760 NEW ZEALAND GAZETTE, No. 26 1 MARCH 2012

(b) where condition 5(d) of the Deed Poll is invoked during the term of the MCNs, from that date, only the Coupon Interest.

(2) The amount to be attributed to the CPI Adjustment is the net amount by which the face value of the MCNs increases or decreases over the term of the MCNs.

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

(a) where the face value of the MCNs increases, the CPI Adjustment shall be expenditure; or

(b) where the face value of the MCNs decreases, the CPI Adjustment shall be income.

(4) If condition 5(d) of the Deed Poll is invoked during the term of the MCNs, from that date, the CPI Adjustment will cease to be either expenditure or income. In this situation, any income or deduction already returned or claimed for the CPI Adjustment must be reversed (see paragraph 6(9) of this Determination below).

(5) All other income, gains, losses or expenditure in relation to the MCNs is solely attributable to the excepted financial arrangement component of the MCNs.

(6) The Coupon Interest payment and the CPI Adjustment (as applicable) will be spread over the term of the MCNs as follows:

(a) In respect of Coupon Interest, the amount to be attributed to an income year during which the MCNs are on issue will be the total of all interest expenditure incurred in the relevant income year. For example, for the income year ending 30 June 2012, this will include all interest payments falling due for payment up to and including the payment to be made on 1 July 2012.

(b) In respect of the CPI Adjustment, where condition 5(d) of the Deed Poll has not been invoked, the amount to be attributed to an income year during which the MCNs are on issue will be the amount by which the face value of the MCNs increases or decreases in respect of months falling within that income year. For example, for the income year ending 30 June 2012, this will include the CPI Adjustments made up to and including the CPI Adjustment to be made on 1 July 2012. This net amount of the CPI Adjustment will either be expenditure (where it increases) or income (where it decreases) for that income year.

The Issuer is an International Financial Reporting Standards (IFRS) taxpayer. At the time that the MCNs are issued, the above method will be consistent with an IFRS financial reporting method (provided that condition 5(d) of the Deed Poll is not invoked during the term of the MCNs).

(7) For the purposes of the base price adjustment, the amount of the consideration that has been paid to the Issuer for the MCNs (based on the definition of "consideration" in section EW 31(7) of the Act) is the amount subscribed for the MCNs with no part of the consideration being attributable to the excepted financial arrangement component of the MCNs.

(8) If condition 5(d) of the Deed Poll has not been invoked, for the purposes of the base price adjustment, the amount of the consideration that will be paid by the Issuer for the MCNs by way of the issue of Noteholder Shares (based on the definition of "consideration" in section EW 31(7) of the Act) is equal to the Adjusted Principal Amount (which includes the CPI Adjustments).

(9) If condition 5(d) of the Deed Poll has been invoked, the Issuer will complete a calculation applying the method in Determination G25 in the income year in which the condition is invoked so that the CPI Adjustments treated as income or expenditure to date are reversed in that income year.

(10) If condition 5(d) of the Deed Poll has been invoked, for the purposes of the base price adjustment calculated at maturity of the MCNs, the amount of the consideration that will be paid by the Issuer for the MCNs by way of the issue of Noteholder Shares (based on the definition of "consideration" in section EW 31(7) of the Act) is equal to the amount that was paid by the Noteholder to the Issuer for the MCNs.

7. Examples

Example A: Adjusted Principal Amount is greater than the value of the Shareholder’s shares

(1) This example illustrates the application of the method (set out in this Determination) for determining the amounts attributable to both the debt and equity components of the MCNs to be issued by the Issuer to the Noteholder.

(2) The example assumes the following:

The MCNs are issued on 1 July 2011 and the Noteholder will continue to hold the MCNs until 30 June 2021, when the MCNs will mandatorily convert into shares in the Issuer.

The amount subscribed for the MCNs is $100 million.

The CPI, for all relevant quarters, is 2% per annum.

Interest payments are not suspended during the term of the MCNs.

On conversion, the Adjusted Principal Amount will be less than the total value of the Issuer’s assets.

On conversion, the Adjusted Principal Amount will be greater than the total value of the Shareholder’s Shares.

Condition 5(d) of the Deed Poll has not been invoked.

(3) The Issuer will be allowed deductions for expenditure arising under the Financial Arrangements Rules during the term of the MCNs. This expenditure is in the form of the CPI Adjustments and the coupon interest payments. The expenditure for the first two income years, for which deductions will be allowed, is set out in the table in Appendix 1 (the deductions will continue on this basis during the term of the MCN). It is noted that the CPI Adjustments will be deductible whether paid in the form of shares only or a combination of shares and cash (where the Shareholder subscribes for additional shares and the Issuer uses the funds raised to redeem part of the MCNs prior to the MCNs being converted to Noteholder Shares).

(4) Any other amounts will be attributable to the equity component of the MCNs.