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Summary of

Securities Act (Pumpkin Patch Limited) Exemption Notice 2004

2004/106

Gazetted on 6 May 2004
Expires on 31 October 2004

Effects of the exemption

• Pumpkin Patch is able to include historical financial information in the investment statement.
• The price of the shares need not be stated in the prospectus.
• The net tangible asset backing per share can be calculated by reference to the maximum number of shares that would be issued if the subscription price of the shares was at the high point, mid-point and low point of the indicative price range.
• The prospective statement of cash flows for Pumpkin Patch can be for a period which coincides with the company's normal accounting period, rather than for a period relating to the date the prospectus is registered.
• The subscription price to be paid on the exercise of the options need not be stated in the prospectus.

Background
Pumpkin Patch was established in New Zealand in 1990. The company designs, manufactures and distributes children's clothing through mail order and retail outlets in Australasia, the United Kingdom and other regions.

The share offer is expected to raise around $100 million, but a fixed price will not be sought for the shares, as the company proposes to determine the price through a book-building process. A share option scheme will be offered to senior managers and directors of Pumpkin Patch, but will not be available to the public.

Pumpkin Patch has applied to have the shares listed by NZX.

The exemption
Pumpkin Patch is exempted from regulation 12(1)(a), and from clauses 1(4), 8(5), 10(1)(c), and 13(a)(iii) of the First Schedule to the Securities Regulations 1983.

Conditions
Pumpkin Patch is able to include historical financial information in the investment statement, on condition that the investment statement includes the total assets, net assets and total liabilities of the issuing group. This information must also be contained in the registered prospectus.

Pumpkin Patch is exempt from the requirement to include the share price in the prospectus, on condition that the prospectus

• describes how the subscription price for the shares will be fixed; and
• describes the factors that may be taken into account in fixing the price; and
• states when the price is expected to be fixed; and
• describes how the shares will be allocated; and
• gives the indicative price range; and
• states whether the company reserves the right to set the price outside the indicative range; and
• states how the subscriber can find out the price once it has been fixed; and
• describes the procedures for holding subscription money for the shares; and
• describes how over-subscription will be treated and how refunds will be made; and
• states that the company has applied to NZX for listing.

Pumpkin Patch is exempt from the requirement to include the net tangible asset backing per share, calculated using the method required by clause 8(5) of the First Schedule, on condition that the prospectus contains information on the net tangible asset backing per share, calculated according to the maximum number of shares that would be issued if the subscription price of the shares was at the high point, mid-point and low point of the indicative range.

Pumpkin Patch is exempt from the requirement to include in the prospectus the subscription price to be paid on the exercise of the options, on condition that the prospectus describes how this price will be fixed.

The exemption from clause 10(1)(c) of the First Schedule is granted on the condition that the prospectus contains a prospective statement of cash flows for Pumpkin Patch and its subsidiaries for two financial years from 1 August 2003.

Reasons
The exemption from regulation 12(1)(a) of the Regulations permits extra information about the assets of the issuing group to be included in the investment statement, while still requiring the investment statement to set out the amounts of the total assets, net assets, and total liabilities of the issuing group, which is consistent with the policy of regulation 12(1)(a). The registered prospectus must also contain this information.

As the price of the shares will be determined by a book building process, this price and the total number of shares to be allotted will not be known at the date of the registered prospectus. This means that PPL will not be able to comply with clauses 1(4), 8(5), and 13(a)(iii) of the First Schedule. The exemption is necessary for the offer to proceed. The conditions of the exemption require PPL to provide alternative information to potential investors about the pricing mechanisms for the shares and options.

The exemption from clause 10(1)(c) of the First Schedule allows the prospective financial information to be aligned to the normal accounting periods of the issuer. This will provide more useful and more easily comparable information for potential investors.