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SKY and INL boards agree on Scheme to merge

SKY and INL boards agree on Scheme to merge

9 May 2005

SKY and INL boards agree on Scheme to merge

SKY Network Television Limited (“SKY”) and Independent Newspapers Limited (“INL”) today announced in a joint statement that both boards had approved the scheme of arrangement (the “Scheme”) to merge the two companies and agreed to put it to shareholder vote.

At separate board meetings today, directors of both companies approved the Scheme and resolved to put the Scheme to their respective shareholders on 13 June 2005. The information memorandum and other shareholder materials are expected to be despatched on 19 May 2005.

Under the Scheme, a new company (“MergeCo”) will buy all of the shares in INL and SKY and then all three companies will amalgamate, with MergeCo remaining as the surviving company. MergeCo will be renamed SKY Network Television Limited.

Under the Scheme SKY shareholders receive $1.28 per share and one MergeCo share for each SKY share. Each INL shareholder receives $1.78 per share and 0.836 of a MergeCo share for each INL share.

Ken Cowley, INL Executive Chairman and Peter Macourt, SKY Chairman said Grant Samuel had undertaken an independent appraisal for INL shareholders and Ferrier Hodgson had undertaken an independent appraisal for SKY shareholders. Both Grant Samuel and Ferrier Hodgson have concluded that the Scheme is fair and reasonable to shareholders of INL and SKY minority shareholders respectively.

The Scheme requires the approval of SKY and INL shareholders at special meetings to be held in Auckland on 13 June at 10.00 am for INL and 12.00 midday for SKY.

If shareholder approval is gained, the Scheme will require final orders from the High Court to proceed. If final court approval is obtained it is expected that the Scheme will be completed on 1 July 2005, with MergeCo share statements and payment to shareholders sent shortly after that date.

The SKY Board also approved seeking SKY noteholder approval for the Scheme at a meeting on 7 June 2005 in Auckland. SKY has approximately $111 million of capital notes, which are listed on the NZDX.

If noteholder approval is obtained, upon implementation of the Scheme the capital notes will become MergeCo capital notes. The terms of the MergeCo capital notes will be the same as the terms of the existing SKY capital notes.

MergeCo will also offer to acquire capital notes from noteholders who do not wish to hold MergeCo capital notes. Details of this offer will be provided to noteholders as part of their information pack sent with the notice of meeting.


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