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SOEI announces buy back

Attention Business Editors

May 26th, 2006

SOEI announces buy back of Mandatory Convertible Notes

* SOEI announces an offer to buy back up to 100% of its SOEGB 7% mandatory convertible notes at a price of $1.55 per note in cash, with a total cost of up to NZ$9.91 million.

* The offer is pro rata to all note holders.

* Note holders can tender their notes into the offer or hold their notes until conversion into ordinary shares in August 2007.

* Funding for the buy back will be from a combination of cash reserves and a new debt facility.

* The offer will be posted to note holders on June 14 and will close on July 7.


The directors of Software of Excellence International today announced that following a review of its capital structure the company will be undertaking a buy back of its 6,395,939 SOEGB 7% Mandatory Convertible Notes ("Notes") at a price of $1.55 per Note.

The Notes were issued at $1.50 each and are due to convert to ordinary shares on August 9, 2007.

If the Company were to receive acceptances from 100% of Note holders, the cost to the company would be $9.91 million.

The company has now completed its business restructuring. The result is a more focused business with strong cash flows, and directors believe it is now appropriate to focus on capital management.

Independent Review

SOEI chairman Jim Syme said that the decision to buy back the notes followed an independent financial review of the company, which recommended that SOEI simplify its capital structure.

He said the repurchase would be funded from the company's available cash reserves and from a bank funding line of $5 million principally denominated in British pounds, reflecting the lower interest rates available in that market. The UK business generates 74% of the company's total revenue.

"This move will leave us with a more efficient and modestly-geared balance sheet. Future acquisitions that fit within our present business strategy will be funded through a mix of cash flows and equity."

Financial Impact

If the notes were to convert at current prices, the outcome would be materially dilutive to ordinary shareholders. The buy back of notes will be earnings per share positive to SOEI.

A 100% acceptance would result in SOEI having 25,868,769 ordinary shares on issue.

Offer details and timing

Consideration $1.55 per Mandatory Convertible Note NZX record date June 9, 2006 Offer posted June 14, 2006 Offer opens June 19, 2006 Offer closes July 7, 2006 Acceptance level announced July 13, 2006 Cheques posted to note holders July 14, 2006


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