Offeror(s): Cullen Investments Limited

Independent Adviser(s): Ferrier Hodgson (Rule 18)

Company Meeting Date: 31/10/2001

Exemption: ElderCare New Zealand Limited - Exemption Notice 2002

On 31 October 2001, ElderCare New Zealand Limited (“ElderCare”) held a meeting at which its shareholders approved the placement of $5 million unsecured, subordinated, fixed interest convertible notes to Cullen Investments Limited (“Cullen”) as part of a recapitalisation plan for Eldercare (the “allotment”). Cullen had the option to convert up to 25% of the convertible notes at $0.22 per share prior to 30 April 2003. The conversion of at least 75% of the notes was at the discretion of Eldercare.

The Panel noted that while the allotment of convertible non-voting securities to Cullen would not appear to be in breach of the Code, any conversion of those notes into voting shares would, in the absence of remedial action and provided Cullen’s voting control of DTL increased at the time of conversion, breach rule 7(d) of the Code. This was because the notice of meeting at which the allotment was approved did not comply with rules 16(b) and 16(d). Those rules require the notice of meeting to include specific details such as the number and percentage of voting securities to be allotted pre- and post-allotment.

ElderCare undertook remedial action by seeking retrospective exemption from the Code. The basis of the exemption was that the nature of the securities involved did not allow the particular information to be provided to shareholders with the certainty required by the Code.

The Panel considered that it was appropriate to grant the exemption as there was sufficient information given to shareholders to enable them to understand the potential impact of the issue of the convertible securities on the voting control of DTL. Additionally, the costs of requiring DTL to hold a further meeting at which the shareholders could have another vote to rectify the allotment would outweigh any benefits from requiring such a course of action. As such, the Panel granted an exemption to Cullen from rule 7(d) and ElderCare from rules 16(b) and 16(d).

Ferrier Hodgson prepared a rule 18 independent adviser’s report on the merits of the allotment.