Monday, 19 February 2018


MEETING: FLI: Scheme of Arrangement Special Meeting

08 Dec 2017 09:52NZX
NZX Release 8 December 2017

Proposed Scheme of Arrangement
Chairman''s Address and Summary of Proxies Received

Attached is a copy of the Chairman''s address for today''s Special Meeting of
Shareholders including a table showing a summary of proxy votes received.

Fliway will release the results of voting on the Resolution at the meeting
today as soon as this information is available.


As you will be aware, we are here today to consider the proposed Scheme of
Arrangement through which all of the shares in Fliway would be acquired by
Yang Kee.

By way of an order of events today,  I propose to re-cap the events leading
up to today and provide an overview of the proposed Scheme.  This will
include a summary of the reasons that your independent directors are
recommending the Scheme, as well as an update on its status.  There will then
be an opportunity for shareholders to raise any questions you have about the
proposed Scheme before the resolution is put to the meeting.  There is only
one item of business for today''s meeting, so I expect to close the meeting
after the matter has been put to shareholders,

But first let me provide a few introductory comments about Yang Kee.  Yang
Kee is one of Singapore''s largest privately owned Logistics companies that is
looking to expand its presence in the region through acquisition of well run
logistics providers in geographies it currently does not operate in. In March
of 2017, Yang Kee acquired Australian firm Axima, which delivered expertise
in the fast moving consumer goods sector, and Yang Kee wants to add Fliway to
that acquisition to complete the Australasian platform and enlarge its
presence in this growing region.

The discussions with Fliway originally started last year.  They completed a
thorough due diligence exercise and the discussions ultimately culminated
with the parties signing a document called a "Scheme Implementation
Agreement" in late October this year.

I think it is worth taking a moment to talk about what a Scheme of
Arrangement is, as it is not a transaction structure that has been able to be
used to effect takeover transactions until recently.

The Scheme
A Scheme is an arrangement primarily between a company and its shareholders
that is approved by the High Court.  Over time, a range of different types of
commercial transactions have been approved by court-approved schemes of
arrangement, such as returns of capital or the separation of Fletcher
Challenge.  Relatively recently the Takeovers Panel confirmed that they felt
that schemes of arrangement are a useful mechanism through which takeover
transactions can be implemented, and we saw the Nuplex takeover by Allnex
completed earlier this year by way of scheme.

Because a scheme or arrangement relies on the target putting a proposed
arrangement to its shareholders for approval, they require a more
facilitative relationship between the bidder and target than required for a
conventional takeover offer.  They also deliver greater levels of certainty
for both parties in terms of timetable and transaction outcome. These
benefits create the best opportunity to maximise price for all shareholders
in addition to the process giving all shareholders the right to have their
say and vote on the proposal.

As a result, once the commercial terms had been agreed, the transaction
document signed was a Scheme Implementation Agreement - being an agreement
pursuant to which Fliway would propose the Scheme to the High Court and its

Today is the most important step in that process, where Fliway shareholders
get to have their say and vote as to whether they support the merits of the

The Scheme Booklet, issued with the Notice of Meeting for this meeting,
contains a very comprehensive description of the scheme, the steps involved
in implementing the scheme and shareholders rights through this process.  I
do not propose to recite those details for shareholders now.  However, in
essence, the proposed Scheme involves Yang Kee acquiring all of the shares in
Fliway for consideration of $1.22 per share.  All shareholders will receive
the same consideration on a per share basis.

It is an all or nothing arrangement.  If approved, all shareholders will have
their shares transferred to Yang Kee in exchange for the consideration,
whether or not they vote for or against the Scheme today.

So the decision for shareholders as a group is whether or not they would
prefer to receive a guaranteed $1.22 for each share held now or continue to
hold your investment in Fliway with a view that you may potentially receive
higher returns in the future.

To approve the Scheme, shareholders who represent 75% or more of the votes
cast today must vote in favour of the Scheme and those votes in favour must
also represent more than 50% of the total number of Fliway shares on issue.

Directors recommendation
As outlined in the Scheme Booklet, your Independent Directors both recommend
that you vote in favour of the Scheme of Arrangement. We intend to vote all
the Fliway shares that we own or control in favour of the Scheme, including
any undirected proxies we hold.

Alan and I have not made this recommendation lightly.  It was made after
carefully considering our own views of the advantages and disadvantages of
the Yang Kee proposal. In recommending the Scheme we have taken into account
that whilst Fliway is well positioned to deliver growth in earnings,
delivering this growth will not come without associated risk and is likely to
take some time.

Also, we think that $1.22 represents a strong offer based on Fliway''s recent
trading performance.  It is a 13% premium to the share price before the
transaction was announced.  Fliway''s shares have never closed at or above
$1.22 since we listed in April 2015.

We were assisted in our analysis of the merits of the Scheme by KordaMentha''s
report, which concluded with a valuation range of $1.04 - $1.24.  The offer
price of $1.22 sits at the upper end of that range.  That report was provided
to shareholders in the Scheme Booklet.

We reviewed the consideration offered by Yang Kee against that received in
comparable change of control transactions.  In that exercise we focussed on
the ratio of enterprise value to underlying EBIT (or earnings before interest
and tax).  This analysis led us to the conclusion that $1.22 per share
compares favourably, and some of the details of that analysis are set out in
the Scheme Booklet.

Finally, we consider that it is relevant that no superior proposal has
emerged since the Scheme was announced in October.  This coupled with the
fact that Fliway has traded below its IPO price since April 2015 makes us
think that an offer that is superior to the Scheme is unlikely to be

As a result of all of these factors, we felt that the better course for
shareholders was to take the opportunity to realise some of the future value
of their Fliway shares now, and at a premium to Fliway''s share price prior to
the proposal.

We are also conscious of the fact that Duncan Hawkesby, the Managing Director
and majority shareholder of Fliway, via the D&G Hawkesby Trust, is supportive
of the transaction, having entered into a Deal protection Deed with Yang Kee
NZ which, among other things confirms its intention to vote in favour of the

Process update
Before moving on to the formal item of business today, I thought it would be
worthwhile updating shareholders on the status of our process with the High
Court in respect of the Scheme.  Fliway was granted initial orders in respect
of the Scheme on 21 November 2017, a copy of which is included with the
Scheme Booklet you will have received. The initial orders direct Fliway to
call this meeting and impose certain other process requirements on Fliway in
relation to the Scheme.

If shareholders approve the Scheme today, Fliway will apply to the High Court
for final orders.  The hearing for final orders is scheduled for 19 December
2017.  We will announce the outcome of that hearing via NZX.
If approval is given at that final court hearing, Fliway shares will be
suspended from trading on the NZX Main Board at the end of the day on the
21st of December 2017 and shareholders should expect to be paid NZ$1.22 per
share cash consideration on the 4th of January 2018.

Before I open it up to shareholders for questions, I wanted to show the
number of valid proxies received in advance of the meeting.  These proxies
are shown on this slide.  It is worth noting that 68% of Fliway Shareholders
have voted by proxy, and over 98% of those are FOR.  The proxy votes include
the vote of the majority shareholder.  The Court has asked that the Company
provides the breakdown of votes outside of the majority shareholder given the
Deal Protection Deed - so if you set aside the proxy vote from the majority
shareholder, then over 94% of the proxy votes are FOR.

Before I put the resolution to the meeting, I would like to offer
shareholders the opportunity to ask any questions that they might have in
relation to the Scheme.  Please raise your hand if you have a question.

Thank you for that discussion. If there are no further questions, I would
now like to move to the formal resolution and requirement for calling this
meeting today.

The resolution as per the Notice of Meeting is:

That the Scheme (the terms of which are described in the Scheme Booklet as
sent to Shareholders dated 21 November 2017) be and is hereby approved.

I invite you to vote on this resolution now.  Please mark your voting paper.
A representative from Link will collect your papers once you have voted.

Concluding remarks
Ladies and gentleman, on behalf of all my fellow Directors I would like to
recognise the effort of every Fliway employee. Through their skills and
expertise they have built the company into one of the leading logistics
companies in New Zealand that it is today and through their strategy and hard
work have delivered value to our shareholders.

From the beginning, Yang Kee have made it clear that they respect and value
the Fliway team and they are looking forward to seeing our people work and
succeed alongside the wider Yang Kee team.

Importantly, thank you to our shareholders, being Chairman of Fliway has been
a privilege and an honour. This has certainly been an historic meeting for
the Company. I thank you for your attendance here today, but I also thank you
for your support of Fliway. I know that some of you have been shareholders
from the time we listed the company and your continued support of the company
has been greatly appreciated.


For more information contact:
Duncan Hawkesby
Fliway Managing Director
+64 21 882 882
End CA:00311631 For:FLI    Type:MEETING    Time:2017-12-08 09:52:05
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