Nov 26, 2004. /Lesprom Network/. 1. Carter Holt Harvey Limited (“CAH”) requires an additional financing facility (“the Facility”) to assist with management of CAH group’s liquidity requirements over the next six to nine months. 2. CAH sought requests for funding proposals on a competitive basis from a group of CAH’s banks. Following an analysis of the response received, the BNZ proposal was selected by the General Manager Treasury and Tax and Manager Treasury Risk. 3. The Facility is a NZ$400 million multi currency revolving advances facility. As security for the Facility, CAH and several of CAH’s subsidiaries (“the Subsidiaries”) are required to guarantee the amounts owing under the Facility (and certain other amounts owing to BNZ). CAH has advised NZXR that the terms of the Facility and the Guarantee are entirely normal terms for financial facilities of this size and type between a company of the credit rating of CAH and a New Zealand bank. 4. CAH has provided NZXR with the current drafts of the Facility Agreement and the Guarantee (with pricing details removed). 5. CAH intends to use advances drawn under the Facility to refinance debt facilities which are maturing this year and to provide working capital to meet the general corporate requirements of the CAH group. This first drawdown under the Facility is expected to occur at the end of this month. 6. The involvement in the Transaction of the director who is a director of both CHH and BNZ is as follows: (a) Mr Thomas Kirriemuir McDonald (“Mr McDonald”) is a non-executive (and independent) director of CAH. Mr McDonald is one of nine directors of CAH. (b) Mr McDonald is a director of a number of other companies and is the chairman of BNZ. Mr McDonald was appointed as a director of CAH in April 1998 and has been a director of BNZ since August 1991. (c) Mr McDonald is a non-executive director of CAH and was not engaged in the selection of BNZ as financier for this Transaction or the subsequent negotiation of the terms nor entry into the Transaction. In accordance with CAH’s constitution, which provides that a director who is interested in a transaction may not vote on the transaction, Mr McDonald will not sign the written resolution of the directors of CAH approving CAH’s entry into the Transaction. (d) Mr McDonald had, before the negotiations with the BNZ commenced, made a general disclosure of his BNZ directorship in the interests register of CAH on 1 April 1998. (e) Mr McDonald’s interest in the Transaction will be disclosed in the notes to the written resolution to be circulated to the board of directors of CAH seeking the board’s approval of the Transaction. Application 7. CAH has applied to NZX Regulation for a waiver from the requirements to obtain shareholder approval under NZSX Listing Rule 9.2.1 for CAH and the Subsidiaries to enter the Transaction. 8. In support of its application CAH submit: (a) The terms of the transaction are at fair value for CAH because the proposal was assessed alongside other proposals sought and received in a competitive process. (b) The terms of the Transaction and CAH’s decision to enter into the Transaction were negotiated between the General Manager Treasury and Tax and executives of BNZ on commercial and arms’-length terms. (c) Mr McDonald has not unduly influenced the decision of CAH to enter into the Facility Documentation. As noted above, the selection of the financier for the Facility was made at management level rather than at board level. Mr McDonald is a non-executive director of CAH and was not engaged in the selection of BNZ, the negotiation of the terms of the Transaction documents nor will Mr McDonald be involved in the CAH board’s approval of the Transaction. The decision of the CAH board will be made independently of Mr McDonald. (d) Mr McDonald is not a party to, and does not have any personal interest in, or stand to benefit personally from, the Transaction. (e) The entry into the Transaction is in the best interests of CAH because the funding is required to meet obligations and potential opportunities over the next nine months and the terms of the Facility are competitive (having been agreed as part of the competitive bid process referred to above). (f) NZX has been willing, in the past, to grant waivers in similar situations, where a director of an issuer is also a director of a bank providing finance to that issuer. 8. Listing Rule 9.2 is aimed at regulating those transactions in which a person may gain favourable consideration because of their relationship with the Issuer. In addition to these transactions, the rule is intended to capture transactions that may be perceived to be favourable. 9. Listing Rule 9.2.1 provides that: “An Issuer shall not enter into a Material Transaction if a Related Party is,/> or is likely to become: (a) a direct or indirect party to the Material Transaction, or to at least one of a related series of transactions of which the Material Transaction forms part… unless: … (e) that Material Transaction is approved by an Ordinary Resolution of the Issuer.” 10. The definition of Material Transaction under NZSX Listing Rule 9.2.2 includes a transaction or a related series of transactions under which an Issuer: “(c) borrows, lends, pays, or receives, money, or incurs an obligation, of an amount in excess of 5% of the Average Market Capitalisation of the Issuer; or (d) enters into any guarantee, indemnity, or similar obligation or gives any security, for or of obligation which could expose the Issuer to liability in excess of 5% of the Average Market Capitalisation of the Issuer…” 11. BNZ is an Associated Person of a director of CAH (namely Mr McDonald) by virtue of Mr McDonald also being a director of BNZ. Therefore BNZ is a Related Party of CAH within the meaning of NZSX LR 9.2.3. 12. For the purposes of Listing Rule 9.2.2, the Average Market Capitalisation of CAH is approximately NZ$2,821 million. The relevant monetary threshold for transactions under Listing Rule 9.2.1 will therefore be approximately NZ$141 million. 13. The Facility is for advances of up to NZ$400 million. CAH expects to draw down the full amount of the Facility. The Transaction is therefore in excess of the NZ$141 million monetary threshold under NZSX LR 9.2.2. 14. Footnote 1 to the Rule provides that: “NZX may waiver the requirement to obtain the approval of a resolution for the purposes of Rule 9.2.1 if it is satisfied that the personal connections with, or involvement or personal interest of a Related Party are immaterial or plainly unlikely to have influenced the promotion of the proposal to enter in to the transaction or its terms and conditions.” Decision 15. On the basis that the information provided to NZXR is full and accurate in all material respects, NZXR has decided to grant CAH a waiver from Listing Rule 9.2.1. Reasons 16. In coming to the decision to grant CAH a waiver from Listing Rule 9.2.1 NZXR has considered the following matters: a. That the request process for funding proposals was carried out on a competitive basis. b. CAH’s advice that the terms are normal terms for financial facilities of this size and type between a company of the credit rating of CAH and a New Zealand bank; c. The selection process for the financier and terms of the Transaction documents occurred at a management level rather than at board level and Mr McDonald had no involvement, as a non-executive board member of CAH, in the decision; d. There is no incentive for CAH to set the terms of the Facility at anything other than commercial terms; e. NZXR has received from CAH a certified copy of written resolutions of the directors of CAH (except Mr McDonald) resolving that (among other things) the decision of CAH to enter into the proposed Transaction: (a) Is an arms length and commercial decision of CAH; (b) Was not unduly influenced by the director of CAH that also sits on the board of BNZ; and (c) Is in the best interests of the shareholders of CAH. f. NZXR has granted waivers in similar situations where a director of an issuer is also director of bank providing finance to that issuer.