1 MARCH 2012 NEW ZEALAND GAZETTE, No. 26 759

with a value equal to the Shareholder Shares held by the Shareholder. The Noteholder and the Shareholder will then each have 50% of the shares in the Issuer.

(e) After 10 years, where condition 5(d) of the Deed Poll has not been invoked, and where the Adjusted Face Value of the MCNs is more than the value of the Shareholder Shares, the Issuer may elect to extend the term of the MCNs by three years. Where this occurs, the Coupon Interest will increase to 5% and the MCNs will convert on the Replacement Conversion Date.

(f) If condition 5(d) of the Deed Poll has not been invoked, and the Adjusted Face Value of the MCNs is more than the value of the Shareholder Shares, whether the term of the MCNs has been extended (as described in paragraph 3(1)(e) above) or not, the Shareholder may subscribe for additional Shareholder Shares under condition 5(b) of the Deed Poll. This involves the Shareholder subscribing for additional Shareholder Shares in the Issuer. The purchase of the additional Shareholder Shares will provide funds to the Issuer, all of which must be used by the Issuer to repay part of the Adjusted Face Value of the MCNs owing to the Noteholder. This subscription increases the Shareholder’s shareholding, while at the same time reducing the value of the Noteholder Shares that the Noteholder is entitled to receive on conversion. The value of the share purchase by the Shareholder is such that on conversion of the remainder, the Noteholder and the Shareholder will each have 50% of the shares in the Issuer.

(g) The Noteholder will be entitled to appoint 50% of the board of directors of the Issuer. If the Noteholder’s Directors vote against a recommendation made by the property manager and supported by the Shareholder-appointed directors (except where that recommendation relates to front loading, or involves a transaction between the Shareholder and a related company) and such vote is ratified by the Noteholder then condition 5(d) of the Deed Poll may be invoked. If condition 5(d) is invoked, the Noteholder will lose its right, on conversion, to receive Noteholder Shares to the value of the Adjusted Face Value of the MCNs. In this event, on the Conversion Date, or Replacement Conversion Date (as the case may be), the Issuer will issue to the Noteholder shares equal to the number of Shareholder Shares on issue to the Shareholder on the Conversion Date.

4. Principle

(1) The MCNs have both debt and equity components. They can be regarded alternatively as:

(a) a loan to the Issuer with repayment in shares (debt component); or

(b) a forward purchase of shares (in which case the holder of the MCNs is buying shares in a company and has equity in it).

(2) As the MCNs have this dual character, when calculating income or expenditure in relation to the MCNs it is first necessary to separate the debt and equity components of the MCNs.

(3) This Determination specifies that the Coupon Interest and (where condition 5(d) of the Deed Poll has not been invoked) the CPI Adjustment relate to the debt component of the MCNs. Changes in the value of the Noteholder Shares relate to the equity component and will be excluded from the application of the Financial Arrangements Rules when calculating income or expenditure for the Issuer.

(4) This Determination specifies that if condition 5(d) of the Deed Poll is invoked then, from the date the condition is invoked, only the Coupon Interest will relate to the debt component of the MCNs. If condition 5(d) is invoked then the CPI Adjustment and any changes in the value of the Noteholder Shares will relate to the equity component and will be excluded from the application of the Financial Arrangements Rules when calculating income or expenditure for the Issuer. Further, any income or deductions already returned or claimed for the CPI Adjustments must be reversed (see paragraph 6(9) of this determination below).

(5) For the purposes of this Determination, any change in the market value of the Noteholder Shares between the issue date of the MCNs and the conversion of the MCNs into shares is solely attributable to the equity component of the MCNs. Therefore, the difference in Noteholder Share price can be ignored when calculating income and expenditure.

5. Interpretation

(1) In this Determination, the following expressions (which have not been defined elsewhere in this Determination) have the following meanings:

Adjusted Face Value means the initial face value of the MCNs together with the quarterly CPI adjustments to the face value of the MCNs.

Financial Arrangements Rules means the rules referred to in sections YA 1 and EW 1(2) of the Act.

Coupon Interest means the cash interest amounts paid on a monthly basis by the Issuer to the Noteholder pursuant to the terms of the Deed Poll.

CPI Adjustment means the quarterly adjustments to the face value of the Notes pursuant to the terms of the Deed Poll.

Noteholder Shares in relation to the MCNs means the fully paid ordinary shares in the Issuer to be issued on conversion of the MCNs.

Shareholder Shares means the fully paid ordinary shares in the Issuer held by the Shareholder, including any additional shares subscribed for under condition 5(b) of the Deed Poll.

6. Method

(1) When calculating the aggregate income or aggregate expenditure with regard to the MCNs, the income, gain, loss, expenditure or any other consideration receivable by the Noteholder or payable by the Issuer will be:

(a) where condition 5(d) of the Deed Poll has not been invoked during the term of the MCNs:

(i) the Coupon Interest; and

(ii) the CPI Adjustment.