertaking an annual negotiation to establish the sale price of Oyster Bay's grapes to Delegat's Wine Estate Limited ("Delegat's").

2. The transaction is a Related Party transaction because Oyster Bay propose to sell all grapes it grows to Delegat's, which holds approximately 32% of the shares in Oyster Bay.

Application

3. Oyster Bay has applied to NZX Regulation ("NZXR") for a waiver from Rule B4.1 of the NZAX Listing Rules so it will not be required to go to shareholders in respect of the sale of the grapes to Delegat's.

4. NZAX Listing Rule B4.1 contains the related party transaction provisions that apply in respect of NZAX Issuers. Footnote 2 to the Rule states that:

"NZX may waive the requirement to obtain the approval of a resolution for the purposes of NZAX Listing rule B4.1, if the NZAX Issuer produces a report from a suitable independent person as to the fairness of the terms of the renewal or re-negotiation."

Decision

5. On the basis that the information provided to NZXR is full and accurate in all material respects, NZXR grants Oyster Bay a waiver from NZAX Listing Rule B4.1 on the following conditions:

a. An independent vitaculturalist's report is provided to NZXR stating that the negotiated grape prices are fair to minority shareholders of Oyster Bay.

b. The waiver is disclosed in Oyster Bay's annual reports while the waiver is in force.

c. The Independent Directors of Oyster Bay provide certification to NZXR that the negotiation was undertaken on an arms' length basis and the price and terms of the agreement is commercial and fair to minority shareholders.

Reasons

6. In coming to this decision, NZXR has considered the following matters:

a. These are existing arrangements which have been in place for some years.

b. The arrangements were disclosed in the prospectus and disclosure document prepared when the company listed so that shareholders will be aware of the arrangements and could and can take the arrangements into consideration when deciding whether to purchase the company's shares.

c. The disclosure document also outlined Oyster Bay's intention to each year seek a waiver from NZXR in respect of the requirements in Rules B4 that shareholder approval be sought for the outcome of the grape price negotiation under the purchaser agreements.

d. Oyster Bay propose to provide certification from independent directors that terms are commercial and on arms' length terms and in the best interests of the company.

e. An independent vitaculturalist's report will be provided on the appropriateness of the grape pricing. NZXR has been provided information that the vitaculturalist has familiarity with grape growing in the Marlborough region which gives him the necessary expertise to comment on the reasonableness of pricing outcomes.

f. The general formula / framework for determining obligations has been disclosed in the disclosure document.

g. The application fits into the policy set out in Footnote 2 to NZAX Listing Rule B4.1.