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Appraisal Based on Unverified Assumptions

Pacific Retail Appraisal Based on Unverified Assumptions

Auckland – October 25 2001 – Cullen Investments today strongly criticised the assumptions underlying Anderson’s appraisal of its subsidiary Logan Corporation’s offer to purchase up to 100% of Pacific Retail Group (NZSE: PRG), calling them unverified.

Anderson’s report, which is due to be mailed to shareholders today, bases its valuation on three year management projections which have not been presented to, considered or approved by the full PRG Board.

Cullen Investments Group Managing Director, Phil Newland, said that he had been surprised by the valuation range of $2.13 to $2.95 and curious as to its foundation.

“Like other shareholders we have not yet seen a draft of the report and have seen only the notice filed by the independent Directors last Friday with the NZSE. On meeting with the independent Directors yesterday to discuss the basis for the reported valuation, which varied considerably from our own view, we discovered that Anderson had relied on projections and assumptions which had not been subjected to full Board scrutiny or approval. We regard that omission as significant.”

“To the extent that the projections do not represent the considered view of the full Board and have not been independently verified, there is a risk that minority shareholders acting on the notice and the report may not have accurate advice upon which to base their decision to accept the offer,” said Newland. “Cullen does not intend to vary its offer beyond its current level of $1.76. We are happy with the level of acceptances to date and note that the offer is not conditional upon a minimum level of acceptances.”

Mr Newland said that the independent Directors, when questioned about the procedure followed by Anderson, acknowledged that the projections had formed the basis of the valuation and that neither those projections nor the assumptions underlying them had been put before the Board. They also acknowledged that Anderson had not prepared their own projections nor independently verified those provided with members of the full Board.

“We have subsequently taken legal advice and have written to the independent Directors expressing our concern at the procedure followed by the appraisers and requesting that any projections and assumptions be subject to independent verification before sending the report to shareholders,” said Newland. “Notwithstanding that request, they determined to mail the report in its current state.”

Logan Corporation, which initially held 63% of PRG, last month offered shareholders $1.76 per share, more than 20 percent above the pre-bid closing price of $1.45 and a significant premium above the average share price over the past six months. Logan has since acquired 5 percent more of the Company’s shares under the ‘creep’ provisions in the takeovers code.


About Cullen Investments
Cullen Investments Limited is a private investment company with strategic investments in a network of well-established businesses, principally in Australia and New Zealand. Cullen holds a substantial interest in a core group of companies operating in the retailing, financial services, infrastructure, property, healthcare, technology, entertainment and bloodstock sectors.

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