Media Backgrounder - Priority

Registration

The Government, after the successful share floats of Auckland International Airport and Capital Properties, where tens of thousands of Kiwis took the opportunity to buy shares, now proposes selling, by public offer, 60% of its shares in Contact Energy Limited.

The other 40% would be sold to a cornerstone shareholder. That process has already advanced to the short-listing and due diligence stage. It is expected that the identity of the cornerstone shareholder will be announced by the end of March.

The Government, to help plan the float and gauge public interest in it, is introducing a Priority Registration process.

This process gives potential investors the opportunity to record their interest in receiving the Contact Investment Statement, when it becomes available, and a personalised application form to apply to purchase Contact shares if they wish. Those who priority register will also be eligible for 25% more Contact shares from the public pool than the minimum public allocation.

Priority Registration begins on Monday, 22 February, and will run through until 5pm, March15. It is only open to people living in New Zealand. People may priority register only once.

People with Priority Registration are under no obligation to buy shares in Contact. However, if they do, using their personalised application forms, they will be eligible for 25% more Contact shares than the minimum public allocation. The allocation level will be set after the proposed public offer closes in May, and exact demand for shares is known.

Priority Registration was successfully used in both the Telstra and New South Wales TAB floats in Australia. Just over half those who participated in Priority Registration bought shares.

The benefits of Priority Registration include:

Increasing the ease of applying to purchase Contact shares - the application forms are pre-printed for those who have Priority Registration Giving priority registrants eligibility for 25% more shares than the minimum public allocation Helping to estimate more accurately the number of Investment Statements (and Prospectuses) required Streamlining of all processes.

During Priority Registration, potential investors will not be asked how many shares they may wish to buy, nor how much money they have to spend. Some people who priority register will inevitably decide later not buy shares, and some who do not priority register will ultimately buy shares.

New Zealanders can priority register by:

Telephoning 0800 CONTACT and giving their names and addresses, or requesting a form to fill out themselves and return. Filling out a newspaper coupon asking for a Priority Registration form and posting it back(free post).

If they are Brokers' clients, returning the form sent to them by their Broker. Each Priority Registration application lodged through the Contact Energy Share Information Line will be acknowledged, giving applicants the opportunity to check their details, which cannot be altered later.

All people who priority register will automatically receive the Investment Statement and personalised application forms once the proposed offer formally opens, likely to be in April.

Priority Registration will also be promoted by a Broker Client Priority Registration programme, now underway. This will relieve the pressure on the Contact Energy Share Information Line, but Brokers' clients do not receive any advantages that are not available to other New Zealanders.

In addition to the public pool, it is proposed that shares will also be allocated to investors through the Broker firm offer and will be offered to institutional investors both in New Zealand and overseas.

An advertising campaign to inform the public about the Priority Registration opportunities will start on the evening of Tuesday, 23 February 1999.

Telstra

Priority Registration was used very successfully prior to the public offer of Telstra shares in Australia. About 8.7 million letters and Priority Registration forms were sent out to interested parties.

A total of 2.5 million people throughout Australia took up Priority Registration. Of the 2.5 million who priority registered, 54% applied for shares. A total of 72% of all retail applications for Telstra shares were priority registrants.

Priority Registration was invaluable in planning, to ensure sufficient paper was pre-ordered and resources allocated to the tasks to ensure they were completed on time.