30 SEPTEMBER 2005 NEW ZEALAND GAZETTE, No. 167 4207

Notes to and Forming Part of the Financial Statements
For the year ended 30 June 2005

GAS DIVISION

2 Redeemable Fixed Coupon Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.
On 30 June 2005, no Redeemable Fixed Coupon Bonds were on issue:

The redeemable bonds issued on 1 September 2000 were due to expire on 1 September 2005 (5 year bonds) and 1 September 2007 (7 year bonds). The Redeemable Bonds were redeemed by Powerco in February 2005. $180 million of commercial bank debt was used to refinance the redemption, and will continue to do so until September 2005, when it is intended that an issue of $180 million in Credit Wrapped bonds will replace it.

The refinancing interest rate is based on the New Zealand 90 day BKBM plus a .20% margin. As at 30 June 2005 the applicable rates were:
September 2005 tranche ($100m) 7.2425%
September 2007 tranche ($80m) 7.2425%

The fair value of the bonds as at 31 March 2004 were:
5 year fixed coupon bonds $100,864,378 (7.87%)
7 year fixed coupon bonds $82,399,937 (8.15%)

3 Capital Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.
On 30 June 2005, no capital bonds were on issue:

The Capital Bonds, issued on 22 May 2002, were unsecured, subordinated debt obligations of Powerco Limited with an interest rate of 8.4% p.a. fixed until 22 May 2007. The Capital Bonds have now been replaced with an issue of Subordinated Bonds, which occurred on 15 April 2005. The Subordinated Bonds, as detailed in note 4 below, have an interest rate of 7.64% p.a. and expire on 15 April 2010.

4 Subordinated Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.
On 30 June 2005, subordinated bonds on issue were:

The Subordinated Bonds were issued on 15 April 2005 and are unsecured, subordinated debt obligations of Powerco Limited. They were issued in order to replace the $100m Capital Bonds, and have a tenure of 5 years. They have an interest rate of 7.64% p.a. fixed until expiry on 15 April 2010.
The fair value of the subordinated bonds as at 30 June 2005 is $102,755,042 (Capital Bonds Value, 31 March 2004: $104,685,000).

5 Guaranteed Bonds

As Powerco Limited is an integrated business, this disclosure relates to the business as a whole.
On 30 June 2005, 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 year bonds). As at 30 June 2005, the interest rates on the guaranteed bonds are:
7 year guaranteed bonds 6.22%
9 year guaranteed bonds 6.39%
11 year guaranteed bonds 6.53%

The Guaranteed Bonds have the benefit of the Security Trust Deed as a Senior Secured Facility.

The fair values of the Guaranteed Bonds as at 30 June 2005 was:
7 year guaranteed bonds $98,399,704
9 year guaranteed bonds $98,751,530
11 year guaranteed bonds $49,393,056