Key points

For all relevant capital raisings announced on or after 16 September 2020 and on or before 30 November 2020:

• Any listed entity that wishes to utilise the class waivers must be able to evidence that it is raising capital “… predominately for the purposes of addressing the existing or potential future financial effect on the entity resulting from the COVID-19 health crisis, and / or its economic impact…” on the listed entity.
• If the capital raising appears to have inequitable features for existing securityholders, the Australian Securities Exchange (ASX) can withhold the benefit of the class waivers (even if the capital raising is COVID-19 related and urgently required by the listed entity).

Background

From 16 September 2020, any entity that wishes to utilise the additional placement capacity under two class order waivers ”Temporary Extra Placement Capacity Class Waiver” and “Non-renounceable Offers Class Waiver” (class waivers) must satisfy ASX that it is raising capital “… predominately for the purposes of addressing the existing or potential future financial effect on the entity resulting from the COVID-19 health crisis, and/or its economic impact… ” on the listed entity (along with satisfying the other conditions set out in the class waivers).

As discussed in our previous articles “The Australian Securities Exchange provides a number of measures for temporary emergency capital raising relief until 31 July 2020 due to COVID-19”, “Australian Securities Exchange clarifies certain temporary emergency capital raising measures” and “Australian Securities Exchange extends temporary emergency capital raising relief until 30 November 2020”, the ASX introduced temporary emergency capital raising relief at the end of March 2020 through the class waivers, until 30 November 2020.

At the time of introducing the class waivers, the ASX recognised that many listed entities faced great challenges due to the highly volatile markets caused by the COVID-19 pandemic. For this reason, on top of providing urgent capital raising relief to entities that were directly impacted by COVID-19, the class waivers allowed a wide range of capital raisings for entities that were indirectly impacted by COVID-19.

Changes to the class waivers

The ASX is now of the view that there has been an important stabilisation in market conditions since the extension of the class waivers on 13 July 2020 and has announced that it has amended the class waivers. From 16 September 2020, any entity that wishes to take advantage of the additional placement capacity under the class waivers must satisfy ASX that the entity is raising capital “… predominately for the purposes of addressing the existing or potential future financial effect on the entity as a result of COVID-19 and / or its economic impact…”.

If the capital raising appears (based on the ASX’s assessment) to have inequitable features for existing security holders, the ASX has the power to withhold the benefit of the class waivers for that capital raising, despite the fact that the capital raising is COVID-19 related and urgently required by the listed entity.

The class waivers have been implemented by the publication of the replacement class waivers dated 15 September 2020 and the changes will apply to all relevant capital raisings announced on or after 16 September 2020 and on or before 30 November 2020.

When an entity announces the capital raising, it must include in the announcement a statement that it intends to rely on the class waiver and explain the purpose for which the entity is seeking to raise capital and explain how the purpose relates to the COVID-19 health crisis and / or its economic impact. The entity must complete the capital raising within a reasonable period of making the announcement.

Please contact our team if you require assistance or advice in relation to taking advantage of the class waivers.