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Fletcher Chall. On The Recent Proposal For Energy

STATEMENT BY THE BOARD OF FLETCHER CHALLENGE LIMITED
ON THE RECENT PROPOSAL FOR ENERGY

AUCKLAND, 28 February 2001 – The Board of Fletcher Challenge said today that the Special Meeting of Shareholders on 6 March will proceed, in order to give shareholders the opportunity to vote on the offer from Shell and Apache. The Chairman of Fletcher Challenge Limited, Roderick Deane, said that under the terms of the Shell and Apache offer, Shell and Apache can terminate the offer if the transaction is not completed by 23 March. Shell and Apache have not extended the deadline.

In deciding to proceed with the shareholder meeting, the Board of Fletcher Challenge was also influenced by the fact that the recently announced proposal from Greymouth Petroleum is not currently a formal offer capable of being accepted by the company or voted on by shareholders.

Although the proposal has been made by Greymouth Petroleum to acquire the Fletcher Challenge Energy assets just days before the Special Meeting of Shareholders to vote on separation issue for Fletcher Challenge, Board’s primary focus remains on ensuring that all shareholders receive the best value possible from the sale of the energy assets.

“In making an assessment of value it is important that the facts be clearly understood and emotive statements such as the country of residence of each of the bidders be seen for what they are and put aside. That the physical assets of Fletcher Challenge Energy will remain in New Zealand is undisputed - who will own and manage those assets will be determined by whichever party can offer the current shareholders the best value” said Dr Deane.

The facts today are as follows:

The Shell Offer
Shell and Apache have offered
- $US 3.34 cash for each Fletcher Challenge Energy share, plus
- An entitlement to one Capstone Turbine share for every 70 Fletcher Energy shares and
- One Rubicon share for every Fletcher Energy share.

The Shell and Apache offer was recommended to shareholders by the Fletcher Challenge Board and is due to be voted on by shareholders on 6 March.

If shareholders approve the Shell and Apache offer and the Court sanctions the transaction, the transaction will be completed on 23 March. Payment will be made to shareholders a few days later.

The Greymouth Proposal
Greymouth has proposed a minimum US$3.70 cents for each Fletcher Challenge Energy share, plus the same components for Rubicon and Capstone shares.

The proposal from Greymouth is conditional on securing debt and equity finance, and undertaking due diligence, only after which Greymouth would be in a position to decide if their proposal can be converted into a formal offer.

In evaluating the Greymouth proposal, the Fletcher Challenge Board is considering the fundamental issues of price, certainty and timing.

- On the issue of price, the cash component of the Greymouth proposal is 10% higher than that of Shell and Apache.

- On the issue of certainty, the Shell Apache offer is a firm offer and is able to be closed on 23 March following shareholder approval and Court sanction. The Greymouth proposal requires due diligence and the Board therefore is unable to verify Greymouth’s ability to complete a purchase of the Energy Division. The Greymouth proposal is not currently an offer capable of being accepted by the company or being voted on by shareholders.

- On the issue of timing, the Shell Apache offer can be settled by 23 March. The timing around the proposal from Greymouth is less certain, although the company has said that it can be in a position to confirm an offer by 23 March. However, as there are regulatory and procedural issues Fletcher Challenge is bound to follow in presenting such an offer, shareholders will not be able to vote on any formal offer from Greymouth prior to June 2001.

A shareholder meeting is the right and proper place for issues such as this to be aired and discussed fully, and for shareholders to make their decisions on the future of the company and their investment in it.

Shareholders who have already voted are able to change their votes or proxy appointments up to 2 pm on Sunday, 4 March, and Fletcher Challenge will place advertisements in daily newspapers outlining the procedure for shareholders. Fletcher Challenge is working with Computershare, the company’s share registrar, to ensure that despite the time constraints, shareholders can participate in the voting according to their wishes.

Fletcher Challenge has established a Shareholder Helpline, 0800 734 734, which will be able to provide further information to shareholders who have queries regarding voting procedures for Tuesday’s Special Shareholder Meeting.

Ends

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