Alternative Bid For Energy Not Received

AUCKLAND, 26 February 2001 ¡V The Board of Fletcher Challenge Limited believe that it is in the interests of shareholders to clarify the situation in relation to a possible alternative bid for the Energy Division by a group of investors operating under the name of Greymouth Petroleum.

¡§We have not received an offer from Greymouth Petroleum, nor, despite repeated requests, has Fletcher Challenge been advised of the identity of the international investors rumoured to be behind Greymouth. The identity and credentials of any backers are vitally important in a deal of this size (nearly $4.6 billion), together with price and timing,¡¨ explained Roderick Deane, Chairman of Fletcher Challenge.

Had Fletcher Challenge received any substantive alternative offer, the Board would have been able to provide that information to shareholders. Such an offer could then have been taken into account by shareholders prior to voting at the Special Shareholder Meeting on March 6 2001. No recent contact with Fletcher Challenge has been sought by Greymouth or any other party, and no alternative offer has been received.

As a result of a contestable sales process, Shell and Apache made an offer to purchase all the assets of Fletcher Challenge Energy, (including related liabilities), and in return shareholders would receive
„X a US$3.34 cash payment (which shareholders may elect to have paid in NZ$),
„X an entitlement to one Capstone Turbine share for each 70 Energy shares,
„X one share in Rubicon, the newly-established company, for each Energy share,
with payment to be made shortly after the transaction closes, expected to be March 23. This offer was recommended by the Fletcher Challenge Board to shareholders.

The Shell and Apache offer can be terminated by either party on March 23, 2001. Shareholders are due to vote on this issue and the related Building Division separation at a Special Meeting on March 6 2001. Postal votes and proxy votes are currently being received.

¡§The Board will keep shareholders informed of any activity that has the potential to impact on shareholder value, or the intended separation process,¡¨ said Dr Deane.

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