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Summary of

Securities Act (Fonterra Co-operative Group Limited) Exemption Notice 2005

2005/37

Gazetted on 1 March 2005
Expires on 31 December 2005

Effects of the exemption
Fonterra Co-operative Group Limited ("Fonterra") and its wholly owned subsidiary, Fonterra Foods Pty Limited ("Fonterra Foods"), are able to offer Fonterra redeemable preference shares to New Zealand based shareholders in National Foods Limited as part of a takeover offer, without a registered prospectus or investment statement, so long as the offer complies with Australian law.

Fonterra and Fonterra Foods do not need to issue certificates for the shares.

Background
Fonterra is a co-operative dairy company registered under the Companies Act 1993 and the Co-operative Companies Act 1996. Fonterra announced an off-market takeover offer for National Foods Limited, an Australian food and beverage company, in October 2004.

Fonterra proposes to offer Fonterra redeemable preference shares to shareholders in National Foods Limited as part or full consideration for their National Foods shares. The redeemable preference shares will not be listed by NZX, ASX or any other stock exchange.

The exemption
Fonterra and Fonterra Foods are exempt, in respect of the redeemable preference shares, from:

• sections 37, 37A, 38A, and 54 of the Securities Act 1978; and
• the Securities Regulations 1983 (except regulation 8).

Conditions
The exemption is subject to the following conditions:

• the share offer complies with Australian law;
• the offer document distributed to New Zealand based shareholders of National Foods contains, or has attached to it, the following statements:
  • that the offer complies with Australian law;
  • that the offer document is not a prospectus registered under New Zealand law and may not contain all the information required in a New Zealand registered prospectus; and
  • that Fonterra is an issuer of the shares and as such has obligations under New Zealand law.

Reasons
The offer of redeemable preference shares is to be made primarily in Australia, as part of a takeover offer for National Foods Limited, an Australian company. There are few New Zealand shareholders of National Foods Limited. In this case, the cost of full compliance with New Zealand securities laws, in addition to compliance with Australian law, would outweigh the benefits of such compliance for shareholders of the Australian company.

The offer is to be made in compliance with Australian law, and New Zealand shareholders of National Foods Limited will receive the same disclosure as Australian shareholders.

The offer document permitted under the exemption will be an advertisement under New Zealand securities law, and therefore must comply with the rule that it must not be likely to deceive, mislead, or confuse investors. Fonterra and its directors are responsible under New Zealand law for the contents of the offer document. The conditions of the exemption require that this is made clear to investors.