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Tranz Rail Holdings Limited

News Release
23 December 2004

Tranz Rail Holdings Limited

The Securities Commission has reached a settlement of the insider trading proceeding brought against Mr Beard, the former managing director and chief executive officer of Tranz Rail.

In August 2001, the Board of Tranz Rail made a grant of 70,496 shares of stock in lieu of a cash bonus to Mr Beard. At that time, the Board made provision for, and subsequently gave specific approval for, the sale of a portion of these shares to pay for the tax liability created by the grant. Accordingly, in March 2002, Mr Beard sold 35,248 shares to fund the payment of provisional taxes to the New Zealand Inland Revenue Department. At that time, Mr Beard held 270,496 shares, of which 200,000 were purchased when he joined the company in May 2000.

Mr Beard believes that he sought and obtained the consent of the Board for the sale of the shares in question. In seeking that consent, Mr Beard retrospectively submitted the required documentation in which he indicated at that time that he was or may have been in possession of inside information. He did not sell any other shares and, in fact, continued to accumulate shares in the company until the Toll Holdings takeover of Tranz Rail in October 2003. At that time he sold all his holdings, a total of 513,133 ordinary shares, 790,000 options and 1,200,000 redeemable preference shares, incurring a significant loss.

Mr Beard has agreed to pay the full amount of the Commission’s compensation claim of $55,691.84 and $100,000 of the Commission’s claim for penalty and costs, a total of $155,691.84.

Mr Beard has agreed to make this payment without any admission of liability. He acknowledged at that time that he was or may have been in possession of inside information

when he traded the shares in question as a result of his position as an officer and director of Tranz Rail. He also acknowledges that, as a result, the Commission had a case against him under the Securities Markets Act 1988. He considers, however, that he had a defence to that case.

Mr Beard has also agreed to assist the Commission with its case against the remaining defendants in the proceeding.

The settlement has been approved by the High Court. No judgment has been entered against Mr Beard.

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