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Sale Of The Warehouse Australia Business

Sale Of The Warehouse Australia Business

Auckland, 24th November 2005 - The Directors of The Warehouse Group Limited ("The Warehouse") today announced that it has entered into a conditional agreement to sell The Warehouse Australia business and other Australian assets for an aggregate cash consideration of A$92 million (NZ$99m).

The purchaser of The Warehouse Australia business is a jointly owned entity to be formed by funds managed by Catalyst Investment Managers Pty Ltd and its parent PPM Capital Limited (together, Catalyst) and Castle Harlan Australian Mezzanine Partners Pty Ltd, acting on behalf of the CHAMP I and CHAMP II funds (CHAMP). As part of this transaction, The Warehouse Australia's Sydney Head Office will be sold to Investec Wentworth Specialised Property Trust.

Announcing these developments today, The Warehouse Chairman Keith Smith said the company had reviewed strategic options for its Australian business. Although The Warehouse Australia has made substantial improvements as evidenced by its improved profitability in the past year, the review indicated that further substantial investment was needed to achieve operating scale and future growth. The Board considered that at this time, focusing the company's resources on developing its New Zealand businesses would generate a better outcome for shareholders.

Whilst the effective date for the transaction is the 27th November 2005, completion of the sale is expected in early 2006 and is subject to normal regulatory approvals, completion of the related Millers Retail Ltd sale agreement and other normal commercial conditions.

The disposal of the business will result in a pre-tax earnings expense in the 2005/06 financial year of between NZ$80 million and NZ$90 million.

With Catalyst and CHAMP also acquiring the discount variety business of Miller's Retail Limited, the merged entity provides a sound future for the Australian business and its team members. The combined business will benefit from the additional scale provided by a significantly increased sales base together with a modern logistics infrastructure and systems framework.

Ian Tsicalas will head the combined Australian discount variety retail businesses with support by the management team to be drawn from both The Warehouse Australia and Miller's discount variety business.

As a result of the company entering into a conditional agreement, Ian Tsicalas today resigned as a director of The Warehouse Group Limited. Keith Smith acknowledged the significant contribution that Ian has made to the company since his appointment in November 2003.

The NZSX has granted a waiver in respect of Listing Rule 9.2.1 from the requirement to seek shareholder approval for this transaction.

The Warehouse Group Limited was advised by CSFB (Sydney), First NZ Capital (Auckland) and Allens Arthur Robinson (Sydney).


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