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Board endorses increased offer from Shell


Board endorses increased offer from
Shell and Apache for Fletcher Challenge Energy

AUCKLAND, 1 March 2001 ¡V The Board of Fletcher Challenge Limited has this afternoon received an increased offer from Shell and Apache for the assets of Fletcher Challenge Energy. The new offer of US$3.55 per share (an increase of US$0.21 or NZ$0.49 per share) is accompanied by the same components of an entitlement to one Capstone Turbine share for every 70 Fletcher Challenge Energy shares, and one Rubicon share for each Fletcher Challenge Energy share.

¡§We are pleased that shareholders will be able to make their decision on the Shell and Apache offer on Tuesday, 6 March, on the basis of a stronger cash component¡¨, said Roderick Deane, Chairman of Fletcher Challenge. ¡§The Board unanimously recommends the Shell and Apache offer and we urge shareholders to vote in favour of the transaction¡¨ he said.

¡§Under the terms of that offer, Shell and Apache can terminate their offer if the transaction is not completed by 23 March. Shell and Apache have advised us that this is their final offer, and that they will not be extending their offer beyond the 23 March deadline. To meet this deadline, we are required to have the shareholder vote on 6 March¡¨, Dr Deane said.

In comparing this firm offer against the Greymouth proposal, shareholders should take into account, in addition to price, the issues of timing and certainty.

Timing:
„X If the Shell and Apache offer is accepted by shareholders, the transaction will be completed and payment will be made in late March, 2001.
„X Even if Greymouth was able to convert its proposal into a formal offer, shareholders would not be able to vote on that offer until at least June 2001, with settlement some time later. Greymouth has indicated that they need to undertake due diligence, and also to satisfy debt and equity finance conditions.

Certainty:
- The Shell and Apache offer is unconditional, requiring only shareholder approval and Court sanction.
- We have received only a proposal from Greymouth, and it is far from certain that this proposal can be converted into a formal offer.
- There are a several issues that Greymouth would have to negotiate with third parties, including the transfer of third party guarantees. They may require significant undertakings from Greymouth which will take time to complete.

Price:
- The Shell and Apache cash offer is for US$3.55, payable in March
- The Greymouth proposal (should it be converted into an offer) is for US$3.70, with payment likely to be some time beyond June. In addition, as completion of Greymouth¡¦s proposal would be some months away, shareholders would be exposed to Capstone share price risk, foreign exchange volatility and later receipt of cash.

Newspaper advertisements have been commissioned advising shareholders of Shell and Apache¡¦s revised offer along with an outline of voting procedures for next Tuesday¡¦s meeting.


Ends

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