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Fletcher Energy Proposal Received

AUCKLAND, 27 February 2001 ¡V Fletcher Challenge has received a proposal from Greymouth Petroleum to acquire Fletcher Challenge Energy. Greymouth Petroleum has stated that its proposal has a similar structure to that of the Shell and Apache offer, but with an increased cash component of a minimum of US$3.70 per share. The proposal is subject to a number of conditions, including finance and due diligence on the assets and liabilities (a process which will take at least several weeks). Any transaction that could arise from the proposal is unlikely to be able to be closed before the end of June 2001.

The proposal from Greymouth Petroleum, which seeks an adjournment of the March 6 Shareholder Meeting to March 23, will impact on the overall separation process for Fletcher Challenge Limited. The Shell and Apache offer currently before shareholders may lapse if not completed by March 23. As the separation transactions are inter-dependent, the separation of Fletcher Challenge Building, and the dismantling of Fletcher Challenge Limited, cannot proceed without an Energy transaction also being accepted by shareholders.

Before the Board of Fletcher Challenge can respond to the Greymouth proposal it requires and has requested further information. Once it has the necessary information the Board will evaluate the offer from Greymouth, based on an assessment of
„X overall value and fairness to all shareholders
„X certainty of receiving that value on closure
„X the impact of a timing delay
„X the ability of Greymouth to deliver on Energy¡¦s ongoing obligations

Fletcher Challenge has no additional information which it can release to the market, but will communicate further as information becomes available.

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