Simplified Disclosure Prospectus for an offer of interest bearing bonds

This Prospectus is a Simplified Disclosure Prospectus for an offer of bonds that will rank equally with bonds issued by Contact that are already quoted on the NZX Debt Market. Contact is subject to a continuous disclosure obligation that requires it to notify certain material information to NZX, a registered exchange under the Securities Markets Act 1988, for the purpose of that information being made available to participants in the NZX Debt Market, a market operated by NZX.

Arranger, Joint Lead Manager Joint Lead Managers: Co-Manager: and Organising Participant:

Sustainability and growth

Our award-winning Wairākei bioreactor, shown on the front cover, is a unique, world-first facility. Supporting the Wairākei power station, it helps us to deliver base load geothermal energy in a sustainable way for tomorrow and beyond.

LETTER TO INVESTORS 4 IMPORTANT INFORMATION 5 KEY INFORMATION 6 OFFER PROCESS 8 HOW THE INTEREST RATE WILL BE SET 9 ISSUER PROFILE 10 SELECTED FINANCIAL INFORMATION 18 GOVERNANCE 21 RISKS 22 TRUSTEE’S STATEMENT 27 STATUTORY INFORMATION 28 GLOSSARY 38 HOW TO APPLY 40 DIRECTORY 47 Letter to investors

Dear investor We are pleased to present you with this opportunity to invest in bonds to be issued by Contact (2014 Bonds). The Offer is part of Contact’s ongoing funding programme with the proceeds of the Offer to be used for the repayment of the bonds maturing on 15 May 2014 (2009 Bonds) and for general corporate purposes. The 2014 Bonds will extend our term funding profile, maintain diversity in our funding sources, and continue our presence as an issuer on the NZX Debt Market. The Offer consists of an Exchange Offer and a General Offer. The Exchange Offer gives holders of the 2009 Bonds the opportunity to exchange some or all of their 2009 Bonds for 2014 Bonds offered under this Prospectus. If you are an Existing Bondholder who chooses to take part in the Exchange Offer, and if your application is successful, you will have all or part of your holdings of 2009 Bonds exchanged by Contact for 2014 Bonds. In exchange for your 2009 Bonds (which will be cancelled on exchange) you will receive an equal number of the 2014 Bonds offered under this Prospectus. But, notwithstanding that you have exchanged your 2009 Bonds, you will still be paid interest on 15 May 2014 for the 2009 Bonds at the current rate applying to these bonds of 8% per annum. Because of this payment, interest will only start to accrue on the 2014 Bonds issued under the Exchange Offer from 15 May 2014 and you will receive the first payment at the Interest Rate of the 2014 Bonds on 15 August 2014. The General Offer allows new investors to apply for 2014 Bonds and existing investors to apply for more than their current holding of 2009 Bonds. As $534 million of the 2009 Bonds are currently outstanding, and Contact is only proposing to issue up to $250 million of 2014 Bonds under this Prospectus, we do expect significant interest in the 2014 Bonds. Assuming that the 2014 Bonds are fully subscribed via exchanges for the 2009 Bonds, Contact will be returning about $284 million to its bondholders on 15 May 2014, and has already made arrangements to fund this amount through alternative funding sources. Contact has no current intention to issue any further bonds in the retail market in the near term. This Prospectus provides an overview of Contact’s operations, important information in relation to the 2014 Bonds and the Offer, and information on where you can obtain further information about Contact. To ensure that an investment in the 2014 Bonds meets your specific objectives, we recommend you read this Prospectus carefully and consult your financial adviser before making a decision. We commend this Offer of 2014 Bonds to you as an investment opportunity and look forward to your participation.

Dennis Barnes Chief Executive

4 LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Important information

Prospectus Selling restrictions the Organising Participant, the Joint Lead Managers, and the Co-Manager) and their This Prospectus is a Simplified Disclosure The 2014 Bonds are offered in New Zealand respective directors, officers, employees Prospectus prepared in accordance with to New Zealand resident investors. This and agents in respect of any loss, cost, regulation 10 of, and schedule 12 to, the Prospectus may not be used for the liability or expense sustained or incurred as Securities Regulations. purposes of, and does not constitute, an a result of the investor breaching the selling offer or invitation in any jurisdiction other restrictions described above. Capitalised terms are defined in the than New Zealand. Contact reserves the Glossary section or within the relevant right to reject any application for 2014 Disclaimer section of this Prospectus. Bonds under the Offer that it believes The Parties have not independently All references to dates and times are to comes from a person who is not a New verified the information contained in this New Zealand dates and times. Zealand resident investor. Prospectus. In accepting delivery of this This Prospectus is prepared as at, and This Prospectus is intended for use only Prospectus, the recipient acknowledges dated, 18 February 2014. A copy of this in connection with the Offer and does that none of the Parties (nor their Prospectus, signed by or on behalf of the not constitute an offer or invitation in any respective directors, officers, employees directors of Contact, and having endorsed place in which, or to any person to whom, it and agents) gives any warranty or on it or attached to it the documents would not be lawful to make such an offer representation of accuracy or reliability. To required by section 41 of the Securities or invitation. No action has been taken the maximum extent possible at law, none Act, has been delivered to the Registrar of to register this Prospectus or permit an of the Parties (nor any of their respective Financial Service Providers for registration offering of the 2014 Bonds to persons directors, officers, employees or agents) under section 42 of the Securities Act. in any jurisdiction outside New Zealand. accepts any liability whatsoever for any Accordingly, the 2014 Bonds have not been, loss arising from this Prospectus or its Continuous disclosure and will not be, registered under the United contents or otherwise arising in connection with the Offer. Contact is subject to a continuous States Securities Act 1933 as amended disclosure obligation that requires it to (US Securities Act) and this Prospectus Each recipient of this Prospectus must notify certain material information to NZX does not constitute an offer of securities in make his, her, or its own independent for the purpose of that information being the United States of America or to any ‘US investigation and assessment of the made available to participants on the person’, as defined in Regulation S under financial condition and affairs of Contact NZX Main Board and NZX Debt Market the US Securities Act (US Person), or to any before deciding whether or not to apply for operated by NZX under the Securities person acting for the account or benefit of a 2014 Bonds. Markets Act and the Listing Rules. Copies US Person. of that information are provided on By applying for 2014 Bonds, each investor Contact’s page on NZX’s website agrees to indemnify Contact and the Parties (www..com/companies/CEN). (being collectively the Trustee, the Arranger,

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 5 Key information

Issuer Bondholders of the 2009 Bonds. Existing exercise its discretion along the following Contact Energy Limited (Contact). The Bondholders can apply to exchange some general terms (including in relation to 2014 Bonds are not guaranteed by any or all of their 2009 Bonds for 2014 Bonds on oversubscriptions): other person. a one-for-one basis (the Exchange Offer). • Contact will give priority to applications Refer to the Issuer profile section of this The 2009 Bonds exchanged by Existing under the Exchange Offer, subject to the Prospectus. Bondholders will be cancelled by Contact Rate Setting Mechanism; and after they are transferred to Contact under Type of bond the Exchange Offer. Existing Bondholders • Existing Bondholders who also wish to take part in the General Offer (to Unsecured, unsubordinated, fixed rate, will still receive their final interest payment subscribe for additional 2014 Bonds over interest bearing debt obligations of Contact. in respect of their exchanged 2009 Bonds on 15 May 2014, as if those 2009 Bonds and above their holdings of 2009 Bonds) Use of proceeds had not been cancelled. For this reason, no will be given preference above other applicants under the General Offer. The net proceeds will be used to redeem interest will be paid on 2014 Bonds received the 2009 Bonds and for general corporate under the Exchange Offer for the period Notwithstanding the above, Contact may purposes. through to the first Interest Payment Date reserve a pool of 2014 Bonds for certain (15 May 2014). Key terms of the Offer applicants in the General Offer under General Offer Reserved Allocations and may make The Offer will be comprised of two parts: an statements to this effect during the Offer Exchange Offer and a General Offer. The 2014 Bonds will also be offered to process. Exchange Offer persons who do not hold 2009 Bonds and Existing Bondholders who wish to apply for Contact may scale applications at its The 2014 Bonds will be offered to Existing additional 2014 Bonds (the General Offer). discretion, but will not scale any application Contact may allocate 2014 Bonds in the to below five thousand (5,000) 2014 Bonds (Principal Amount of $5,000). Key dates General Offer to retail investors and/or reserve them for NZX brokers or firms, and/ Refer to the Offer process and How the Opening Date: or approved financial intermediaries. Interest Rate will be set sections of this 26 February 2014 Subscribers under the General Offer will Prospectus. Exchange Offer Closing Date: receive interest on their 2014 Bonds for the 13 March 2014 Issue size period from when their application money General Offer Closing Date: is banked. Up to $200 million of 2014 Bonds with up 20 March 2014 to $50 million of oversubscriptions. Relationship between the Offers Issue Dates: Refer to the Offer process section of this 20 March 2014 & 27 March 2014 (if required)1 Under the Exchange Offer applicants will be Prospectus. able to choose how many 2014 Bonds they Expected date for quotation Principal Amount / Issue Price and trading of 2014 Bonds: wish to exchange at particular interest rates 21 March 2014 (see Offer process section). 2014 Bonds $1.00 per 2014 Bond. issued under the General Offer will be at Maturity Date: the Final Interest Rate (see How the Interest For bonds exchanged under the Exchange 15 May 2019 Rate will be set section). The reponses of Offer, the Issue Price will be met by the Exchange Offer and General Offer applicants subscriber exchanging some or all of their Contact may make further announcements to will be used to set the Final Interest Rate. 2009 Bonds for 2014 Bonds on a one-for- the NZX regarding the timetable for the Offer. one basis. 1Contact reserves the right to close the offer Contact reserves the right to decide which early, in which case the second Issue Date may applications to accept under either the Refer to the Offer process section of this not be required. Exchange Offer or the General Offer, but will Prospectus.

6 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Interest Rate first Interest Payment Date. • Customer demand for and gas in New Zealand may decrease. Any Subsequent interest payments will be The Interest Rate will be set by the process such reduction is likely to have an adverse made on 15 February, 15 May, 15 August, described under the How the Interest Rate effect on Contact’s revenues and profits. will be set section of this Prospectus. The and 15 November in each year and on the Interest Rate will be not less than 5.80% Maturity Date. • Contact’s power stations may not be per annum and shall be notified by Contact able to generate the expected amounts Refer to the Statutory information section of of electricity if they cannot operate in the to Bondholders by notice to the NZX given this Prospectus, under the heading Time of not later than the first Issue Date. normal manner or at all. This could occur payment. for a wide range of reasons, including For Existing Bondholders, however, Excess applications equipment failures and breakdowns, notwithstanding that you have exchanged natural disasters or resource consents your 2009 Bonds, you will still be paid If the Offer is oversubscribed or any not being renewed or being renewed with interest on 15 May 2014 for the 2009 application is not accepted by Contact, unfavourable changes to conditions. whether because of late receipt or Bonds at the current rate of 8% per annum. • The availability and/or cost of fuel that otherwise, subscription amounts paid in Contact requires to generate electricity Refer to the How the Interest Rate will be set relation to the General Offer will be returned may change. section of this Prospectus. (without interest) to the applicant as soon Interest payments as reasonably practicable after Contact • While application has been made to quote decides not to accept the application (for the 2014 Bonds, there is no guarantee Interest will (subject to the exceptions below) whatever reasons) and, in any event, within that any secondary market for the 2014 accrue daily on the Principal Amount of five Business Days of the first Issue Date. Bonds will develop or that you will be able each 2014 Bond and be paid in arrear in to readily sell your 2014 Bonds. equal quarterly instalments on each Interest If an application under the Exchange Offer is • The value of the 2014 Bonds will fluctuate Payment Date. not accepted by Contact, the 2009 Bonds that the applicant offered to exchange will over time due to changes in market The first Interest Payment Date for the 2014 not be acquired by Contact. interest rates, market perception of Bonds will be 15 May 2014 (but no interest will Contact’s creditworthiness and other be paid on that date for 2014 Bonds issued Refer to the Offer process section of market conditions. These changes under the Exchange Offer). this Prospectus. may be significant and could result in significant losses to you if you sell your No interest will accrue in relation to 2014 Early redemption 2014 Bonds. Bonds issued under the Exchange Offer There is no provision for early redemption. until 15 May 2014. This is because on 15 May Refer to the Risks section of this Prospectus. Listing and NZX code 2014 the Existing Bondholders who have Contact’s credit rating exchanged their 2009 Bonds will receive the Application has been made to NZX for final interest payment that would have been permission to quote the 2014 Bonds on Contact has a Standard & Poor’s long-term paid on their exchanged 2009 Bonds. Existing the NZX Debt Market and all requirements credit rating of BBB/stable. The 2014 Bonds Bondholders who do not exchange their 2009 of the NZX relating thereto that can be are expected to be assigned an initial credit Bonds will receive their final interest payment complied with on or before the date of rating of BBB by S&P. on the same basis (plus the principal amount this Prospectus have been complied with. Refer to the Risks section of this Prospectus, of their 2009 Bonds) on 15 May 2014. However, NZX accepts no responsibility under the heading Credit rating. for any statement in this Prospectus. NZX In relation to the 2014 Bonds issued under Ranking of securities the General Offer, the interest paid on the is a registered exchange, regulated under first Interest Payment Date will be for the the Securities Markets Act 1988, and the The Trustee, on behalf of Bondholders, has period from (and including) the date on NZX Debt Market is a registered market the benefit of the Negative Pledge. Among which the Bondholder’s application money operated by NZX. other things, the Negative Pledge provides is banked to the first Interest Payment that Contact will not grant any security interest NZX ticker code CEN020 has been Date. The interest for this period will be in its assets except under certain limited reserved for the 2014 Bonds. calculated based on the number of days in exceptions set out in the Negative Pledge. the period and a 365-day year, rather than What are the key risks of this Refer to the Statutory information section being the equal quarterly payment made Offer? of this Prospectus, under the heading on other Interest Payment Dates. • The two largest opposition political parties Relationship with listed securities and ranking Interest paid on the first Interest Payment Date (the New Zealand Labour Party and the of securities. will be paid to the original subscriber for each Green Party of Aotearoa New Zealand) Financial covenants 2014 Bond issued under the General Offer. have proposed policies for electricity sector reform that would involve significant The Negative Pledge provides that Contact If a successful applicant under either structural changes. If these parties are must ensure that the ratio of consolidated the Exchange Offer or the General Offer elected and these policies were to be unsubordinated group debt to consolidated sells 2014 Bonds prior to the first Interest implemented, Contact’s revenues could unsubordinated group debt plus Payment Date those 2014 Bonds will not be reduced. shareholder funds (all as described in the entitle the purchaser to any interest on the Negative Pledge) does not exceed 60%.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 7 Offer process

Contact is making the Offer of 2014 Bonds in two parts - the Exchange Offer and the General Offer.

Overview The Exchange Offer process under the General Offer as described below. Applications from Existing If you are an Existing Bondholder who Participants receive 2014 Bonds and final Bondholders will receive preference under elects to take up the Exchange Offer, the interest payment from the 2009 Bonds the General Offer. Exchange Offer allows you to apply to If you are an Existing Bondholder who exchange some or all of your 2009 Bonds The General Offer process chooses to take part in the Exchange (which will mature on 15 May 2014) for 2014 Offer, and if your application is successful, Contact may allot 2014 Bonds under Bonds. If your application is accepted, you will have all or part of your holdings the General Offer, as well as under the you do not need to make any payment. of 2009 Bonds exchanged by Contact Exchange Offer. Your exchange of the 2009 Bonds will for 2014 Bonds on a one-for-one basis. constitute payment of the Issue Price for Within the General Offer, Contact may In exchange for your 2009 Bonds (which the 2014 Bonds. reserve 2014 Bonds for NZX brokers and/ will, on exchange, be cancelled) you will or firms under the General Offer (Reserved The General Offer is an offer to investors receive an equal number of the 2014 Allocations). To the extent that there are who wish to subscribe for 2014 Bonds by Bonds offered under this Prospectus. But, 2014 Bonds available for the General paying the Issue Price. Existing Bondholders notwithstanding that you have exchanged Offer that are not subject to Reserved who wish to apply for a greater number of your 2009 Bonds, you will still be paid Allocations or applications from Existing 2014 Bonds than their current holding of interest on 15 May 2014 for the 2009 Bondholders, these may be offered to the 2009 Bonds may also apply for 2014 Bonds Bonds at the rate of 8% per annum which wider public. under the General Offer. currently applies to the 2009 Bonds. Because of this payment, interest will If you wish to apply for 2014 Bonds under How 2014 Bonds will be allotted only start to accrue on the 2014 Bonds either process, you must complete the issued under the Exchange Offer from 15 Contact reserves the right to allot 2014 relevant Application Form attached to this May 2014. Therefore, your first interest Bonds under either the Exchange Offer or Prospectus. Existing Bondholders applying payment on the 2014 Bonds will be paid on the General Offer at its discretion but will for 2014 Bonds under the Exchange Offer 15 August 2014. exercise its discretion along the following or General Offer should use the Existing general terms: Bondholder Application Form which What if you don’t wish to exchange your was sent to them accompanying this 2009 Bonds? • Contact will give priority to applications Prospectus. Instructions for completing under the Exchange Offer, subject to Participating in the Exchange Offer is and sending the Application Forms are the Rate Setting Mechanism; and entirely optional. If you are an Existing included in the How to apply section of this Bondholder and choose not to subscribe • Existing Bondholders who also wish Prospectus. for 2014 Bonds under the Exchange Offer, to take part in the General Offer (to Contact may refuse to accept any then you will continue to hold your 2009 subscribe for additional 2014 Bonds over application in whole or in part. It is not Bonds until those 2009 Bonds reach their and above their holdings of 2009 Bonds) obliged to issue any minimum number of maturity date on 15 May 2014, at which will be given preference above other 2014 Bonds, and may choose to issue less date they will be redeemed. The terms of applicants under the General Offer. than $200 million of 2014 Bonds, despite your 2009 Bonds will be unaffected by this Notwithstanding the above, Contact may having received applications for that process. reserve a pool of 2014 Bonds for Reserved amount of 2014 Bonds or more. If Contact Can you subscribe under the General Allocations for applicants in the General elects to accept applications for $150 Offer? Offer and may make statements to this million or less, the Interest Rate will be at effect during the Offer process. least 6.00% per annum, irrespective of the Existing Bondholders may also choose to Interest Rates specified in the applications subscribe for additional 2014 Bonds (over received. and above their holding of 2009 Bonds)

8 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 How the Interest Rate will be set

Contact will set the Interest Rate using the mechanism described below (the Rate Setting Mechanism).

Rate Setting Mechanism Alternatively, if you wish to accept the applications to match the number of 2014 Interest Rate as set by the Rate Setting Bonds it intends to issue. This means that A single Interest Rate, for the entire Offer, Mechanism, then you should select ‘Final if you apply for 2014 Bonds at a minimum will be set by the Rate Setting Mechanism Interest Rate’ on the Existing Bondholder interest rate that is above the Final Interest and all 2014 Bonds will carry this rate. Application Form (options 1 and 2 on the Rate, you will not receive any 2014 Bonds. The Final Interest Rate will not be less than form). 5.80% per annum. If Contact accepts applications for $150 Applicants under the General Offer can million or less, the Final Interest Rate will If you are an Existing Bondholder who only subscribe for 2014 Bonds at the Final be at least 6.00% per annum, irrespective chooses to take part in the Exchange Offer, Interest Rate. of the Interest Rates specified in the you can choose to apply for 2014 Bonds at applications received. Contact may also, at For the purposes of the Rate Setting three different potential minimum interest its discretion, increase one or more of the Mechanism, all applications at the Final rates: interest rates offered by announcement to Interest Rate, whether from the Exchange NZX (available on nzx.com). • 5.80% per annum; Offer or General Offer, will be treated by • 5.90% per annum; and Contact as being applications at the The Interest Rate shall be notified by Contact lowest interest rate (5.80%). to Bondholders by announcement to NZX • 6.00% per annum. (available on nzx.com) given not later than Contact intends to use applications from the first Issue Date, and by email to those This choice represents the minimum the Exchange Offer and General Offer to applicants who have provided Contact with a interest rate at which you wish to reinvest in set the Interest Rate for the 2014 Bonds. current electronic mail address. 2014 Bonds (option 3 on the form). The Final Interest Rate will be the lowest rate at which Contact receives sufficient

Examples of the Rate Setting Mechanism

Example A: Example B: Contact wishes to issue $200 million of Like Example A, Contact wishes to issue 2014 Bonds and receives applications for at $200 million of 2014 Bonds, but only least $200 million of 2014 Bonds specifying receives $100 million of applications an interest rate of 5.80% or the Final Interest specifying an interest rate of 5.80% per Rate. Accordingly, the Interest Rate will be annum or the Final Interest Rate. However, set at 5.80% per annum. Contact receives a further $120 million of applications specifying an interest rate of In this example if you applied for 2014 5.90% per annum. Under Example B the Bonds under the Exchange Offer at a rate Interest Rate for all $200 million of 2014 of 5.80% or selected the Final Interest Rate, Bonds issued will be 5.90% per annum. you will receive an allocation of 2014 Bonds (subject to scaling). If you only applied for In this example if you applied for 2014 2014 Bonds under the Exchange Offer at a Bonds under the Exchange Offer at a rate rate of 5.90% or higher, you will not receive of 5.80%, 5.90% or the Final Interest Rate, any 2014 Bonds. you will receive an allocation of 2014 Bonds (subject to scaling). If you applied for 2014 Bonds under the Exchange Offer at a rate of 6.00%, you will not receive any 2014 Bonds.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 9 Issuer profile

Contact is the second largest energy retailer in New Zealand and supplies electricity, gas and LPG to approximately 566,000 commercial and residential customers.

The Issuer profile set out in this section commencement of a wholesale electricity power stations generating more than half is a summary of the business of Contact market in 1996, the bulk of electricity of New Zealand’s electricity in 2013. With Energy Limited and its subsidiaries and generated in New Zealand is sold through the addition of other sources of energy, associate (the Contact Group). Investors a spot market to large industrial and including geothermal, biomass and wind, should be aware that the 2014 Bonds are commercial users and to retailers who around 75% of New Zealand’s electricity being issued by Contact Energy Limited, in turn sell the electricity to customers generation came from renewable energy the parent company of the Contact Group. in the retail market. Participants in the resources in 2013. spot market can hedge their exposures Contact has been in operation since Transpower, the Crown entity that owns with other market participants or through 1996, when it acquired a portfolio of the high voltage electricity transmission acquiring futures contracts on the ASX and gas assets from system in New Zealand, transports bulk New Zealand electricity futures market. the state-owned electricity generator, electricity from generation sites to cities, Electricity Corporation of New Zealand Currently there are five main competitors towns and some major industrial users. Limited. Contact is one of New Zealand’s in the New Zealand generation market: This transmission network connects with a largest publicly listed companies with a Contact, , Meridian distribution network of 29 local electricity market capitalisation in excess of NZ$3.8 Energy Limited, Mighty River Power Limited lines businesses that deliver power to New billion as of 13 February 2014. Contact’s and Limited. All of these Zealand’s homes and businesses. ordinary shares were listed on the NZX generators are also retailers of electricity Electricity generation and retailing Main Board in May 1999 and the company and between them have approximately businesses such as Contact are governed remains one of New Zealand’s most widely 95% market share of both generation by the Electricity Industry Act 2010 that held companies with around 72,000 and retail. Of these, Contact, TrustPower, substantially prevents them from carrying shareholders and over 8,000 bondholders Mighty River Power and on the business of electricity transmission as at 31 December 2013. In 2004, the (Mighty River Power and Meridian Energy and distribution. Origin Energy Group (of which Origin are each 51% government owned) are Energy Limited is the parent) became listed on the NZX. Genesis Energy remains Retail electricity supply in New Zealand is Contact’s majority shareholder. As at 31 New Zealand Government owned; however, deregulated, with any party able to offer December 2013 Origin Energy held or the present Government has stated that to sell electricity in competition with other controlled 53.1% of the ordinary shares it intends to sell up to 49% of its shares in electricity retailers to any retail customer. of Contact. Genesis Energy during 2014, meaning it Competition for retail customers among would also be listed on the NZX. New Zealand’s 18 retailers remains intense Environment in which with New Zealand having the most active Electricity in New Zealand is generated Contact operates energy market in the world1. Retail electricity primarily from hydro, geothermal, wind, tariffs are not subject to price regulation New Zealand’s electricity industry spans natural gas and sources. Renewable and vary across New Zealand. On average, generation, high voltage transmission, energy resources play a significant role across the industry, over 30,000 customers distribution and retail. Since the in New Zealand’s energy mix, with hydro

1VaasaETT World Energy Retail Market Rankings

10 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 change supplier or ‘churn’ each month. business and Netback for the retail channels. support the variability in hydro and wind The Net Purchase Cost reflects the total generation. Contact is well positioned to Demand for electricity in New Zealand has cash operational costs of supplying the provide this flexibility through its thermal remained stable over the past six years at energy sold and is calculated as the sum of power stations and gas storage facility. approximately 38 terawatt hours (TWh) the total cost of generation and the trading per annum. Demand is split approximately In the retail business, continued market margin between wholesale electricity sales 33% residential, 28% commercial and competition, reduced wholesale prices and purchases. Netback is the revenue agricultural, and 38% industrial customers, and increasing costs require a focus retained by Contact from its energy sales, the largest of which is the Tiwai Point on operational efficiencies and a move after deducting pass through costs (mostly Aluminium Smelter which has an annual towards lower cost ways of acquiring Transpower and electricity lines and gas demand of approximately 5 TWh. customers to maintain and improve distribution company charges) and cost to margins. This objective will be supported serve charges. These metrics are released Company overview by the completion of a new SAP customer through the NZX each month. In order to management and billing system which will Contact is one of New Zealand’s leading remain competitive in the market, Contact provide Contact with new capabilities to integrated energy companies. Contact’s seeks to minimise its Net Purchase Cost and offer products and solutions that meet operations include electricity generation control the pass through costs and its own customer needs. and the sale of electricity, natural gas cost to serve. and LPG to residential, commercial and industrial customers throughout New The commissioning of the Te Mihi Zealand. Contact currently employs 1,175 geothermal power station represents people and has its head office in . the completion of the current investment programme to reduce the cost, and Contact’s strategy increase the diversity and flexibility, Contact’s strategy is focused on of Contact’s generation portfolio. developing, owning and operating lower Future incremental gains in generation cost baseload and flexible energy supplies from geothermal and hydro assets are to cost-effectively meet the requirements being sought. of its customers and the market. Contact In response to the expiry of cheaper gas seeks to secure a range of development contracts, Contact has invested over $2 options across various fuel types to be billion in the past six years to lead the in a position to execute them as market transition away from baseload gas to opportunities arise. renewable geothermal generation. The Contact focuses on two key metrics in reduction in baseload gas generation has monitoring performance: Net Purchase Cost resulted in an increased need for flexible for the generation and trading part of the thermal generation and fuel supply to

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 11 Our business model

Insight Source Generate First, we assess the future energy We seek the most cost-effective We purchase and source fuel for needs of customers, as well as the and efficient generation electricity generation. We buy gas broader economic and local energy development options to meet and diesel from producers; rain market conditions. future customer needs or to and snow-melt fills hydro storage replace existing, less efficient lakes; drilling extracts geothermal

generation. Geothermal fluid and steam. We also have the developments are our priority – ability to store and use gas from market conditions dictate when our Ahuroa gas storage facility. We we build new or adapt older vary the output and combination generation. of plants used to meet energy demand peaks and respond to

seasonal/weather factors.

12 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Wholesale Distribute Sell & serve We sell the electricity generated Electricity is transported from As a retailer, we sell electricity, on the wholesale electricity market generators by Transpower and gas and LPG products and and also purchase the electricity then by local lines distribution services to residential, small needed for sales to our customers. companies to customers. Gas business, commercial and We buy and sell futures to manage is sourced by producers and industrial customers to meet risk and take market positions. transported by Vector, Maui and their energy needs. We keep in gas network companies. Contact touch with customers, answer

delivers bottled LPG to customers queries and provide information via our fleet of delivery trucks. Within on usage through our contact we also supply LPG centre team, business account through the reticulated network. managers, our website, email, social media and post.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 13 Contact’s generation business Contact owns and operates a diverse electricity generation portfolio of 11 power stations across the North Island and the South Island of New Zealand, comprising 2,218 megawatts (MW) of generation capacity, and generates approximately a quarter of New Zealand’s total annual electricity generation. The commissioning of Te Mihi, a newly constructed geothermal power station in the Wairākei steamfield, is expected to result in a net increase in generation capacity of 114 MW. For the year ended 30 June 2013, approximately 36% of Contact’s generation came from hydro, 23% from geothermal, 41% from natural gas and 0.04% from diesel. The is in the final stages of commissioning and ran successfully at 159 MW during its four week reliability test in December 2013. Commissioning tests revealed an issue with the hot well pumps. Solutions are being developed, which should see the plant operating at full capacity in the final quarter of the 2014 financial year. In the event that further modifications to the hot well pumps are required, the production impacts will be reduced by diverting steam to the existing Wairakei units. The associated commercial matters are in the process of being resolved with the contractor. Key operating statistics for Contact’s generation business are shown in the table below.

Electricity generation – operating statistics year ended 30 June 2013 2012 2011 Hydro (GWh) 3,561 2,895 3,860 Geothermal (GWh) 2,249 2,370 2,275 Thermal (GWh) 4,069 4,664 3,616 Total generation (GWh) 9,879 9,929 9,751

Details of Contact’s power stations and other major related assets are illustrated in the graphic marked Where we operate.

Generation by type for the year ended 30 June 2013 Total – 9,879 GWh Hydro – 3,561 GWh

Geothermal – 2,249 GWh

Thermal – 4,069 GWh

Customers by energy type at 30 June 2013 Electricity – 439,500 Total – 566,000

Natural gas – 61,500

LPG – 65,000

14 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Contact’s retail business Contact is the second largest energy retailer in New Zealand, supplying electricity, gas and LPG to approximately 566,000 commercial and residential customers as of 30 June 2013. As of 31 December 2013 Contact had 22% of New Zealand’s total retail electricity market and 23% of New Zealand’s natural gas market by number of customer accounts. Charges to retail electricity and gas customers are set at levels sufficient to cover the Net Purchase Cost, capital return, risk margin and a retail margin. Larger customers’ tariffs are usually set after a tender where Contact and its competitors bid for the business based on a margin over and above recovery of energy (benchmarked against the ASX electricity futures market) and network costs. Residential and smaller business customers are commonly on fixed unit tariffs with no constraint on usage. This pricing structure removes the risk for customers of exposure to volatile wholesale prices with the overall pricing set in a competitive market. Some customers are on tariffs that are fixed for a period of time (commonly one to two years) and others on tariffs that can be changed on notice. Contact’s practice is to review the tariffs annually. It is also common for Contact to offer special products, prices and packages to customers as a means of acquisition or to reward loyalty. As the market has become more competitive, Contact has increased the range of products, prices and packages that it offers. Key operating statistics for Contact’s business are summarised below*.

Electricity retailing – operating statistics year ended 30 June 2013 2012 2011 Mass market sales (GWh) 4,067 4,188 4,333 Commercial and industrial sales (GWh) 4,210 4,092 3,920 Total retail sales (GWh) 8,277 8,280 8,253 Electricity customers 439,500 443,500 447,000

Key operating statistics for Contact’s natural gas operations are summarised below*.

Natural gas– operating statistics year ended 30 June 2013 2012 2011 Sales to wholesale customers (PJ) 2.3 2.3 7.1 Sales to retail customers (PJ) 2.5 2.5 2.8 Used for internal generation (PJ) 34.6 38.7 30.1 Total gas used or sold (PJ) 39.4 43.5 40.0 Gas customers 61,500 62,500 60,000 LPG Contact retails LPG through a wholly owned subsidiary, Rockgas. In the year ended 31 December 2013, Rockgas was the largest LPG supplier in New Zealand, supplying approximately 43% of the LPG market by volume. Key operating statistics for Contact’s LPG business are summarised below*.

LPG – operating statistics year ended 30 June 2013 2012 2011 Sales to LPG customers (tonnes) 68,061 65,715 65,201 LPG customers (including through franchisees) 65,000 61,500 59,300 Contact is not a producer of LPG, but acquires the majority of its supply from New Zealand producers who extract LPG as a by-product of their gas and crude oil production. Contact’s principal supplier, Origin Energy, sources its LPG from the Kupe field.

Following a number of years of decline, the LPG market is beginning to show signs of growth with annualised demand in the 12 months to 30 June 2013 of approximately 150,000 tonnes, up 8,000 tonnes on the previous year. In past years, with the decline of the Maui field, New Zealand has imported LPG to meet demand. However, with the Kupe field commencing production in 2009 and Mangahewa in 2011, New Zealand is now in a position of oversupply with frequent exports. A lack of domestic storage means imports are still required at certain times of the year, predominantly to cover production outages.

* Sourced from Contact’s FY12 and FY13 full year results management discussion and analysis, as released to NZX.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 15 Where we operate

Existing power stations

Offices

Power stations being commissioned

LPG sales and distribution

Gas storage facility

Clyde

Queenstown/ Wanaka Christchurch Dunedin

Roxburgh

Invercargill

Name Output Commissioned Type Location Capacity (MW) 2013 Generation (GWh)1 Ahuroa – 2011 Gas storage facility Taranaki 11.6 petajoules (PJ) Ability to store and extract stored as at gas as conditions require 31 December 2013 Clyde Hydro 1992 Conventional Otago 432 1,942 Ohaaki Geothermal 1989 Flash steam 40 330 Ōtāhuhu B Thermal 1999 Combined-cycle turbine 400 1,684 Poihipi Geothermal 1996 Flash steam Waikato 55 416

1. For year ended 30 June 2013.

16 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Auckland Ot¯ahuhu¯

Ohaaki

Te Rapa Te Mihi Whirinaki Stratford

Ahuroa

Te Huka

Wellington Wair¯akei

Poihipi Levin

Name Output Commissioned Type Location Capacity (MW) 2013 Generation (GWh)1 Te Huka Geothermal 2010 Binary cycle Taupō 23 198 Te Mihi Geothermal Commissioning Flash steam North of Taupō 166 – Te Rapa Thermal 1999 Open-cycle turbine cogeneration Waikato 44 226 Roxburgh Hydro 1956–1962 Conventional Otago 320 1,619 Stratford Thermal 1998 Combined-cycle turbine Taranaki 377 1,708 Stratford Thermal 2011 Peaker gas turbine Taranaki 200 447 Wair¯akei Geothermal 1958, 2005 Flash steam/binary cycle Waikato 1722 1,305 Whirinaki Thermal 2004 Diesel fuel, open-cycle turbine Hawke’s Bay 155 4

2 Capacity expected to reduce to 120 MW once Te Mihi commissioned.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 17 Selected financial information

The selected financial information set out in the tables below contains financial data for both Contact and the entire Contact Group over the financial years ending 30 June 2009 to 30 June 2013.

Contact Group Selected financial information for Contact Energy Group1 for the year ended 30 June 2013 2012 2011 2010 2009 Revenue and other income ($m) 2,526 2,701 2,231 2,164 2,220 Operating expenses ($m) (1,985) (2,192) (1,789) (1,737) (1,775) EBITDAF ($m)2 541 509 441 427 445 Profit for the year ($m) 199 190 150 155 116

Total assets ($m) 6,197 6,112 5,643 5,148 5,026 Total liabilities ($m) 2,660 2,695 2,408 2,371 2,367 - borrowings ($m) 1,370 1,304 1,085 1,282 1,237 Shareholders’ equity ($m) 3,537 3,418 3,236 2,777 2,660

Operating cash inflow ($m) 469 440 379 368 425 Investing cash in/(out)flow ($m) (274) (521) (436) (442) (466) Financing cash in/(out)flow ($m) (121) 41 104 (104) 218

Gearing%3 28.5 29.4 26.7 32.3 29.3

1The selected financial information has been extracted from audited financial statements which have been prepared in accordance with New Zealand Generally Accepted Accounting Practice. The audited financial statements comply with New Zealand Equivalents to International Financial Reporting Standards and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities, and with International Financial Reporting Standards. All amounts are stated in New Zealand dollars. The selected financial information provided cannot be expected to provide as complete an understanding as provided by the full financial statements which are included in the annual reports of Contact available at www.contactenergy.co.nz/web/investor/investor. 2Earnings before net interest expense, tax, depreciation, amortisation, change in fair value of financial instruments and other significant items. EBITDAF is a non-generally accepted accounting practice (non-GAAP) profit measure. Management and directors monitor EBITDAF as a key indicator of Contact’s performance at segment and Group levels, and believe it assists investors in understanding the performance of the core operations of the business. A reconciliation of EBITDAF to profit after tax is provided in the Income Statement of Contact’s audited financial statements.

18 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Contact Selected financial information for Contact Energy Limited1 for the year ended 30 June 2013 2012 2011 2010 2009 Revenue and other income ($m) 2,361 2,497 2,001 1,894 1,882 Operating expenses ($m) (1,846) (2,007) (1,597) (1,513) (1,509) EBITDAF ($m)2 515 490 403 382 373 Profit for the year ($m) 183 186 123 171 62

Total assets ($m) 6,175 6,085 5,603 5,107 4,974 Total liabilities ($m) 2,695 2,762 2,458 2,394 2,395 - borrowings ($m) 1,370 1,304 1,085 1,283 1,236 Shareholders’ equity ($m) 3,480 3,323 3,145 2,713 2,580

Operating cash inflow ($m) 463 433 367 349 412 Investing cash in/(out)flow ($m) (268) (516) (423) (423) (452) Financing cash in/(out)flow ($m) (121) 42 104 (104) 219

3Gearing ratio is a non-GAAP measure calculated as debt to debt plus equity. Debt is the face value of Contact’s debt net of short term deposits. Equity is total shareholders’ equity excluding the effect of the fair value of financial instruments net of tax. Management and directors monitor capital on the basis of the cash flow metrics required to sustain an investment grade credit rating and seeks to retain a gearing ratio suitable to the nature of Contact’s business. The basis of calculation of the gearing ratio is included in the notes to Contact’s audited financial statements.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 19 Financial performance capacity in electricity transmission between customer billing and servicing system the North Island and South Island, which due to complete in 2014. Contact’s revenue fluctuates from year to increased the earnings risk under varying • Stratford peaker plant – 200 MW gas- year depending on, among other factors, weather conditions and higher gas prices. wholesale and retail electricity prices fired peakers help manage risk during and electricity generation volumes. Past If Contact has excess generation capacity low priced periods when combined- performance is not necessarily indicative in either the North Island or South Island, cycle generation is turned off to save of future results. Contact can export energy between the on fuel costs and enables incremental islands to meet demand. Transmission generation volumes during high price The balance between Contact’s customer constraints on the flow of electricity can periods. demand and its generation portfolio limit, and have limited, Contact’s ability • Ahuroa gas storage facility – New on each of the North Island or South to service customer demand from areas Zealand’s only commercial gas storage Island may change due to weather or where it has excess generation capacity. facility. Ahuroa provides over 17 PJ of climatic conditions. New Zealand’s spot These factors impact both the price capacity to align stable gas contracted wholesale market prices are, to a large Contact is required to pay for wholesale volumes with the volatility of demand degree, weather-dependent in the short electricity and the revenues it may receive for thermal generation. term, because over half of New Zealand’s for its generation. The recent completion generation comes from hydro sources. by Transpower of commissioning the • Te Huka geothermal power plant – Spot wholesale prices for electricity tend upgraded inter-island transmission link is 23 MW power station commissioned in to be driven up during cold or dry weather, expected to reduce this risk. 2010 representing the first electricity with cold weather creating high demand generation from the world-class The past three years have seen steady and dry weather resulting in lower available Tauhara geothermal resource in improvement in Contact’s financial hydro supply being replaced by more Taupō. Contact has secured resource performance as shown in net profit after expensive thermal (gas and coal-fired) consents to allow it to develop tax and other key measures by which the generation. Conversely, wholesale spot approximately 250 MW from this field. prices tend to be lower during warm or company assesses performance. The wet weather, with warm weather resulting improved performance follows a six- • Whirinaki diesel-fired peaker plant – in lower demand and wet weather causing year, $2 billion investment in improving purchased from the Government for higher available hydro supply. These the flexibility and diversity of Contact’s $30 million in 2011, this plant provides changes in weather or climatic conditions generation assets as well as the systems 155 MW of fast-start diesel-fired can affect both customer demand for energy and processes that support the business. generation to provide risk management and the supply of electricity in the market. This investment has enabled Contact to in the event of high wholesale prices. deliver consistent profits during a range Contact Group’s balance sheet gearing Contact’s Ahuroa gas storage facility and of hydrology sequences, transmission (debt to debt plus equity) in this period has the Stratford peaker plant add flexibility constraints and plant outages. to Contact’s generation portfolio so that, been in the range of 26.7% to 32.3%, and if wet conditions occur and less thermal Capital programme and capital was 28.5% at 30 June 2013 (as set out in generation is required, the cost of inflexibility structure the Selected financial information section). associated with Contact’s gas contracts Investments over the past five years have The gearing position reflects the is better managed. To enable the benefits included: completion of $115 million of transactions of the increased flexibility to be realised, related to the sale of non-core assets. Contact has reduced its level of contracted • Wairākei Investment Programme – This included the sale of gas meter assets gas from 55 petajoules (PJ) in 2010 to comprising the development of the 166 for $60 million, and the sale of the former 24 PJ in 2014 and 3 PJ in 2015. Contact MW Te Mihi geothermal power plant New Plymouth power station site in two continues to review its future requirements and the Wairākei bioreactor. These separate transactions for a total price for contracted gas to meet retail and investments reduce emission levels to of $24 million. In addition, Contact has generation requirements, supported by the meet consent conditions and enhance also successfully executed a multi-year volumes held in gas storage. the production from the Wairākei geothermal steamfield. programme to sell land assets that were Contact’s financial performance in not core to current operations or future the period from 2009 to 2011 was • Enterprise transformation project – developments. predominantly impacted by having more implementation of SAP across finance, gas contracted than the market required asset management and procurement, during wetter conditions and the loss of and a final stage to replace the existing

20 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Governance

Contact’s Board comprises seven directors with a mix of qualifications and skills, and who have substantial and diverse business, governance and experience appropriate to Contact’s existing operations and strategic direction.

Three of the directors are independent and Bruce Beeren, Whaimutu Dewes material respects with the NZX Corporate four are associated with Contact’s parent (independent director), Karen Moses Governance Best Practice Code and the company, Origin Energy. and Sue Sheldon (independent director). corporate governance principles in the Contact’s chief executive officer is Financial Markets Authority Corporate The Board is chaired by Grant King, who Dennis Barnes. Governance in New Zealand Principles and is also managing director of Origin Energy. Guidelines. Phillip Pryke, an independent director, Contact seeks to follow best practice is deputy chairman. The other Board governance recommendations for listed members are David Baldwin, companies and believes it complies in all

1 2 3 4

5 6 7 8

1. Grant King 2. Phillip Pryke 3. David Baldwin 4. Bruce Beeren 5. Whaimutu Dewes 6. Karen Moses 7. Sue Sheldon 8. Dennis Barnes

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 21 Risks

There are a number of factors, specific to Contact and of a general nature, which may affect the future operating and financial performance of Contact, the ability of Contact to make interest payments on the 2014 Bonds and to repay the 2014 Bonds at maturity, and the market value of the 2014 Bonds prior to the Maturity Date.

Investment risks management or otherwise becomes its proposed policies would reduce total unable to pay interest due on, or other electricity charges by between $500 The summary of risks presented below amounts in respect of, the 2014 Bonds. million and $700 million per year and the is not exhaustive. Changes in risk factors The consequences of the insolvency of Green Party claimed $750 million per may offset each other to some extent Contact for Bondholders are described year. These claims imply that Contact’s or may be cumulative. In addition, this in the Statutory information section electricity revenues would be materially Prospectus does not take account of under the heading Consequences of lower if the policies are implemented. your personal circumstances, financial insolvency. These claimed reductions are in respect position or investment requirements. of the electricity sector generally, and are The factors that may contribute to the It is therefore important that, before not specific to Contact. Under the policies, deterioration in the financial performance or making any investment decision, you NZ Power would have a central role in the insolvency of Contact include those that are give consideration to the suitability of an planning, regulation and operation of the set out in this Risks section under the heading investment in the 2014 Bonds in light of electricity system. Based on information Material business risks relating to Contact. your investment needs, objectives and released to date, NZ Power would financial circumstances. You should read Bondholders also face risks relating to purchase and on-sell electricity to retailers this Prospectus in its entirety and, if you the performance of the 2014 Bonds in the and large users on long-term contracts. are in any doubt as to the action to take, secondary market (if one develops). A Each generator would be paid a fair return consult a Primary Market Participant, discussion of these risks is set out below in this for their actual costs calculated by NZ Authorised Financial Adviser, or your Risks section under the heading Bond risks. Power on the basis of their historic capital broker, solicitor, accountant or other costs, possibly adjusted by inflation, plus professional adviser before deciding Material business risks relating operating costs such as fuel, depreciation whether to invest. to Contact and maintenance. NZ Power may require The principal risks for you, as a Bondholder, Contact’s financial performance is the owners of the existing major electricity are that: dependent on a number of specific companies (including Contact) to separate and interrelated factors, any of which their retail divisions into standalone • you may be unable to recover from could have a material adverse effect on companies with separate boards and Contact or from a purchaser on the Contact’s future results. Contact has management. secondary market for the 2014 Bonds a risk management system to mitigate (if one develops) all or any of the From Contact’s perspective, if these identified key risks to the business but not Principal Amount of the 2014 Bonds; parties were elected to power and these all risks may be identified or fully mitigated. and/or policies were implemented, wholesale In addition, Contact regularly considers and retail revenues could be materially • you may not receive timely, full, or any the cost of further risk mitigation and reduced. However, a current lack of detail interest payments on the 2014 Bonds. compares this to the likelihood and cost of means estimating the quantum of any the risk itself. These circumstances could arise if: change is difficult at this point in time. NZ Power • there is a deterioration in the operating Electricity generation asset performance of Contact and, therefore, In April 2013, the two largest opposition performance and fuel the financial performance or position of parties (New Zealand Labour Party and Contact owns a variety of generation Contact, including its ability to service the Green Party of Aotearoa New Zealand) assets, and is therefore exposed to a its debt obligations; and/or announced their intent to establish a new number of operational risks associated central government agency called NZ • Contact becomes Insolvent for any with these assets including equipment Power if they come to power after the next reason, or is placed into administration, failures, failure of information technology general election (expected by November receivership, liquidation or statutory systems, contractor default, unplanned 2014). The Labour Party claimed that interruptions, unforeseen accidents,

22 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 security breaches, loss of containment and operations. Considerable efforts are base, Contact is adversely affected by low of water, gas and high pressure and expended in managing these processes wholesale prices. However, at times when temperature steam, operational error, and and compliance with the conditions of Contact is a net buyer in the wholesale major catastrophic events. Contact’s environmental consents. There market, it is adversely affected if wholesale is a risk, however, that these systems may prices are high. Geothermal generation is particularly not ensure all required consents are held or dependent on continued production of New Zealand’s wholesale electricity prices prevent non-compliance. steam from the geothermal reservoirs. are influenced by a number of factors that Performance of the reservoirs may be Currently, generators do not pay the are difficult to predict. In particular, weather impacted by factors that may alter the Government or third parties for access can impact short term prices. Wholesale physical state of the reservoir and the rights to water or geothermal fluid. There is electricity prices may also be adversely effectiveness of drilling programmes an increasing focus on the value of these affected by a reduction in demand, targeted at maintaining and growing access rights. It is possible that Contact the availability of fuel and generation geothermal output. In addition, there is a and other generators will eventually face capacity in the wholesale electricity risk of a geothermal well ‘blow out’ resulting some additional tax or resource rental for market, competitor behaviour (including in loss of containment of geothermal fluid continued access to water or geothermal the introduction of new generation into and potential asset damage. fluid. the market) and transmission system availability. This could affect both the Hydroelectric generation is particularly Catastrophic events volume of energy Contact can generate as dependent on sufficient rain or snow falling A catastrophic event such as a major well as the price it receives for generation. in the catchment area. Contact’s two earthquake, critical breach of site security, Whether Contact is adversely affected hydroelectric plants are both on the Clutha landslide, volcanic eruption, fire, flood, will depend on the specific circumstances River and rely on the same catchment. explosion, transmission cable or pipeline and how those circumstances impact Neither plant has significant water storage failure, or other disaster could adversely Contact’s portfolio. flexibility, so performance is dependent on impact or cause failure of: the consistency and scale of water inflows. Pricing in the New Zealand wholesale • Contact’s generation facilities; electricity market differs across the Resource consents and environmental country, particularly during periods of risks • supply of gas to Contact’s thermal transmission constraints, and so there generation stations and/or cause Contact’s ongoing operation of its can be a potential mismatch between the Contact to be unable to supply gas to generation assets relies on obtaining wholesale electricity price that a generator its customers; or appropriate resource consents under the receives for its generation output at one Resource Management Act 1991 and on • the transmission infrastructure upon location and the wholesale electricity price operating in compliance with applicable which the electricity or gas sectors that a retailer pays to buy electricity at environmental laws and consents. A depend. another location to meet the needs of its failure to renew or maintain consents for customers at that point (price separation). Contact seeks to reduce risk through Contact’s assets on appropriate terms, or Low wholesale electricity prices received available mitigants such as appropriately to obtain consents at all, may adversely by Contact at a generation location and balancing customer load and generation affect Contact’s financial performance. high wholesale electricity prices paid capacity and including risk margins in Contact maintains systems to monitor at a different retail location can have pricing. In addition, Contact enters into its compliance with the conditions of its an adverse effect on the profitability of insurance contracts to mitigate insurable environmental consents. Contact. risks where commercially feasible. Contact also depends upon the existence Supply and demand Wholesale electricity market of an appropriate resource management The volume of electricity, gas and LPG planning environment in each area where Contact participates in the wholesale sold by Contact is dependent on both its generation assets are located. A change electricity market. This exposes Contact wholesale and retail customer demand, to district, regional or national planning to risks that can impact its financial which is influenced by a range of variables policies or requirements that affect performance and position. including energy usage in homes, Contact’s ability to operate may adversely As a generator of electricity, the output businesses and industries; technological affect Contact’s financial performance. from Contact’s generation assets is offered advancement; energy efficiency schemes; Contact could be held liable if it causes into the wholesale electricity market and, if economic conditions; energy prices; and environmental damage or if it fails to dispatched, Contact receives the market weather conditions. comply with applicable environmental price. As a retailer of electricity, Contact The electricity market in New Zealand is laws or consents. The imposition of a pays the market price for electricity it currently oversupplied and the demand substantial penalty or liability on Contact purchases from the wholesale market. outlook over the short to medium term for environmental damage or non- Accordingly, at times when Contact is flat, which has an effect on Contact’s compliance could have a material adverse produces more electricity than is required revenues and profits. effect on Contact’s financial performance to meet the demands of its customer

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 23 The Tiwai Point Aluminium Smelter, customers are being supplied, or non- could result in lost revenue or damage to operated by New Zealand Aluminium supply of electricity. Contact’s reputation. Delays in successful Smelters (NZAS), represented implementation would cause additional Fuel supply approximately 13% of New Zealand’s project costs, greater operational risk as electricity demand in 2013. NZAS and Contact purchases gas and diesel from legacy systems age further and become Meridian Energy Limited, which supplies third parties to operate its thermal power less reliable, and delays in realising electricity to NZAS, announced in August stations and supply its gas customers, and forecast operational and business benefits. 2013 that they had renegotiated their consequently is exposed to fuel supply and As each stage of the implementation electricity supply contract. The terms of price risk. proceeds, Contact develops detailed the new contract enable NZAS to reduce plans for managing the risk and cost of this Contact has contracted for its expected consumption from the current 572 MW implementation and to ensure continuity of requirements of gas until approximately the to 400 MW with 12 months’ notice from 1 the business through the transition. end of 2014. Contact will seek to achieve January 2014 or to completely exit with greater flexibility in its gas contracting Competitor behaviour 12 to 18 months’ notice with the earliest after 2014 when supply agreements are possible termination date being 31 Contact operates in the competitive renegotiated. To the extent that Contact December 2016. This provides Contact wholesale and retail electricity, gas and contracts for less gas, this may expose with greater clarity on the near-term LPG markets and Contact’s financial Contact to increased risk of gas field situation in the electricity market. However, performance can be adversely affected by outages or the inability to secure sufficient if NZAS were to close the Tiwai Point competitors’ actions in these markets. In volumes during periods of high demand Aluminium Smelter in the future, there wholesale electricity markets, such action for thermal generation. Such an impact may be an oversupply of electricity with could result in higher or lower wholesale on supply could impact on Contact’s a consequential reduction in wholesale prices and increased or reduced volumes. ability to generate electricity and sell electricity prices. In the retail markets, such action could gas. The Ahuroa gas storage facility result in increased customer churn, loss As new renewable generation (with partially mitigates this risk, provided of customers and reduced margins. low marginal cost to operate) is added, there is sufficient gas available from the Consequently, the level of retail tariffs is combined with low demand growth, facility. In relation to the longer term risk of important to the long-term profitability Contact’s baseload thermal plants inadequate supply of gas within the New of Contact. Contact’s recent experience (Ōtāhuhu B and Taranaki combined- Zealand market, Contact is exposed to is that retail competition has been cycle plants) will be needed less to meet the risk that there is insufficient fuel for intensifying, with more customers actively demand. Contact manages this risk by its generation and retail needs if there is a seeking lower prices. Contact has also ensuring new gas purchasing commitments reduction in long-term gas supply. In these been proactive in acquiring and retaining are short term and/or flexible, and through circumstances, Contact would have the customers, often with lower priced the use of the Ahuroa gas storage facility. option to develop infrastructure to support products. Contact expects this heightened the importation of liquefied natural gas Electricity and gas transmission and competition to continue and maintain the which would operate in conjunction with its distribution pressure on margins. gas storage investment. The expansion of Contact is reliant on external network Contact’s geothermal generation capability LPG risk providers to deliver electricity and gas to also mitigates gas supply risks. Contact runs an LPG business, with its customers and fuel to its thermal power Information technology operational activities spanning LPG bulk stations. A failure of any of these networks storage and bottling facilities, installation could, depending on the extent and nature Contact’s wholesale, generation and and maintenance of LPG reticulation of the failure, impact on Contact’s ability retail businesses rely on a number of networks and road transportation of LPG to generate electricity and sell energy to its key information technology applications. in bulk and bottled form. The nature of customers. Any failure in these applications or the LPG as a highly flammable hydrocarbon hardware that supports the applications Transmission constraints (both through product means that these activities may have an adverse effect on Contact’s Transpower’s high voltage transmission are inherently high risk requiring active business. network and local lines businesses’ management through well defined distribution networks) could reduce the Contact is in the process of implementing operating procedures. quantity of electricity able to be supplied a substantial new enterprise-wide In addition, Contact’s suppliers of LPG from cheaper generation sources or information management system for source much of their supply of LPG from reduce the ability to reticulate electricity the retail business which is planned the Kupe field. Any failure at the Kupe at all, resulting in high wholesale electricity for completion in 2014. Any issues that field would affect Contact’s ability to prices at locations where Contact’s arise during transition to the new system supply LPG. Alternative arrangements

24 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 (for example the importation of LPG) have conditions affecting exchange and interest circumstances may not permit you to hold been established to mitigate against this rates, inflation, costs of commodities, the 2014 Bonds until maturity. risk but there may be a time lag before other input costs, prices, rates of Transfer risk these arrangements take effect on a economic growth, regulation, taxation and large scale. environmental laws, the industrial relations If you transfer your 2014 Bonds on the climate, the effects of natural disasters NZX Debt Market, the price at which you Regulatory environment such as earthquakes, and customer are able to sell your 2014 Bonds on the Participants in the New Zealand energy demands. NZX Debt Market may be less than the industry are exposed to changes in the price paid for them. For example, if market As part of ordinary business operations regulatory environment. These changes interest rates go up, the market value of the Contact enters into contracts and can affect the basis upon which Contact 2014 Bonds may go down, and vice versa. interacts with a number of parties. As with provides energy and services to existing any business, there is a risk that disputes The price at which you are able to sell your customers. In addition, the introduction may arise in relation to such contracts and 2014 Bonds on the NZX Debt Market will of new legislation can impact the way interactions. Like all businesses Contact also be affected by deterioration, whether the industry operates and can result is exposed to counterparty credit risk and real or perceived, in the creditworthiness in the imposition of costs that may not is at risk of fraud or other malfeasance by of Contact. Other factors affecting the be fully recoverable from the market, staff or contractual counterparties and price of the 2014 Bonds independent of the such as carbon or other fuel levies. mis-statements as to its financial condition creditworthiness of Contact may include the Contact and other New Zealand energy or operations. These risks are managed by time remaining to the maturity of the 2014 participants could be affected by (for internal controls and audits. Bonds, the outstanding number of the 2014 example) restructuring of the industry, Bonds, the amount of, and demand for, 2014 implementation of price controls, changes Bond risks Bonds being sold in the secondary market to the Resource Management Act 1991, Market and liquidity considerations from time to time, any legal restrictions changes to water allocation or policy, limiting demand for the 2014 Bonds, the restriction of the use of water or other It is intended that the 2014 Bonds will availability of comparable securities and natural resources, restrictions on thermal be quoted on the NZX Debt Market. A the level, direction and volatility of market generation or other regulatory changes. secondary trading market for the 2014 interest rates generally. Such factors will Contact also has exposure to general Bonds is expected to develop over time, also affect the market value of the 2014 regulatory changes, including in relation to but there can be no assurance of the Bonds. In particular, they may mean that tax or other business matters. liquidity of such a market. Even following you are unable to transfer your 2014 Bonds the development of a secondary market, The Electricity Authority is currently for a price equal to their Principal Amount. depending on market conditions and other reviewing the transmission pricing factors, investors seeking to sell relatively Credit rating methodology which specifies the method small or relatively large amounts of 2014 for Transpower to recover the costs of Bonds on the secondary market may not Contact currently has an issuer credit operating, maintaining, upgrading and be able to do so at prices comparable rating of BBB (stable outlook) from extending the transmission grid. This to those that may be available to other Standard & Poor’s (S&P). This rating was review will consider the manner in which investors. first assigned by S&P on 22 December Transpower’s costs of HVDC assets are 2002. According to S&P, an obligor rated recovered from market participants. These In the absence of a liquid secondary ‘BBB’ has adequate capacity to meet costs are currently charged solely to South market of the 2014 Bonds, you may not its financial commitments; however, Island generators including Contact. While be able to sell your 2014 Bonds readily or adverse economic conditions or changing the basis of the charging may change, at prices that will enable you to realise a circumstances are more likely to lead to a Contact’s assessment (based on the yield, if any, comparable to that of similar weakened capacity of the obligor to meet current proposal) is that the changes would instruments with a developed secondary its financial commitments. not have a material effect on Contact market. The 2014 Bonds are expected to be (either positively or negatively). You should not purchase 2014 Bonds assigned an initial rating of BBB by S&P. General risks associated with an unless you understand and are able to A credit rating in respect of an entity is an investment in Contact bear the risk that the 2014 Bonds may not be readily saleable, that the value of independent opinion of the capability and Changes in economic conditions, 2014 Bonds will fluctuate over time and willingness of an entity to repay its debts particularly New Zealand’s economic that such fluctuations may be significant – in other words, its financial strength or conditions, may adversely impact and could result in significant losses to creditworthiness. A credit rating in respect Contact’s performance. These include you. This is particularly the case if your of a bond is an independent opinion of the general changes in monetary and fiscal capability and willingness of an entity to

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 25 repay the debt under that bond. Neither S&P periodically reviews Contact’s issuer criteria could result in a ratings downgrade. rating is a guarantee that the bond being credit rating, and any change to the issuer Further information about the ratings offered is a safe investment or that any or credit rating will likely result in a change to criteria used by S&P is available on its all amounts payable under that bond will the issue credit rating of the 2014 Bonds website (www.standardandpoors.com/ be repaid. (which change may not necessarily be aboutcreditratings/). equivalent or proportionate). S&P may Credit ratings should be considered review Contact’s issuer credit rating at any The credit ratings of Contact or the alongside all other relevant information time. Any withdrawal or downward revision 2014 Bonds are not a recommendation when making an investment decision. of the credit rating of Contact or the 2014 to buy, sell or hold securities issued by S&P gives ratings from ‘AAA’ through to ‘D/ Bonds may have an effect on the ability Contact (including the 2014 Bonds) and SD’, as set out in the table below. Credit of investors to sell the 2014 Bonds and may be subject to revision, withdrawal or ratings of ‘AAA’ to ‘BBB’ are considered to the market price of the 2014 Bonds (and, suspension at any time. be ‘investment grade’. therefore, the proceeds received from a sale of the 2014 Bonds). When determining The ratings from ‘AA’ to ‘CCC’ may be a company’s issuer credit rating, S&P takes modified with the addition of a plus (+) or a variety of qualitative and quantitative minus (-) sign to show relative standing factors into account. A sustained within the major rating categories. Ratings deterioration in S&P’s assessment of may also be subject to positive, negative or Contact’s performance under the ratings stable outlooks.

Rating AAA AA A BBB BB B CCC CC D / SD Default Capacity to Currently Extremely Less More Currently / meet financial Very strong Strong Adequate highly strong vulnerable vulnerable vulnerable Selective commitments vulnerable default INVESTMENT GRADE

26 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Trustee’s Statement

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 27 Statutory information

The Offer is an offer of debt securities that will rank equally with the bonds already issued by Contact that are quoted on the NZX Debt Market (the 2009 Bonds). Consequently, the information in this section is provided in accordance with Schedule 12 to the Securities Regulations.

Names, addresses and other Documents. A summary of the principal to the Registrar at the address below, and information provisions of the Trust Documents is set may also be submitted to any Primary out in this Statutory information section Market Participant, the Organising The Issuer of the 2014 Bonds is Contact under the heading Summary of the Trust Participant or through any other channel Energy Limited, whose registered office is Documents on pages 31 to 35. approved by NZX, in time to enable Harbour City Tower, 29 Brandon Street, forwarding to the Registrar before 5pm Wellington 6011. Maximum amount of securities on the Exchange Offer Closing Date or being offered The directors of Contact as at the date General Offer Closing Date, as the case of this Prospectus are Grant Alfred King, 2014 Bonds with an aggregate Principal may be. Phillip John Pryke, David Andrew Baldwin, Amount of up to $200 million (plus General Offer applicants who receive Bruce Gerard Beeren, Whaimutu Kent oversubscriptions of up to $50 million) are a Reserved Allocation from a Primary Dewes, Karen Anne Moses and Susan being offered by Contact. Market Participant or approved financial Jane Sheldon. Issue Price intermediary must provide a completed There is no promoter in relation to the Offer. Application Form (with payment) to that The Issue Price for the 2014 Bonds is $1.00, Primary Market Participant or financial The Trustee in respect of the 2014 Bonds being the Principal Amount of each 2014 intermediary in time to enable forwarding is The New Zealand Guardian Trust Bond. to the Registrar before 5pm on the General Company Limited, whose registered office For 2014 Bonds issued under the Exchange Offer Closing Date. is Level 7, Vero Centre, 48 Shortland Offer, the Issue Price will be met by Street, Auckland. The address details of the Registrar are: the subscriber (Existing Bondholder) Experts and underwriters exchanging some or all of their 2009 Link Market Services Limited Bonds for 2014 Bonds on a one-for-one Postal address: PO Box 91976 No experts are named in this Prospectus. basis. Auckland 1142 The Offer is not underwritten. Applications Physical address: Level 7, Zurich House Main terms of Offer The 2014 Bonds will be offered under the 21 Queen Street Auckland 1010 The 2014 Bonds Exchange Offer to Existing Bondholders and under the General Offer to Existing Persons subscribing for 2014 Bonds under The 2014 Bonds offered in this Prospectus Bondholders and other investors. the General Offer must provide payment are debt securities. The 2014 Bonds to Contact (via the Registrar), as described constitute unsecured, unsubordinated, Applications to subscribe for 2014 Bonds further in the How to apply section of the interest bearing debt obligations of must be for a minimum Principal Amount Prospectus. Contact. The 2014 Bonds will rank equally of $5,000. There is no maximum amount of 2014 Bonds you may apply for, but and without preference among themselves, Contact reserves the right to refuse all or applications for a Principal Amount of less and equally with the 2009 Bonds already any part of any application for 2014 Bonds than $5,000 may not be accepted. issued by Contact and quoted on the NZX without giving a reason including (but Debt Market. The 2014 Bonds are offered in New without limitation) where an applicant has not provided account details for payments A brief description of the key features of Zealand to New Zealand resident investors. by direct credit. An application cannot be the Offer is included as the Key information Applications to subscribe for 2014 Bonds withdrawn or revoked by an applicant once section at pages 6 to 7, with more detail must be made on the relevant Application it has been submitted. about the Offer process in the section Form in accordance with the instructions set out in the section How to apply. entitled Offer process on page 8. More Contact reserves the right to accept detailed information about the Conditions Applications for 2014 Bonds may be sent applications that are received by the of the 2014 Bonds is contained in the Trust

28 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Registrar after the Exchange Offer Closing • issue further bonds, or incur other secondary market (if one develops); Date or General Offer Closing Date, as the debts, which rank equally with the • the performance by Contact of its case may be, but has no obligation to do so. 2014 Bonds (whether as to payment of obligations as the Issuer of the 2014 interest, principal or otherwise). By signing and submitting a valid Bonds, including the payment of Application Form, an applicant irrevocably Additional information in relation to the interest on the applicable Interest offers to subscribe for and acquire the ranking of the 2014 Bonds is set out in this Payment Dates; Principal Amount of 2014 Bonds specified Statutory information section under the • the price of the 2014 Bonds if a in the Application Form (or such lesser heading Consequences of insolvency. Bondholder chooses to transfer 2014 number which Contact may determine) Bonds or sell 2014 Bonds on the on the terms set out in this Prospectus, Issue expenses secondary market (if one develops); the Trust Documents and the Application The estimated amount of expenses of Form, notwithstanding any changes to the the Offer is $1.6 million, based on an Offer • each Bondholder’s individual Exchange Offer Closing Date or General amount of $200 million. That amount circumstances for tax purposes; and Offer Closing Date, as the case may be. includes brokerage (as referred to below), • the other risk factors described in the Relationship with listed arrangement and lead management fees, Risks section. securities and ranking of legal and accounting fees, Trustee fees, securities registry expenses, advertising expenses It is not possible to quantify, as at the date and expenses in respect of the printing and of this Prospectus, the exact amount The Shares and the 2009 Bonds are distribution of this Prospectus. of returns Bondholders will receive. currently quoted on securities markets Therefore, no amount of returns on the operated by NZX. Contact will pay Primary Market 2014 Bonds is promised by Contact. Participants and approved financial The 2014 Bonds constitute unsecured, intermediaries brokerage of 0.40% of the Interest unsubordinated, fixed rate, interest bearing aggregate Principal Amount of 2014 Bonds Contact will pay interest on each 2014 debt obligations of Contact. The 2014 allotted by Contact pursuant to each valid Bond at the applicable Interest Rate. The Bonds will: application submitted by that Primary mechanism by which Contact will set the • rank equally and without preference Market Participant or financial intermediary Interest Rate is described in the How the among themselves, and with the 2009 under the Exchange Offer and 0.50% under Interest Rate is set section. Bonds; and the General Offer. No brokerage is payable on allotments to institutional investors under Time of payment • rank in priority to the Shares in the the Exchange Offer or General Offer. Interest will (subject to the exceptions event of a liquidation of Contact. Returns below) accrue daily on the Principal The 2014 Bonds also rank at least Amount of each 2014 Bond and be paid equally with all other unsecured and Introduction in arrear in equal quarterly instalments on unsubordinated indebtedness of Contact, The information set out below in relation to each Interest Payment Date. except indebtedness preferred by law. As returns on the 2014 Bonds should be read in The first Interest Payment Date for 2014 at the date of this Prospectus there was conjunction with the information set out in the Bonds will be 15 May 2014 (but no interest $534 million outstanding in 2009 Bonds, Risks section. Certain events could reduce or will be paid on that date for 2014 Bonds due to be redeemed on 15 May 2014. eliminate the returns intended to be derived issued under the Exchange Offer). As at the date of the latest statement from holding the 2014 Bonds. No interest will accrue or be paid in relation of financial position referred to in this The returns to Bondholders comprise to 2014 Bonds issued under the Exchange Prospectus (being 30 June 2013) there interest paid on the 2014 Bonds and any Offer on the first Interest Payment Date. were no securities (as that term is capital appreciation realised on a sale of the This is because on 15 May 2014 Existing defined in the Securities Act) secured by 2014 Bonds. Bondholders who have exchanged their a mortgage or charge over any assets of 2009 Bonds will be paid the final interest Contact. Accordingly, as at 30 June 2013, Key factors determining returns payment scheduled to be made on those there were no securities (as that term is The key factors that will determine the 2009 Bonds at the current rate applying to defined in the Securities Act) secured by a returns to Bondholders are: these bonds of 8% per annum, as if those mortgage or charge over any of the assets 2009 Bonds had not been exchanged and of Contact ranking in point of security ahead • the Interest Rate; cancelled. This is the same interest amount of, or equally with, the 2014 Bonds (which are • Contact’s financial condition, financial per 2009 Bond as will be paid in interest to unsecured) offered under this Prospectus. performance and financial position to Existing Bondholders who do not exchange Contact may, from time to time, without the the extent that they affect: their 2009 Bonds. consent of the Bondholders: • Contact’s ability to pay interest on In relation to the 2014 Bonds issued under • issue further bonds which will be treated the 2014 Bonds or repay the Principal the General Offer, the interest paid on as if they are fungible with the 2014 Amount; or the first Interest Payment Date will be for Bonds; and • the price of the 2014 Bonds on the the period from (and including) the date on which the Bondholder’s application

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 29 money is banked to (but excluding) the the Negative Pledge and include: Taxation of returns first Interest Payment Date (this is the • failure to pay interest within three Introduction standard interest component). The interest Business Days of when it is due. If this for this period will be calculated based on The returns on the 2014 Bonds will be occurs, Contact will be required to the number of days in the period and a affected by taxes. If a law requires Contact repay the Principal Amount of each 365-day year, rather than being the equal (which for the purposes of this section 2014 Bond, together with the interest quarterly payment made on other Interest of this Prospectus includes the Registrar that has accrued at the Interest Rate Payment Dates. acting on Contact’s behalf) or the Trustee to the repayment date but has not yet to deduct an amount in respect of taxes Interest paid on 2014 Bonds issued under been paid; from a payment to a Bondholder, then the General Offer on the first Interest • failure to pay any Principal Amount Contact or the Trustee will deduct the Payment Date will be paid to the original within two Business Days of when it is amount for the taxes and pay it to the subscriber for the 2014 Bonds. due; relevant authority. Neither Contact nor the Consequently, if a successful applicant Trustee is obliged to gross-up, indemnify • any breach by Contact of any obligation under either the Exchange Offer or the or otherwise compensate or pay any or undertaking under the Trust General Offer sells their 2014 Bonds prior additional amounts to the Bondholder as a Documents or the Negative Pledge that, to the first Interest Payment Date (15 May consequence of or otherwise in connection if capable of remedy, is not remedied 2014) those 2014 Bonds will not entitle with such deduction. within 30 days of Contact receiving the purchaser to any interest on the first written notice from the Trustee The information set out below relates Interest Payment Date. requiring that breach to be remedied; solely to New Zealand taxation and does Subsequent interest payments will not constitute taxation advice to any • if Contact breaches the financial be made on 15 February, 15 May, 15 Bondholder. The information is believed covenants set out in clause 2.3.1 of August and 15 November in each year by Contact to be correct as at the date the Negative Pledge and Contact and on the Maturity Date. If the Offer is of this Prospectus. Taxation laws are has received written notice from the oversubscribed or any application is not subject to change, and such changes Trustee requiring that covenant is to accepted by Contact, whether because of may affect your tax position with respect be complied with, and that breach has oversubscription, late receipt or otherwise, to an investment in the 2014 Bonds. You not been remedied within 60 days of the subscription amounts paid will be should seek qualified independent financial receipt of such notice; returned (without interest) to the applicant and taxation advice before deciding to as soon as reasonably practicable after • if Contact becomes Insolvent, is placed invest. In particular, you should consult Contact decides not to accept the into liquidation or any analogous your tax adviser in relation to your specific application and, in any event, within five procedure occurs in respect of it; or circumstances. Business Days of the first Issue Date. • if any indebtedness in excess of $10 AII Bondholders (including those Repayment of Principal Amount million is not paid when due or within resident outside New Zealand) must any applicable grace period by Contact. give written notice to the Registrar (or, The Principal Amount of each 2014 Bond where applicable, to the custodian/ will be payable by Contact to the person Form of payment nominee registered as the Bondholder in registered as the Bondholder at the Record All payments in relation to a 2014 Bond respect of 2014 Bonds held on behalf of Date on: may be satisfied by direct credit to the the beneficial owner) of their country of • the Maturity Date; or bank account nominated in writing (prior to residence for taxation purposes and, if the Record Date) by the Bondholder. not a New Zealand tax resident, whether • such date (before the Maturity Date) on the Bondholder is engaged in business in which Contact is required to redeem Payments made on Business Days New Zealand through a branch or other the 2014 Bonds. If any payment falls due on a day that is not fixed establishment in New Zealand. The circumstances in which the 2014 a Business Day, that payment will instead This requirement for written notice is Bonds may be redeemed are set out below. be made on the next day that is a Business satisfied for initial Bondholders where the Day. No additional interest will be paid as a relevant parts of the Application Form are Redemption result of such an adjustment to the day on completed by applicants. Contact must redeem all of the 2014 which payment is made. Resident withholding tax: Resident Bonds on the Maturity Date. Person legally liable to pay returns Bondholders and New Zealand Branch Contact must also immediately redeem Bondholders If a Bondholder sells 2014 Bonds, the the 2014 Bonds if an Event of Default purchaser of the 2014 Bonds will be legally If you are either a New Zealand resident occurs and the Trustee (in its discretion liable to pay the purchase price of those for tax purposes (Resident Bondholder) or upon being directed by Bondholders 2014 Bonds to that Bondholder. or are engaged in business in New by Extraordinary Resolution) declares Zealand through a fixed establishment the 2014 Bonds to be due and payable by Contact is legally liable to pay all other (as defined in the Income Tax Act 2007) notice in writing to Contact. returns on the 2014 Bonds. in New Zealand (New Zealand Branch The Events of Default are set out in full in Bondholder), resident withholding tax

30 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 (RWT) will be deducted from the interest AIL are 0% and 2% of amounts treated as income. Where a Bondholder incurs a loss (including amounts deemed to be interest) interest. Unless Contact is lawfully able to on the transfer of the 2014 Bonds, this loss payable to you in accordance with the use the rate of 0% AIL, an amount equal to may be deductible to the Bondholder in provisions of the Tax Act. As at the date 2% AIL will be deducted. limited circumstances. of this Prospectus, RWT of 33% will be Non-Resident Bondholders may request by In addition, in some circumstances a Non- deducted from interest paid to a Resident written notice to the Registrar that AIL not Resident Bondholder may be subject to Bondholder or New Zealand Branch be deducted from interest paid or credited New Zealand tax on gains on the transfer Bondholder that is an individual or trustee, in respect of their 2014 Bonds, and that of the 2014 Bonds. unless the Bondholder supplies their IRD non-resident withholding tax (NRWT) be number to the Registrar and elects for All Bondholders should ascertain whether deducted instead, at the rate required by RWT to be deducted at a different rate. New Zealand’s provisional tax rules apply law (as reduced by any applicable double to their individual situations. The available rates of RWT for individuals tax agreement where the Non-Resident and trustees as at the date of this Bondholder promptly provides satisfactory Exchanging Bondholders should discuss Prospectus are 33%, 30% and 17.5%. In evidence to the Registrar of entitlement to with their tax adviser whether, in their addition, if the Resident Bondholder or New such reduced rate). particular circumstances, the exchange Zealand Branch Bondholder is a trustee of the 2009 Bonds (including the variation If the Non-Resident Bondholder derives of certain testamentary trusts, or an outlined in this Prospectus) may alter the interest under the 2014 Bonds jointly with individual (not acting as a trustee) who has timing of income which they are required to one or more New Zealand tax residents, a reasonable expectation at the time of the recognise for tax purposes. tax must be deducted from the interest election that their income for the income paid or credited to the Non-Resident year (i.e. 1 April 2013 to 31 March 2014) will Guarantors Bondholder at the applicable RWT rate. be $14,000 or less, and they have supplied No person guarantees, or provides any their IRD number to the Registrar, they may New Zealand income tax implications other surety in respect of, the 2014 Bonds elect for RWT to be deducted at 10.5%. Resident Bondholders and New Zealand or any of Contact’s obligations in relation to The RWT rate for interest paid to a Branch Bondholders who are acquiring the 2014 Bonds. company (other than a Māori authority 2014 Bonds for the purpose of their Provisions of the Trust Documents or trustee) is 28%, as at the date of this business will be entering into a financial and other restrictions on Contact Prospectus. However, if a Resident arrangement which is subject to the Bondholder or New Zealand Branch ‘financial arrangements rules’ in the Tax Summary of the Trust Documents Bondholder that is a company (other than a Act. Interest paid to Resident Bondholders The 2014 Bonds will be issued pursuant Māori authority or trustee) has not supplied and New Zealand Branch Bondholders to the Master Trust Deed and the its IRD number to the Registrar, RWT will be under the 2014 Bonds will be income that Supplemental Trust Deed Series 6 deducted at 33%. is taxable at the Bondholder’s relevant tax (together the Trust Documents). The rate (with a credit for RWT deducted – see RWT will not be deducted where a Trust Documents contain the Conditions above). Resident Bondholder or New Zealand of the 2014 Bonds, and are available for Branch Bondholder provides a copy of The timing of that income will be governed inspection at the places indicated in this a current RWT exemption certificate (as by the financial arrangements rules. The Statutory information section under the defined in the Tax Act) to the Registrar on financial arrangements rules may require heading Access to information on page 37. or before the Record Date for the relevant that interest income or expenditure be Introduction payment. spread over the life of the 2014 Bonds. For most individuals (as opposed to corporate The following is a summary of the principal Bondholders should promptly notify the Bondholders) this should not be the case, provisions of the Trust Documents. Registrar of any changes to their elected as they should constitute ‘cash basis Applicants requiring further information RWT rate as a result of changes to their persons’ for the purposes of the financial should refer to the Trust Documents. particular circumstances. arrangements rules – but this can only be Bondholders are bound by, and are deemed Approved issuer levy and non-resident established by actual application of the to have notice of, the provisions of the Trust withholding tax: Non-Resident Bondholders financial arrangements rules. Documents relating to the 2014 Bonds. Contact has registered, or will register, The financial arrangements rules may The Trustee and the Bondholders the 2014 Bonds with the Inland Revenue cause Bondholders to derive income The Trustee is appointed under the Department for the purposes of the on the transfer of 2014 Bonds held by Master Trust Deed to act as trustee for the approved issuer levy (AIL) regime. Unless them. For example, if a gain is made Bondholders and the holders of any other otherwise agreed, Contact will, where it is on the transfer of 2014 Bonds by a Series of bonds issued under the Master lawfully able, deduct an amount equal to Bondholder to whom the financial Trust Deed and any relevant supplemental the applicable rate of AIL from payments arrangements rules apply, the ‘base price trust deed. made or credited to Bondholders who adjustment’ performed under the financial are neither Resident Bondholders nor arrangements rules will bring the gain to The Trustee does not guarantee the New Zealand Branch Bondholders (Non- account for New Zealand tax purposes and payment of interest or the Principal Resident Bondholders). The current rates of will cause that gain to be included in their Amount of the 2014 Bonds.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 31 Issue and form of the 2014 Bonds Debt Market and to notify the Trustee of is satisfied that the breach will not various matters, including any downgrade materially prejudice the interests of the The Trust Documents do not create any of its issuer credit rating and any non- Bondholders); and security over the assets of Contact or any payment in respect of the 2014 Bonds. of its subsidiaries. • ascertain whether or not the assets of Duties and powers of the Trustee Contact that are or may be available The Master Trust Deed provides that are sufficient or likely to be sufficient Contact may issue bonds (including The principal duties of the Trustee under to discharge the amounts of the 2014 the 2014 Bonds) at such times, in such the Master Trust Deed in relation to the Bonds as they become due. amounts, to such persons, on such Bondholders are summarised as follows: terms and conditions and at the prices The Trustee receives the benefit of a • upon the occurrence of any Event of determined by Contact. Without limiting general indemnity from Contact for any Default which is continuing unremedied, the above, the Master Trust Deed provides expenses, losses or liabilities it reasonably the Trustee may in its discretion, and that Contact can issue bonds (including sustains or incurs while acting as Trustee immediately upon being directed to the 2014 Bonds) with a fixed principal unless the claim arises out of wilful default, do so by an Extraordinary Resolution amount or a principal amount that is to gross negligence or wilful breach of trust by passed by the Bondholders, must be calculated by reference to an index, the Trustee. The Trustee is not indemnified declare the 2014 Bonds to be and, where bonds (including the 2014 against liability for wilful default, gross immediately due and payable by Bonds) are interest bearing, that interest negligence or wilful breach of trust where notice in writing to Contact, exercise will be calculated by reference to a specific the Trustee has failed to show the degree the powers of enforcement available interest rate (which may be fixed or a margin of care and diligence required of it having to it and apply all monies received in over a base rate) or by reference to an index regard to the powers, authorities and accordance with the provisions of the or both. In addition, the Master Trust Deed discretions conferred on it under the Trust Master Trust Deed; provides that bonds may be subordinated or Documents and the provisions of the unsubordinated as specified in the relevant • receive regular financial and other Master Trust Deed. supplemental trust deed. reports provided to it by Contact; Except as otherwise expressly provided Undertakings • perform a number of functions relating in the Trust Documents, the Trustee has to the ongoing administration of the absolute discretion as to the exercise or The Master Trust Deed contains a number Trust Documents, including in relation non-exercise of its powers in relation to the of undertakings given by Contact, including to the meetings of Bondholders, and 2014 Bonds. Under the Trust Documents, that for so long as any 2014 Bonds are the exercise of discretions or the the Trustee may, among other things, in outstanding: giving or withholding of consents relation to the 2014 Bonds: • it will obtain, effect and promptly (as appropriate) relating to such • refrain from exercising any power until renew from time to time all material administration and other matters out directed by an Extraordinary Resolution authorisations required under any of the ordinary, such as making an of Bondholders or the affected class of applicable law to enable it to perform application to the High Court of New Bondholders; and comply fully with the Conditions for Zealand under the Securities Act, the that Series or required on its part for the substitution of an obligor in place of • decline to act or exercise any power, validity or enforceability of the Master Contact in relation to the 2014 Bonds take any action or comply with any Trust Deed and the supplemental trust and agreeing to modifications of the request or direction (including direction deed for the Series; Trust Documents, all upon the terms set by an Extraordinary Resolution of out in the Trust Documents; and Bondholders) unless it has first been • it will promptly notify the Trustee of the indemnified to its satisfaction against occurrence of any Event of Default; • on being satisfied that all 2014 Bonds all reasonable expenses, losses and have been paid or provided upon the • it will send copies to the Trustee of all liabilities it may sustain or incur by so terms of the Trust Documents, and on notices given by it to Bondholders of the doing; being indemnified to its reasonable Series generally; satisfaction, execute a deed of release • represent and act on behalf of • it will maintain its corporate existence of the Trust Documents. Bondholders in any matter concerning and will not merge, amalgamate or them generally; In addition, the Trustee has a statutory consolidate with any person (subject to duty pursuant to the Securities Act and • in the performance of its duties, act certain exceptions); and the Securities Regulations to exercise on, or decline to act on, certificates • it will comply with provisions of the reasonable diligence to: signed by or on behalf of Contact, and Financial Reporting Act 1993, the the advice or opinion of professional • ascertain whether or not there has Securities Act and the Securities advisers; or been any breach of the terms of the Regulations applicable to the 2014 Trust Documents or of the terms of • require Contact to report to Bonds. any offer of the 2014 Bonds and to Bondholders on certain matters, Contact has also undertaken to use its do all it is empowered to do to cause convene meetings of Bondholders or best endeavours to quote and maintain any such breach of those terms to be otherwise seek directions from the quotation of the 2014 Bonds on the NZX remedied (except where the Trustee Bondholders or a court of New Zealand.

32 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Reporting amount at the rate determined by the Trustee to declare the Principal Amount of Registrar to be the aggregate of 2% per 2014 Bonds, together with accrued interest Contact covenants to supply to the annum and the Interest Rate payable on thereon, to be immediately due and Trustee various reports, certificates, the 2014 Bond compounded monthly until payable by notice in writing to Contact. annual and half-yearly financial statements the unpaid amount is paid. and other information as to the financial Bondholders (together with other holders condition of Contact and its subsidiaries Substituted Obligor of other affected Series) have the power and as to compliance with the Trust exercisable by Extraordinary Resolution Contact may substitute any wholly Documents. to agree, approve, authorise, ratify and owned subsidiary (Substituted Obligor) sanction various acts, matters or things in This includes a requirement that two in substitution for Contact or a previous relation to, or in connection with, the Trust directors of Contact, on behalf of the Substituted Obligor under the Trust Documents, the 2014 Bonds and the exercise Board, provide a report to the Trustee, Documents. Such substitution may only or performance by the Trustee of its powers, following the end of each financial year occur if a number of requirements are met, duties and discretions. Such powers are and each financial half-year, as to various as set out in the Master Trust Deed. described in the Master Trust Deed. matters relating to Contact and the 2014 Meetings Bonds, including details of any matter that An Extraordinary Resolution is a resolution has arisen relating to Contact which would The Master Trust Deed contains provisions passed at a meeting of Bondholders materially and adversely affect the ability for meetings of Bondholders and the (or a class of Bondholders) properly of Contact to perform its obligations under matters that may be determined by convened at which at least three-fourths the Master Trust Deed and the 2014 Bonds, ordinary or Extraordinary Resolutions. of the persons entitled to vote and compliance by Contact with the provisions voting upon a show of hands or, if a poll Contact must call a meeting of of the Trust Documents, details of all 2014 is properly demanded then not less than Bondholders, or a class of Bondholders, at Bonds that have been repaid on maturity three-fourths of the eligible votes given the request in writing of the Bondholders in the immediately preceding financial year on such a poll, voted in favour of the of at least 10% of the aggregate Principal or half-year and due maintenance of the resolution. A quorum for the purpose Amount of the 2014 Bonds, or that class Register for the 2014 Bonds. of passing an Extraordinary Resolution of 2014 Bonds (as the case may be), or if is two or more Bondholders (present Events of Default required by law. The Issuer or the Trustee in person or by representative) holding may convene a meeting of Bondholders at Upon the occurrence of any of the Events or representing a majority in Principal any time. of Default, the Trustee may in its discretion, Amount of the 2014 Bonds. If a quorum is and immediately upon being directed An Extraordinary Resolution passed at not present and the meeting is adjourned, to do so by an Extraordinary Resolution a meeting of Bondholders or a class of a quorum at the adjourned meeting is of Bondholders must, declare the 2014 Bondholders properly convened and all Bondholders present (in person or by Bonds to be immediately due and payable held is binding on all Bondholders, or all representative). Anything that may be done by notice in writing to Contact. However, Bondholders of that class (as the case may by Bondholders by an ordinary resolution the Trustee may only take such action be), whether or not they were present at or an Extraordinary Resolution passed at while the Event of Default is continuing such meeting. However: a meeting of Bondholders (or that class of unremedied. Bondholders) may be done by a resolution • a resolution which affects a particular in writing signed by not less than 75% of The Events of Default are defined in Bondholder only, rather than the Bondholders (or that class of Bondholders) the Negative Pledge. A summary of the rights of all Bondholders generally, or having the right to vote on that resolution Events of Default is set out in this Statutory of a particular class of Bondholders and holding in aggregate the 2014 Bonds information section under the heading generally, will not be binding on such (or class of 2014 Bonds) conferring the Redemption on page 30. Bondholder unless such Bondholder right to cast not less than 75% of the votes agrees to be bound by the terms of No enforcement by Bondholders which could be cast on that resolution. such resolution; and Bondholders have no direct enforcement Amendment of Trust Documents • a resolution which affects more than rights and they may not bring proceedings one class of 2014 Bonds and gives or The terms and conditions of the Trust directly against Contact for the may give rise to a conflict of interest Documents may be altered with the enforcement of any of their rights or between the Bondholders of any of the approval of Bondholders (or a class remedies under the Trust Documents, classes so affected is deemed to have of Bondholders, if applicable) by an unless the Trustee has failed to enforce been duly passed if passed at separate Extraordinary Resolution at a meeting such rights or remedies after having properly convened and held meetings of Bondholders (whether convened by become bound to do so under the of the Bondholders of each class so Contact or Bondholders) or in writing by all provisions of the Trust Documents. affected. Bondholders (or a class of Bondholders, if Default Interest applicable) and, in limited circumstances, After the occurrence of an Event of with the approval only of the Trustee and Default and while it continues unremedied, If any amount payable in respect of a 2014 Contact. A description of the requirements Bondholders of a Series may, by an Bond is not paid on its due date, interest for an Extraordinary Resolution is set out in Extraordinary Resolution, direct the (Default Interest) will accrue on the unpaid the preceding paragraph of this Prospectus.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 33 In relation to the 2014 Bonds, the Trustee is satisfied that the interests of the Negative Pledge and Contact may, without the approval affected Bondholders generally will not Contact has entered into a Negative of Bondholders, agree to alter the Trust be materially and adversely prejudiced Pledge under which Contact covenants in Documents in the limited circumstances (and additionally in respect of any favour of certain Financiers (which includes specified in the Supplemental Trust waiver of a breach or anticipated the Trustee on behalf of Bondholders). Deed. These circumstances include breach, provided that such waiver does There are two aspects to the covenants any amendment that is in the opinion of not prejudice the rights of the Trustee that benefit Bondholders: Contact and the Trustee: or the Bondholders in respect of any other breach); or • Contact has covenanted that it will • of a minor, formal, administrative or not grant any security interest over technical nature; • may be agreed by the Trustee to reflect its assets, unless it is an exception an exemption of the nature referred to • to correct a manifest error; permitted within the Negative Pledge; above as an amendment that can be and • to comply with the requirements or a made without Bondholder approval. modification of the requirements of any • Contact has also covenanted that it will Any amendment to the Trust Documents applicable law or any rules of any stock not let its total debt levels exceed 60% will be binding on all Bondholders and will exchange in New Zealand or elsewhere; of group assets. only be effective if it is in writing and signed • necessary for the purpose of obtaining by Contact and the Trustee. With regard to security interests, as noted or maintaining a quotation of the 2014 above, the Negative Pledge provides a Supplemental Trust Deed Bonds on any stock exchange in New general prohibition on Contact granting Zealand or elsewhere; The Supplemental Trust Deed Series 6 security interests over its assets, subject contains provisions specific to the 2014 to a limited range of exceptions. These • in respect of any of the provisions Bonds to be issued under this Prospectus. are specified in the Negative Pledge, and of the Trust Documents relating to It contains, as a schedule, the Conditions of include: reporting to the Trustee, the Trustee’s the 2014 Bonds. fees, expenses and indemnities or the • security interests that arise by exercise of the Trustee’s powers; or Other restrictions operation of law; • where Contact and the Trustee are Restrictions on new mortgages or charges • security interests in assets acquired by both of the opinion that the amendment or ratio of liabilities to assets Contact that continue in those assets will not be, and is not likely to become, despite their transfer to Contact; and The Trust Documents do not create any materially prejudicial to the interests of security over the assets of Contact or any • security interests in Contact’s right, Bondholders. of its subsidiaries or other entities in which title, or interest in any joint ventures, The Trustee may also agree to amend or Contact has an interest. None of Contact, partnership or similar venture to secure temporarily vary the Trust Documents or any of its subsidiaries or other entity in indebtedness. the 2014 Bonds to reflect an exemption which Contact has an interest nor any In addition to the limited scope to grant granted to Contact, or an exemption other person guarantees the obligations security interests, the Negative Pledge also that is applicable to Contact, in relation of Contact under the Trust Documents in contains restrictions on Contact’s ability to any obligation imposed upon Contact respect of the 2014 Bonds. Further, there to transfer assets, intended to protect the by or pursuant to the Securities Act, are no limitations in the Trust Documents interests of the Financiers (including the the Financial Reporting Act 1993, the relating to: Trustee on behalf of Bondholders). Securities Regulations or the listing rules • the creation of new mortgages or of any stock exchange which is materially With regard to overall debt levels, the charges ranking in point of security the same as or analogous to any obligation Negative Pledge specifies that the ahead of, or equally with, any mortgage of Contact under the Master Trust Deed or total debt levels of the group should or charge securing the 2014 Bonds; or the 2014 Bonds, provided two authorised not exceed 60% of group assets. The officers of Contact certify that such • any ratio of liabilities, or class of Negative Pledge specifies that, for the amendment, temporary variation or waiver liabilities, to assets, or to any class of purpose of this calculation, ‘debt’ is the will not have a material adverse effect on assets of Contact. consolidated debt of the Contact Group Contact or be materially and adversely less any subordinated debt (consolidated Borrowing restrictions prejudicial to the general interests of unsubordinated group debt), and group Bondholders. The Trust Documents do not contain any assets are consolidated unsubordinated restrictions on the ability of Contact to group debt plus consolidated shareholders’ In addition, the Trustee may temporarily borrow or incur further indebtedness. funds, with fuller definitions of these terms vary the provisions of the Trust in the Negative Pledge. Documents, or waive any breach or However there are restrictions on anticipated breach by Contact, for such Contact’s ability to grant new security and To assist the Financiers (including the period and on such terms as: on financial ratios in its Negative Pledge Trustee) to satisfy themselves that (described below). Contact is adhering to these covenants the • may be deemed appropriate or Negative Pledge also provides for Contact expedient provided that the Trustee

34 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 to provide the Financiers with information the event of the insolvency of Contact, Early termination upon request. Bondholders could receive none, or only some, of the returns referred to in this On market purchase by Contact Bondholders will not receive the benefit Statutory information section under the of certain clauses in the Negative Pledge. Contact may purchase 2014 Bonds from heading Returns. It is therefore foreseeable These are clauses 2.1.3, 2.3.2, 5, 6, and any person at any time on market or by in those circumstances that Bondholders 7, which provide for guarantees from private treaty at any price. Any 2014 Bonds would receive less than the amount they subsidiary companies in the Contact purchased by Contact will be deemed to paid for their investment in the 2014 Bonds. Group, and disapply the Guaranteeing be immediately cancelled. Group Worth financial covenant. The 2014 Bonds are unsecured, Right to sell securities unsubordinated, fixed rate, interest Bondholders can request a copy of the bearing debt obligations of Contact. In a Bondholders are entitled to sell or transfer Negative Pledge from Contact. liquidation of Contact, Bondholders’ rights their 2014 Bonds at any time, subject to Miscellaneous to payment of any amounts owing under the terms of the Trust Documents and any the 2014 Bonds will rank at least equally applicable securities laws and regulations. The Trust Documents also contain detailed with the claims of all other unsecured and 2014 Bonds may be transferred using provisions relating to procedures for unsubordinated indebtedness of Contact, a transfer document in any commonly holding meetings of Bondholders, transfer except indebtedness preferred by law. used written instrument of transfer, by any and registration of 2014 Bonds and various These may include potential prior claims method of transfer permitted by NZX for other matters. such as statutory preferences, retentions securities listed on the NZX Debt Market Because the 2014 Bonds are to be of title, and liens. or by any other means of transfer of registered (rather than bearer) bonds, marketable securities which is not contrary the Trustee and Contact are entitled Alteration of securities to law and the Listing Rules and which is approved by Contact. to rely on the Register as the sole and The terms of the 2014 Bonds can be conclusive record of the 2014 Bonds held altered in certain circumstances. Contact Application has been made to NZX for by a Bondholder, notwithstanding any also reserves the right to vary the dates permission to quote the 2014 Bonds on the discrepancy between the Register and any of the Offer including the Opening Date, NZX Debt Market and all the requirements certificate issued in respect of any 2014 Exchange Offer Closing Date, or General of NZX relating thereto that can be Bonds. A certificate will not constitute a Offer Closing Date, at its sole discretion. complied with on or before the date of document of title. If either the Exchange Offer Closing Date this Prospectus have been duly complied Transfers must be effected using a or the General Offer Closing Date is with. However, the 2014 Bonds have not registrable transfer form, by any method varied, subsequent dates referred to in the yet been approved for trading and NZX of transfer permitted by NZX for securities timetable in the Key information section accepts no responsibility for any statement listed on the NZX Debt Market or by any on page 6 may change correspondingly. in this Prospectus. The NZX Debt Market other means of transfer of marketable The terms of the Offer and the terms and is a registered market operated by NZX securities which is not contrary to law and conditions on which investors may apply (which is a registered exchange) under the the Listing Rules and which is approved by for and acquire 2014 Bonds may be altered Securities Markets Act. by an amendment to this Prospectus and, Contact. A transfer will not take effect until As at the date of this Prospectus, there is if required, the Trust Documents. Details the transferee is registered as the holder of no established secondary market for the of any amendment to this Prospectus or the 2014 Bond. 2014 Bonds. On the basis that permission the Trust Documents must be filed with the is expected to be granted to quote the The Trustee and Contact are entitled to Registrar of Financial Service Providers. treat a person recorded in the Register as 2014 Bonds on the NZX Debt Market, the absolute owner of the 2014 Bonds it is The terms and conditions of the Trust Contact considers that a secondary recorded to own, and shall have no liability Documents may be altered. A summary of market for the 2014 Bonds will develop to any person for doing so. how the Trust Documents may be altered following completion of the Offer. However, is set out in this Statutory information Contact gives no assurance as to the Trustee’s statement section under the heading Amendment of existence or liquidity of such secondary The statement required to be made by Trust Documents on page 33. market. A summary of the risks involved with selling 2014 Bonds on the secondary the Trustee pursuant to clause 9(3) of Substituted Obligor Schedule 12 to the Securities Regulations market (if one develops) is set out in the is set out in the Trustee’s statement section The Trustee may, without the consent Risks section under the headings Market on page 27. of the Bondholders, agree to any wholly and liquidity considerations and Transfer risk owned subsidiary of Contact taking on page 25. Consequences of insolvency the place of Contact under the Trust Applicants should contact their broker Documents in substitution for Contact Bondholders will not be liable to pay any or financial adviser if they wish to sell or or a previous Substituted Obligor. Such money to Contact or any other person transfer 2014 Bonds. substitution may only occur if a number in respect of the 2014 Bonds as a result of requirements are met, as set out in the Applicants should not attempt to sell of the insolvency of Contact. However, in Master Trust Deed.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 35 their 2014 Bonds until they know whether, Information available under of all announcements made by Contact. and how many, 2014 Bonds have been Contact’s continuous disclosure Copies of all announcements referred to issued to them. None of Contact, the obligations below have been filed with NZX and the Trustee, the Arranger, the Organising Registrar of Financial Service Providers. Contact, as a listed issuer whose shares Participant, the Joint Lead Managers or the The announcements are also available on and bonds are quoted on the NZX Main Co-Manager, nor any of their respective Contact’s website (at www.contactenergy. Board and NZX Debt Market respectively, directors, officers, employees or agents, co.nz/web/investor/investor) and on NZX’s is subject to the continuous disclosure nor any other person accepts any liability website (at www.nzx.com/companies/ obligations of the Listing Rules (which or responsibility should any applicant for CEN). are ‘continuous disclosure provisions’ 2014 Bonds attempt to sell or otherwise for the purposes of section 19D of the Financial statements deal with any 2014 Bonds before receiving Securities Markets Act). As such, Contact from the Registrar a Holding Statement The audited financial statements for is required to immediately notify NZX of recording the number of 2014 Bonds (if Contact and the Contact Group for the any information concerning Contact of any) issued to them. financial year ended 30 June 2013, that which Contact is or becomes aware and comply with, and have been registered Contact may direct the Registrar to refuse which a reasonable person would expect under, the Financial Reporting Act 1993 to register any transfer of 2014 Bonds to have a material effect on the price of (together with the accompanying audit where the Trust Documents, the Listing Contact’s ordinary shares, subject to report), were notified to NZX on 20 Rules or any applicable legislation permits certain exceptions. August 2013 (searchable at www.nzx. or requires Contact to do so. Copies of announcements made by com/companies/CEN) and registered No charges are payable to or by Contact Contact through NZX are available at the Companies Office (searchable on any sale of 2014 Bonds. However, on NZX’s website (at www.nzx.com/ at www.business.govt.nz/companies) brokerage at applicable rates is likely to be companies/CEN). You are encouraged to on 19 September 2013. These are also payable by a Bondholder on any transfer monitor Contact’s announcements through available on Contact’s website (at www. of their 2014 Bonds effected through this website. contactenergy.co.nz/web/investor/ a Primary Market Participant or other investor). Contact’s interim financial In addition to this Prospectus, the financial intermediary. statements for the 6 months ended 31 following information that is material to December 2013 were notified to NZX on the Offer has been disclosed by Contact If Bondholders transfer any 2014 Bonds, 18 February 2014, and are also available at through NZX prior to registration of this the price obtained for them may differ www.contactenergy.co.nz/web/investor/ Prospectus in accordance with Contact’s from the amount paid to subscribe for or investor. purchase them. Factors which may affect obligations under the Listing Rules (i.e. the the price at which a Bondholder is able to Disclosed Information). This is not a list sell 2014 Bonds are set out in the Statutory information section under the heading Key factors determining returns on page 29 and Disclosed Information the Risks section. Disclosure date Description of disclosure Contact will not compensate Bondholders 18 February 2014 Contact Interim Financial Statements notified to NZX for any loss they incur if they choose to sell 3 February 2014 Contact December 2013 Operational Data 2014 Bonds. 8 January 2014 Letter to CEN010 (2009 series) Bondholders Other terms of Offer and 6 January 2014 Contact Interim Results Announcement Date securities 20 December 2013 Contact considering Retail Bond Offer All of the terms of the Offer and the 2014 20 December 2013 Final Notice of Acquisition-Retail Fixed Rate Bonds CEN010 Bonds being offered are set out in this 17 December 2013 Contact November 2013 Operational Data Prospectus, except for those: 18 November 2013 Contact October 2013 Operational Data • implied by law; or 22 October 2013 Contact September 2013 Operational Data • which are set out in a document that 21 October 2013 Contact Capital Bonds (CENFA) – Redemption has been registered with a public 21 October 2013 Capital Bonds due 2042 – Appendix 7 & Notice of Redemption official, is available for public inspection, and is referred to in this Prospectus. 18 October 2013 Contact Capital Bonds due 2042 – Redemption 11 October 2013 Contact Buyback of Retail Fixed Rate Bonds (CEN010) 16 September 2013 Contact August 2013 Operational Data 16 September 2013 Contact 2013 Annual Report and related documents 27 August 2013 Contact July 2013 Operational Data 20 August 2013 Contact 2013 Full Year Results 25 July 2013 Contact June 2013 Operational Data

36 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Access to information Directors’ statement Copies of the Disclosed Information and In the opinion of the directors of Contact, Contact’s 2013 Annual Report (and earlier after due enquiry by them, Contact is in annual reports) and 31 December 2013 compliance with the requirements of the interim financial statements may be obtained, continuous disclosure provisions that apply free of charge, from Contact’s website (at to it. www.contactenergy.co.nz/web/investor/ Signatures investor) or Contact’s page on NZX’s website (at www.nzx.com/companies/CEN). This Prospectus has been signed by each of the directors of Contact (or by their Alternatively, the Disclosed Information authorised agents) on 17 February 2014. and Contact’s 2013 Annual Report (and earlier annual reports) and 31 December SIGNED by the directors of Contact 2013 interim financial statements may be Energy Limited inspected, without charge, during normal business hours by making a request at Contact’s registered office at Harbour City Tower, 29 Brandon Street, PO Box 10742, Wellington.

In addition to the Disclosed Information, Grant Alfred King (Chairman) further information about Contact is contained or referred to in Contact’s financial statements and the documents lodged with NZX prior to the date of registration of this Prospectus, being 18 February 2014, pursuant to Contact’s obligations under the ‘continuous Phillip John Pryke disclosure provisions’ of the Listing Rules (also referred to in section 19D of the Securities Markets Act). These documents are available free of charge, from Contact’s website (at www.contactenergy.co.nz/ David Andrew Baldwin web/investor/investor) or Contact’s page on NZX’s website (at www.nzx.com/ companies/CEN). Other material matters There are no additional material matters Bruce Gerard Beeren relating to the Offer of 2014 Bonds other than those set out in: • this Prospectus; • the NZX announcements referred to Whaimutu Kent Dewes in this Statutory information section under the heading Information available under Contact’s continuous disclosure obligations on page 36 (the Disclosed Information); and Karen Anne Moses (by her authorised agent) • the audited financial statements for Contact and the Contact Group for the year ended 30 June 2013.

Susan Jane Sheldon

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 37 Glossary

The following definitions apply throughout this Prospectus unless the context requires otherwise.

2009 Bonds the bonds issued by Contact in 2009 and quoted on the NZX Debt Market under the ticker CEN010. 2014 Bonds the bonds offered pursuant to this Prospectus. ‘$’, ‘NZ$’ or ‘dollars’ New Zealand dollars, unless expressly stated otherwise. Application Form the application forms which accompany this Prospectus (the Existing Bondholder Application Form and New Subscriber Application Form) to be completed by applicants when applying for 2014 Bonds. Arranger Forsyth Barr Limited. Authorised Financial Adviser an individual authorised as a financial adviser under the Financial Advisers Act 2008. Board the board of directors of Contact. Bondholder a person whose name is recorded in the Register as the holder of a 2014 Bond. Business Day means a day (other than a Saturday or Sunday) on which registered banks are generally open for business in Wellington and Auckland, except that in the context of the Listing Rules, it means a day on which the NZX Debt Market is open for trading. Co-Manager Commonwealth Bank of Australia. Conditions the terms and conditions of the Bonds as set out in Schedule 1 to the Supplemental Trust Deed Series 6. Contact Contact Energy Limited. Disclosed Information is the information described in the Statutory information section under the heading Information available under Contact’s continuous disclosure obligations on page 36. EBITDAF earnings before interest, tax, depreciation, amortisation and change in fair value of financial instruments and other significant items. Event of Default has the meaning given to that term in the Supplemental Trust Deed Series 6, as summarised in the Statutory information section under the heading Redemption. Exchange Offer the component of the Offer that comprises the Offer of Bonds under this Prospectus to holders of the 2009 Bonds in exchange for those bonds. Exchange Offer Closing Date 13 March 2014 or such other date as may be determined by the Issuer. Existing Bondholder the holder of a 2009 Bond as at 24 February 2014. Extraordinary Resolution has the meaning given to it in the Master Trust Deed. Final Interest Rate the Interest Rate set by the Rate Setting Mechanism (as opposed to proposed minimum interest rates for the Exchange Offer) as discussed in the section How the Interest Rate will be set. Financier a person to whom the benefit of the Negative Pledge is extended (which includes the Trustee). FY financial year, being the year ended or ending on 30 June. General Offer the component of the Offer that constitutes the offer of 2014 Bonds under this Prospectus to institutions and retail investors upon payment of the Issue Price of $1.00 per 2014 Bond. General Offer Closing Date 20 March 2014 or such other date as may be determined by the Issuer. GWh gigawatt hours. Holding Statement a statement of holding of securities complying with Listing Rule 11.2. HVDC Transpower’s high voltage transmission line between the North Island and South Island. Insolvent that the Issuer is not able to pay its debts as they fall due. Interest Payment Date 15 February, 15 May, 15 August and 15 November in each year, commencing on 15 May 2014 and ending on 15 May 2019. Interest Rate in relation to a 2014 Bond offered under this Prospectus, the rate of interest per annum payable on the Principal Amount of that 2014 Bond notified by Contact to Bondholders by announcement to NZX not later than the first Issue Date. Issue Date 20 March 2014 and 27 March 2014 (if required). Issue Price $1.00 per 2014 Bond. Issuer Contact Energy Limited. Joint Lead Managers Forsyth Barr Limited, ANZ Bank New Zealand Limited, Deutsche Craigs Limited, First NZ Capital Securities Limited.

38 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 Listing Rules the NZX Main Board / NZX Debt Market Listing Rules of NZX. LPG liquefied petroleum gas. Master Trust Deed the deed between Contact and the Trustee dated 23 February 2009, as amended from time to time (including as amended and restated by deed dated 9 November 2011). Maturity Date 15 May 2019. MW megawatts. Negative Pledge the deed of negative pledge and guarantee entered into by Contact and certain of its subsidiaries on 19 May 2005. NZAS New Zealand Aluminium Smelters Limited. NZX NZX Limited. NZX Debt Market the registered market for trading debt securities operated by NZX. NZX Main Board the registered market for trading equity securities operated by NZX. Offer the offer of 2014 Bonds by Contact under this Prospectus, comprising the General Offer and Exchange Offer. Opening Date 26 February 2014. Organising Participant Forsyth Barr Limited. Origin Energy Origin Energy Limited. Origin Energy Group Origin Energy and its subsidiaries. PJ petajoules. Primary Market Participant has the meaning set out in the NZX Participant Rules. Principal Amount in relation to a 2014 Bond, the amount (other than interest) payable on redemption or repayment of that 2014 Bond, being the amount recorded as such in the Register in respect of that 2014 Bond. Prospectus this simplified disclosure prospectus for the Offer, dated 18 February 2014. Rate Setting Mechanism has the meaning given to that term in the section How the Interest Rate will be set. Record Date 10 calendar days before the relevant Interest Payment Date or Maturity Date or such date (before the Maturity Date) on which Contact is required to redeem the 2014 Bonds, or if that tenth day is not a Business Day, the preceding Business Day or such other date as may be required by NZX. Register any register of 2014 Bonds maintained by the Registrar. Registrar Link Market Services Limited. Reserved Allocations 2014 Bonds reserved for clients of the Joint Lead Managers, the Co-Manager, Primary Market Participants and other approved financial intermediaries, or general public applications as determined by Contact in consultation with the Arranger. Rockgas Rockgas Limited. Securities Act the Securities Act 1978. Securities Markets Act the Securities Markets Act 1988. Securities Regulations the Securities Regulations 2009 made pursuant to the Securities Act. Series has the meaning set out in the Master Trust Deed. Shareholder a registered holder of Shares. Shares ordinary shares in Contact. S&P Standard & Poor’s (Australia) Pty Limited. subsidiary has the meaning given to that term in the Companies Act 1993. Substituted Obligor has the meaning set out in clause 24.2 of the Master Trust Deed. Supplemental Trust Deed the supplemental trust deed between Contact and the Trustee dated 18 February 2014 executed under the Series 6 Master Trust Deed. Tax Act the Income Tax Act 2007. Tiwai Point Aluminium the aluminium smelter at Tiwai Point, Bluff operated by NZAS. Smelter Transpower Limited, the owner and operator of New Zealand's high voltage transmission network. Trust Documents the Master Trust Deed and the Supplemental Trust Deed Series 6. Trustee The New Zealand Guardian Trust Company Limited.

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 39 How to apply

You should read this Prospectus carefully before completing an Application Form.

You must complete an Application Form to Existing Bondholders an opportunity to per annum or 5.80% per annum then apply for 2014 Bonds under the Offer, and exchange all or some of their 2009 Bonds you should insert ‘6,000’ beside each of completing and submitting an Application at the Final Interest Rate (this is the Interest 5.80% and 5.90%, and ‘10,000’ beside Form will constitute an irrevocable offer Rate determined by the Rate Setting 6.00%. If you wish to exchange all 10,000 to subscribe for 2014 Bonds, and so you Mechanism detailed in the Prospectus), or of your 2009 Bonds for 2014 Bonds only will not be able to withdraw or revoke your alternatively to choose how many of their if the Interest Rate is 6.00% per annum application. 2009 Bonds they would like to exchange at and otherwise wish to have the 2009 Bonds several minimum interest rates. redeemed for cash then insert ‘10,000’ Contact may accept or reject an beside 6.00% and insert ‘none’ beside 5.80% application without giving any reason, and The three options for the Exchange Offer and 5.90%. reserves the right to scale applications at are as follows (you may only choose one its discretion. option): If you return the Bondholder Application Form without selecting one of the options OPTION ONE: Which form should I use? in the boxes below, you will be deemed There are two forms for this Offer: the You can tick the box under Option One to have selected to exchange all of your Existing Bondholder Application Form and to apply to exchange ALL of your 2009 holding of 2009 Bonds for 2014 Bonds at the New Subscriber Application Form. If Bonds at the Final Interest Rate. the Final Interest Rate (that is, Option One). you currently hold 2009 Bonds you should OPTION TWO: For more information about the Offer use the Existing Bondholder Application process and how the Interest Rate will be You can apply to exchange SOME, but not Form, which has been personalised with set for the 2014 Bonds, see the section of all, of your 2009 Bonds at the Final Interest your details. If you do not hold 2009 the Prospectus headed Offer process. Bonds, you should use the New Subscriber Rate. Enter the number of 2009 Bonds Application Form. you wish to exchange for 2014 Bonds. 2 - The General Offer and payment details How to complete the Existing Example: If you hold 15,000 2009 Bonds Existing Bondholders who also wish to Bondholder Application Form but only wish to apply to exchange 8,000 take part in the General Offer may apply of them for 2014 Bonds, then you should for an additional allocation of 2014 Bonds Existing Bondholders in New Zealand will select Option Two and enter ‘8,000’ in the by entering the number of 2014 Bonds be sent a personalised Existing Bondholder box. If your application is successful you they wish to apply for in the box marked Application Form with this Prospectus. If will have 8,000 2009 Bonds exchanged for ‘General Offer’. any details are incorrect, please contact 2014 Bonds, and the Principal Amount of the These will be offered at the Interest our Registrar, Link Market Services Limited remaining 7,000 2009 Bonds repaid to you Rate determined by the Rate Setting (Link). when they mature. Mechanism described in this Prospectus. Existing Bondholders may take part in both OPTION THREE: the Exchange Offer and General Offer, if The number of bonds you applied for may they choose. These terms are explained Select an amount of 2009 Bonds to apply be scaled at Contact’s discretion and a further in the Key information and Offer to exchange for 2014 Bonds at each of the lesser number of bonds may be allotted process sections of this Prospectus. minimum interest rates. you. A refund will be paid to you by direct credit or cheque within five Business Days Example: If you hold 10,000 2009 Bonds 1 - Options for the Exchange Offer should this occur. and wish to exchange all of them for 2014 The Existing Bondholder Application Bonds if the Interest Rate is set at 6.00% Example: If you hold 20,000 2009 Bonds Form gives three options for taking part per annum but only wish to exchange but wish to apply for 30,000 2014 Bonds in the Exchange Offer. These options give 6,000 if the Interest Rate is set at 5.90% in total under the Offer, you can apply

40 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 to exchange all your 2009 Bonds under instruction has/have the authority to More than one person the Exchange Offer, and apply for 10,000 operate the account solely/jointly; and Use: JOHN SMITH further 2014 Bonds by entering this d. the bank account you nominated is MICHELLE SMITH number in the box marked ‘General Offer’. a transactional account eligible for Not: J & M SMITH There are three options for payment if you direct debit transactions. If you are Company have applied for 2014 Bonds under the uncertain you should contact your bank. General Offer: Use: ABC Limited Should your direct debit fail, your Not: ABC CHEQUE application will be rejected. If requested, a direct debit authority form may be provided Trusts You must enclose with your Existing to you by Link. Refer to the contact details Bondholder Application Form a cheque or Use: John Smith on the enclosed Existing Bondholder bank draft in New Zealand dollars made (John Smith Family A/C) Application Form. payable to ‘Contact Bond Offer’ and Not: Smith Family Trust crossed ‘Not Transferable’. Do not post- NZCLEAR Partnerships date your cheque. NZClear payments must be made by prior Use: John Smith Please note – Link (the Registrar) will arrangement with Link and are available to Michael Smith only bank cheques after the Exchange authorised institutional investors only. (John Smith and Sons A/C) Offer Closing Date (i.e. on or after 14 3 - Signing the Application Form Not: John Smith & Sons March 2014), once Contact has decided whether, and to what extent, it will accept The Existing Bondholder Application Clubs and unincorporated associations applications under the General Offer. Form needs to be signed personally by the Use: JANE SMITH applicant or applicants. If a company or If you include a cheque with your payment (SMITH INVESTMENT CLUB A/C) other legal person is applying for 2014 Bonds and your application is scaled, Link will Not: SMITH INVESTMENT CLUB it must sign the Application Form as required still bank your cheque, and you will receive a (for example, under the Companies Act 1993 Superannuation funds refund for the unallocated amount (without two directors’ signatures will be required, or interest) within five Business Days of allotment. Use: JOHN SMITH LIMITED one director’s signature if the company only (SUPERANNUATION FUND A/C) DIRECT DEBIT has one director). Not: JOHN SMITH If you select payment by direct debit, Link If an Application Form is signed by a duly SUPERANNUATION FUND will direct debit your bank account. authorised attorney, that person does Enter your . All not need to lodge the power of attorney postal address You must tick the box authorising Link communications to you from Contact will document, but must complete the certificate to direct debit the amount (or a lesser be mailed to the person(s) at the address of non-revocation of power of attorney amount) applied for from either the as shown (unless you provide an email included on page 45. account that Link currently has on register, address on the Application Form). For if this is a direct debitable account, or How to complete the New joint applicants, only one address is to be a bank account nominated by you for this Subscriber Application Form entered. purpose. The New Subscriber Application Form is on Provide your telephone number(s) so that The account will be debited on the General page 43 of this Prospectus. the Registrar or Contact can contact you in Offer Closing Date or shortly thereafter relation to your application if required. once Contact has decided whether, and 1 - Application details By supplying your mobile number you will to what extent, it will accept subscriptions Enter your full name(s). Applications enable the Registrar to advise you by TXT under the General Offer. must be in the name(s) of natural persons, alerts (post allotment for New Zealand companies or other legal entities, up to a The bank account must be with a New investors only) of any changes on your maximum of three names per application. Zealand registered bank. You cannot holding balance, or if your bank account Examples of the correct form of name to use specify a direct debit date and you must details or address on register change, are set out below. Applications using the ensure that: or if a new / replacement FIN has been wrong form of name may be rejected. requested. This feature provides additional a. the bank account details supplied are security to you as an investor. correct; Individual person 2 – Number of 2014 Bonds applied for and b. the application funds in the bank Use: John Smith Not: J Smith payment details account for direct debit are available on the date as stated above; Under the New Subscriber Application Form you may only apply for 2014 Bonds c. the person(s) giving the direct debit as part of the General Offer. These will be

CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 41 offered at the Interest Rate determined The account will be debited on the 4 – Bank account details by the Rate Setting Mechanism described General Offer Closing Date or shortly You must give the details of a New Zealand in this Prospectus. You will not be able to thereafter, once Contact has decided bank account to which Contact will pay apply for different numbers of 2014 Bonds whether, and to what extent, it will accept interest from the 2014 Bonds. This bank at different interest rates, as with the subscriptions under the General Offer. account will also be used for direct debiting Exchange Offer. The bank account must be with a New the amount you applied for, if you choose Applications must be for a minimum of Zealand registered bank. You cannot to pay by direct debit and this is a direct NZ$5,000. Applications for less than specify a direct debit date and you must debitable account. NZ$5,000 may not be accepted. Please ensure that: 5 – IRD number and resident withholding enter the number of 2014 Bonds you wish to a. the bank account details supplied are tax (RWT) apply for in this section. correct; Please note that only one IRD number is The number of 2014 Bonds you apply for b. the application funds in the bank required for a joint application. may be scaled at Contact’s discretion and a account for direct debit are available on lesser number of 2014 Bonds may be allotted You will need to select the correct rate to the date as stated above; to you. A refund will be paid to you by direct deduct RWT from your interest payments – credit or cheque within five Business Days c. the person(s) giving the direct debit alternatively if you select the ‘Exempt’ box after allotment should this occur. instruction has/have the authority to you will need to attach a copy of your RWT operate the account solely/jointly; and certificate to the application. There are three options for payment: d. the bank account you nominated is a 6 – Electronic correspondence CHEQUE transactional account eligible for direct By entering your email address in this You must enclose with your New debit transactions. If you are uncertain section Contact will be able to provide Subscriber Application Form a cheque or you should contact your bank. you with information in a more timely and bank draft in New Zealand dollars made Should your direct debit fail, your environmentally friendly manner. payable to ‘Contact Bond Offer’ and application will be rejected. If requested, crossed ‘Not Transferable’. Do not post- 7 - Signing the Application Forms a direct debit authority form may be date your cheque. provided to you by Link. Refer to the The New Subscriber Application Form Please note – Link (the Registrar) will contact details on the enclosed New needs to be signed personally by the only bank cheques after the Exchange Subscriber Application Form. applicant or applicants. If a company Offer Closing Date (i.e. on or after 14 or other legal person is applying for NZCLEAR March 2014), once Contact has decided 2014 Bonds it must sign the Application whether, and to what extent, it will accept NZClear payments must be made by prior Form as required (for example, under applications under the General Offer. arrangement with Link and are available to the Companies Act 1993 two directors’ authorised institutional investors only. signatures will be required, or one director’s If you include a cheque with your payment signature if the company only has one and your application is scaled, Link will 3 – Common Shareholder Number director). still bank your cheque, and you will receive (CSN) a refund for the unallocated amount If an Application Form is signed by a duly If you have a Common Shareholder (without interest) within five Business Days authorised attorney, that person does Number (CSN) you must enter it in this of allotment. not need to lodge the power of attorney section. The name and address in section document, but must complete the DIRECT DEBIT 1 must match the registration details for certificate of non-revocation of power of your CSN. If you select payment by direct debit Link attorney included on page 45. will direct debit your bank account. If you do not provide a CSN it will be deemed that you do not have a current You must tick the box authorising Link CSN, and you will be allocated a base to direct debit the amount (or a lesser registry number and FIN (identification amount) applied for from the bank account number). nominated by you for this purpose.

42 CONTACT ENERGY LIMITED SIMPLIFIED DISCLOSURE PROSPECTUS 2014 New Subscriber Broker’s stamp Adviser’s code Application Form

(Use this form if you wish to apply for 2014 Bonds and you do not currently hold any 2009 Bonds.) Contact Energy Limited – Bond Offer This application form for the General Offer (New Subscriber Application Form) is issued with the simplified disclosure prospectus dated and prepared as at 18 February 2014 (Prospectus), issued by Contact Energy Limited (Contact). Please complete this New Subscriber Application Form and return it to, or lodge it with, an appropriate person as specified below. Before completing this New Subscriber Application Form, applicants should read the Prospectus to which this application relates.

1. APPLICATION DETAILS AND INFORMATION – PLEASE PRINT IN BLOCK LETTERS

First name(s): Family name(s):

First name(s): Family name(s):

First name(s): Family name(s):

Corporate name or <>

Postal address

Home phone: Work / mobile phone:

2. NUMBER OF 2014 BONDS APPLIED FOR AND PAYMENT DETAILS

I / we apply for the following number of 2014 Bonds under the General Offer at the Final Interest Rate (to be at least 5.80%):

Applications must be accompanied by payment in full, in New Zealand currency based on NZ$1.00 per 2014 Bond. Applications must be for a minimum of NZ$5,000. You may choose only ONE of the options below. Please tick the box next to your selected option (√):

Option 1: My / our cheque, made out to ‘Contact Energy Bond Offer’, is attached as set out in the How to apply section

I / we authorise Link to direct debit the account given below in section 4, and I / we agree to the terms and conditions set out under Option 2: the ‘Direct debit’ heading in the ‘How to apply section’

Option 3: Payment will be made by NZClear as ARRANGED WITH LINK (authorised institutional investors only)

NZClear mnemonic

3. COMMON SHAREHOLDER NUMBER (CSN)

Please note that the application must be in the same name as the CSN below otherwise the application will be deemed to be made without a CSN and a base registry number will be allocated.

If you currently have a Common Shareholder Number (CSN), please enter it here:

4. BANK ACCOUNT DETAILS

Name of bank Name of account

All future interest payments will be credited – – – to this account unless the Registry is instructed otherwise. Bank / branch Account number Suffix 5. IRD NUMBER & RESIDENT WITHHOLDING TAX

– – IRD number Deduct resident withholding tax from all my/our interest payments at the following rate (tick √ one): 10.5% 17.5% 28% 30% 33% Exempt

If you select the "Exempt" box, please attach a copy of your exemption certificate. 43 6. ELECTRONIC CORRESPONDENCE AND REPORTING

Please enter your preferred email address below. If you supply your email address Contact will be able to provide you with all your investor communications electronically where possible, including the Interest Rate when it is set.

7. SIGNATURE(S) OF APPLICANT(S)

I / we hereby acknowledge that I / we have received and read the Prospectus, and apply for the dollar amount of 2014 Bonds set out in section 2 and agree to accept such 2014 Bonds (or such lesser number as may be allotted to me/us) on, and subject to, the terms and conditions set out in the Prospectus, the Trust Documents, and the New Subscriber Application Form.

All applicants on the New Subscriber Application Form must sign.

Date: / / Date: / / Date: / /

SEND THIS APPLICATION FORM AND CHEQUE (IF APPLICABLE) TO BE RECEIVED BY LINK MARKET SERVICES NO LATER THAN 5.00 PM ON 20 MARCH 2014, OR CONTACT YOUR FINANCIAL ADVISER OR MARKET INTERMEDIARY.

Contact Energy Bond Offer Contact Energy Bond Offer c/- Link Market Services Limited c/- Link Market Services Limited PO Box 91976 OR Level 7, Zurich House Auckland 1142 21 Queen Street Phone: +64 9 375 5998 Auckland 1010

Email: [email protected] (please put Bond Application in the subject line) Fax: +64 9 375 5990

Please DO NOT fax or email any applications that are paid by cheque

IF YOU ARE SIGNING AS AN ATTORNEY PLEASE ALSO ATTACH A CERTIFICATE OF NON–REVOCATION OF POWER OF ATTORNEY USING THE FORM PROVIDED IN THE PROSPECTUS

TERMS AND CONDITIONS:

By signing this New Subscriber Application Form:

a. I / we agree to subscribe for 2014 Bonds upon and subject to the terms and conditions of the Prospectus, this New Subscriber Application Form, the Trust Documents, and I/we agree to be bound by the provisions hereof.

b. I / we declare that all details and statements made by me/us in this New Subscriber Application Form are complete and accurate.

c. I / we certify that, where information is provided by me/us in this New Subscriber Application Form about another person, I/we are authorised by such person to disclose the information to Contact and the Registrar and to give authorisation.

d. I / we acknowledge that an application cannot be withdrawn or revoked once it has been submitted.

e. I / we acknowledge that the Offer is only made in New Zealand, and by applying for 2014 Bonds, I / we warrant that I / we received this offer in New Zealand and I / we are eligible to participate in the Offer, and I / we agree to indemnify Contact and its directors, officers, employees and agents in respect of any loss, cost, liability or expense sustained or incurred by Contact as a result of my / our breaching that warranty or the selling restrictions described in the Prospectus.

This New Subscriber Application Form, the Offer and any contract arising out of its acceptance are each governed by New Zealand law. Under the Financial Transactions Reporting Act 1996, applicants may be required to produce evidence of their identity. The information in this New Subscriber Application Form is provided to enable Contact and the Registrar to process your application, and to administer your investment. By signing this New Subscriber Application Form, you authorise Contact and the Registrar to disclose information in situations where Contact or the Registrar are required or permitted to do so by any applicable law or by a governmental, judicial or regulatory entity or authority in any jurisdiction. Personal information will be held by Contact and the Registrar at their respective addresses shown in the directory of the Prospectus or at such other place as is notified upon request. If you are an individual under the Privacy Act 1993, you have the right to access and correct any of your personal information. You can also access your information on the Link website (www.linkmarketservices.co.nz). You will be required to enter your holder number and FIN. 44 Certificate of Non-Revocation of Power of Attorney

I,

(full name) (occupation)

of

(place and country of residence)

CERTIFY:

• THAT by deed dated

(date of instrument creating the power of attorney) (full name of person/body corporate which granted the power of attorney)

of

(place and country of residence of person/body corporate which granted the power of attorney*) Email: [email protected] (please put Bond Application in the subject line) Fax: +64 9 375 5990 appointed me attorney

(his/her/its)

• THAT I have executed the application for 2014 Bonds printed on this Application Form under that appointment and pursuant to the powers thereby conferred on me; and • THAT I have not received notice of any event revoking the power of attorney.

Signed at this day of

month / year

Signature of attorney

* If donor is a body corporate, state place of registered address

45 46 Directory

The Issuer Arranger, Joint Lead Manager Registrar and Organising Participant Contact Energy Limited Link Market Services Limited Harbour City Tower Forsyth Barr Limited Level 7, Zurich House 29 Brandon Street Level 9, Forsyth Barr House 21 Queen Street PO Box 10742 The Octagon Auckland 1010 Wellington 6143 Private Bag 1999 PO Box 91976, Auckland 1142 04 499 4001 Dunedin 9054 09 375 5998 www.contactenergy.co.nz 0800 367 227 Trustee Directors of Contact Joint Lead Managers The New Zealand Guardian Trust Grant Alfred King ANZ Bank New Zealand Limited Company Limited Level 7, 1 Victoria Street Level 7, Vero Centre Phillip John Pryke PO Box 540 48 Shortland Street David Andrew Baldwin Wellington 6011 Auckland 1010 0800 269 476 Bruce Gerard Beeren Legal advisers to the Issuer Deutsche Craigs Limited Whaimutu Kent Dewes Level 36, Vero Centre Buddle Findlay Karen Anne Moses 48 Shortland Street State Insurance Tower, 1 Willis Street PO Box 1196 PO Box 2694 Susan Jane Sheldon Auckland 1140 Wellington 6140 0800 226 263 Legal advisers to the Trustee First NZ Capital Securities Limited Chapman Tripp Level 14, 10 Customhouse Quay 171 Featherston Street PO Box 993 Wellington 6011 Wellington 6140 0800 005 678 Co-Manager Commonwealth Bank of Australia ASB North Wharf 12 Jellicoe Street Auckland 1010 0800 272 732