NEW ZEALAND GAZETTE, No. 119

14 SEPTEMBER 2004

POWERCO

GAS DIVISION

2 Shareholders’ Funds

3 Redeemable Fixed Coupon Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

On 31 March 2004, Redeemable Fixed Coupon Bonds on issue were:

These bonds were issued on 1 September 2000 and expire on 1 September 2005 (5 year bonds) and 1 September 2007 (7 year bonds). Bonds are carried at cost and have fixed interest rate terms. As at 1 April 2004, the interest rate on the redeemable fixed coupon bonds are:

• 5 year fixed coupon bonds: 7.97%
• 7 year fixed coupon bonds: 8.15%

On maturity date, bondholders have a right to require the Company to redeem all of their bonds for cash or convert the bonds to ordinary shares. If this option is not taken, the Company will redeem the bonds for cash.

The fair value of each tranche of the bonds at 31 March were:

• 5 year fixed coupon bonds: $108,864,378 (2003: $101,006,872)
• 7 year fixed coupon bonds: $82,399,937 (2003: $81,576,504)

4 Capital Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

On 31 March 2004, capital bonds on issue were:

The Capital Bonds were issued on 22 May 2002 and are unsecured, subordinated debt obligations of Powerco Limited which are non-cumulative as to interest. The capital bonds have an interest rate of 8.4% p.a. fixed until 22 May 2007. Thereafter, Powerco has the ability to reset the terms and conditions of the capital bonds, including the interest rate, on dates determined by Powerco (Election Dates). On each election Date, Powerco has the right to convert some or all of the capital bonds into Powerco ordinary shares and bondholders can elect to retain their capital bonds or sell some or all of their capital bonds under the resale facility arranged by Powerco. If a bondholder does complete the sale of any bonds it has elected to sell, the bondholder can elect to convert such bonds to Powerco ordinary shares on the election date.

The fair value of the capital bonds as at 31 March 2004 was $104,685,000 (31 March 2003: $101,425,000).

5 Guaranteed Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.

On 31 March 2004, guaranteed bonds on issue were:

The Guaranteed Bonds were issued on 29 March 2004 and are unsecured debt obligations of Powerco Limited. The scheduled payments by the Company of interest and principal are guaranteed on an unsecured basis by US-based XL Capital Assurance Inc, a specialist financial guaranty organisation. The bonds expire on 29 March 2011 (7 year bonds), 29 March 2013 (9 year bonds) and 29 June 2015 (11 1/4 year bonds). As at 1 April 2004, the interest rates on the guaranteed bonds were:

• 7 year guaranteed bonds: 6.22%
• 9 year guaranteed bonds: 6.39%
• 11 1/4 year guaranteed bonds: 6.53%

Under the trust deed constituting the Guaranteed Bonds, the Company has covenanted to ensure that, if XLCA defaults on its obligations under the financial guarantee, the Company will procure sufficient of its subsidiaries to guarantee its obligations under the Guaranteed Bonds by signing a Subsidiary Guarantee so that at all times the total tangible assets of the Company and all guaranteeing subsidiaries exceeds 85% of the total tangible assets of the Group. As at 1 April 2004, no Subsidiary Guarantees had been executed.