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30 August 2000

News Release

FORCE CORPORATION LIMITED - INSIDER TRADING INQUIRY

The Securities Commission has undertaken an inquiry into trading in the shares of Force Corporation Limited. This focussed on events in the early part of this year.

In the afternoon of 3 February, Force Corporation posted a "Don't Sell" notice advising shareholders not to sell stock as the company was "in negotiations as to a possible merger". On 8 February, Force Corporation announced that it intended to merge its operations with The Internet Group Limited (better known as ihug).

Just over one million shares in Force Corporation were traded on the New Zealand Stock Exchange on 3 February. This compared to 45,600 shares the previous day and an average of 67,490 shares per trading day in the previous month. The price of Force Corporation opened at 58 cents on 3 February and closed that day at 65 cents (a rise of 12.07% on the day). The high volume of trading continued through to 11 February when the price of Force Corporation closed at 91 cents.

The Commission's inquiry was undertaken to consider whether any insider of Force Corporation who had inside information about the proposed merger may have traded in the shares, or may have tipped another person about the shares, in the period up to the full announcement by the company on 8 February.

In the course of the inquiry the Commission received evidence from those persons who purchased shares in Force Corporation in the period 3 to 8 February and who accounted for most of the buying in this period. Evidence was also received from brokers and other witnesses.

The people who bought shares at this time were carefully questioned about the circumstances of their trading, the state of their knowledge and motivation for buying, as well as about any links that they may have had with the participants involved in the proposed merger. The brokers were questioned about the circumstances in which the buying orders were placed. The Commission retained Counsel to assist with the process of questioning all witnesses who gave evidence in the inquiry.

The Commission's inquiry is now completed. In the event the Commission was not able to establish on the evidence that the persons who had bought shares had possession of inside information about the proposed merger between Force Corporation and ihug.

Norman F Miller
Senior Executive (Operations)

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