NEW ZEALAND GAZETTE

No. 79

being the Face Value plus Additional Interest but excluding any Coupon Interest.

"Coupon Interest" means the cash interest amounts paid on a semi-annual basis by NZ Co to the Noteholder.

"Face Value" means the amount of money provided to NZ Co as evidenced by the Note.

"NZ Co" means NZ Co, a company incorporated in New Zealand.

"Parent Co" means Parent Co, a public company listed on a recognised stock exchange.

"Maturity" means 5 years from the date of issue of the Notes.

"Note" means the Converting Note issued by NZ Co pursuant to a poll deed.

"Noteholder" means a person or persons investing in the Notes.

"Redemption Proceeds" means the cash amount expressed in Australian dollars, being the amount which the Noteholder receives upon the Notes being redeemed which must then be used to purchase shares in Parent Co.

"Termination Fee" means the interest payable (up to a maximum of 6 months) where the Noteholders elect to convert the Notes into shares following an interest suspension.

Method

1. No part of the following amounts are attributable to the expected financial arrangements:

• Where the Noteholder uses the Redemption Amounts to subscribe for Parent Co shares, the amount by which the aggregate market value of the Parent Co shares (expressed in Australian dollars in which the Notes are denominated) is above the Face Value of the Notes held by that Noteholder and redeemed by NZ Co.

• The Coupon Interest payments.

• The Additional Interest.

• The Termination Fee.

Examples

(Any reference to the redemption amount or value of Parent Co shares is illustrative only.)

Example 1

Investor A has A$10,000 of Notes issued by NZ Co, and on 15 September in Year 4 elects to convert the Notes to shares in Parent Co.

Accrued Coupon Interest of A$200 to the date of conversion is paid to Investor A in cash.

The market price of Parent Co shares at the date of conversion is A$2.63. The conversion price is A$2.50 [i.e. A$2.63 × 0.95 (rounded to the nearest whole cent)]. Investor A is issued with 4000 shares which have a total market value of A$10,520.

The Face Value of the Notes is A$10,000.

In accordance with the method prescribed in the determination, neither the Coupon Interest nor the $520 difference between the Face Value of the Notes and the value of the shares is attributable to the excepted financial arrangements.

Example 2

Investor B has A$10,000 of Notes issued by NZ Co, and at the end of Year 5 must convert the Notes to shares in Parent Co. NZ Co does not elect to redeem the Notes for cash at maturity.

The market price of Parent Co shares at the date of conversion is A$2.63. The conversion price is A$2.50. Investor B is issued with 4000 shares which have a total market value of A$10,520.

Accrued Coupon Interest of A$500 to the date of maturity is paid to the Noteholder in cash.

The Face Value of the Notes is A$10,000. Investor B receives $10,520 worth of shares.

In accordance with the method prescribed in the determination, neither the Coupon Interest nor the $520 difference between the Face Value of the Notes and the value of the shares is attributable to the excepted financial arrangements.

Example 3

Investor C has A$10,000 of Notes issued by NZ Co, and at the end of Year 5 must convert the Notes to shares in Parent Co. NZ Co elects to redeem the Notes for cash at maturity.

The market price of Parent Co shares at the date of conversion is A$2.63. Investor C receives A$10,500 as the Cash Redemption Amount.

NZ Co pays the Noteholder A$10,500 Cash Redemption Amount and the accrued Coupon Interest of A$450 to the date of maturity. NZ Co is then reimbursed for A$500 from Parent Co (being the amount of Additional Interest).

The Face Value of the Notes is A$10,000.

In accordance with the method prescribed in the determination, neither the Coupon Interest nor the additional interest is attributable to the excepted financial arrangements.

This determination is signed by me on the 3rd day of June 1998.

MARTIN SMITH, General Manager (Adjudication & Rulings).

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