Simplified disclosure prospectus for an offer of fixed rate senior bonds 27 November 2009

Transcription

1 Joint Lead Manager Joint Lead Manager Co-Manager Simplified disclosure prospectus for an offer of fixed rate senior bonds 27 November 2009 This is a simplified disclosure prospectus in relation to an offer of Senior Bonds that rank in priority to the Subordinated Bonds issued by TrustPower Limited and the Ordinary Shares of TrustPower Limited, which are listed on the NZDX and NZSX respectively. TrustPower Limited is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited for the purpose of that information being made available to participants in the NZDX and NZSX markets operated by NZX Limited.

2 Table of contents Important information 1 Summary of the Offer 2 Chairman s letter 3 Main terms of the Offer 4 Industry and business description 6 Summary of Trust Documents and Deed of Negative Pledge 27 Trustee s statement 32 Risk factors 33 Statutory information 37 Glossary 44 Application instructions 46 Directory 49

3 TRUSTPOWER 1 Important information Introduction This Prospectus is a simplified disclosure prospectus prepared under regulation 10 of the Securities Regulations. It is prepared as at, and dated, 27 November This Prospectus is for an offer of a Series of unsecured, unsubordinated fixed rate Senior Bonds. The Senior Bonds are offered in two Tranches, Five Year Senior Bonds and Seven Year Senior Bonds. The bonds offered under this Prospectus are unsecured but referred to as Senior Bonds because they are not subordinated obligations of TrustPower and they would rank in priority to the Subordinated Bonds on a liquidation of TrustPower. Reference to the bonds as Senior Bonds does not mean that they are secured or that they would rank ahead of other unsubordinated obligations of TrustPower. Applications to subscribe for Senior Bonds should be made using the Application Form which accompanies this Prospectus. No investment statement is required to be issued in respect of the Offer and therefore this Prospectus represents the sole offer document in respect of the Offer. Registration A copy of this Prospectus, signed by or on behalf of the Directors of TrustPower, and having attached to it, all documents and other materials required by section 41 of the Securities Act, has been delivered to the Registrar of Companies at Auckland for registration in accordance with section 42 of the Securities Act. Those documents are copies of the NZX announcements referred to on page 42 of this Prospectus, a copy of the audited consolidated financial statements for the Guaranteeing Group for the financial year ended 31 March 2009, a copy of the unaudited interim consolidated financial statements for the Guaranteeing Group for the six months ended 30 September 2009, the Trustee s statement as set out on page 32 of this Prospectus and letters of authority authorising this Prospectus to be signed by the agent of each Director of TrustPower (where appropriate). Definitions Capitalised terms used in this Prospectus have defined meanings which appear in the Glossary on pages 44 and 45 or within the relevant section of this Prospectus in which the term is used. All references in this Prospectus to $ are to New Zealand dollars unless otherwise specified. All references in this Prospectus to dates and times are to New Zealand dates and times. Investment decision This Prospectus does not take into account the individual investment objectives, financial situation or particular needs of any investor. Accordingly, the information in this Prospectus does not constitute financial product advice. Before applying for any Senior Bonds, you should consider your individual risk profile for investments, investment objectives and individual financial circumstances. If you are in any doubt, you should consult your financial or other professional adviser before deciding whether or not to apply for Senior Bonds. Offer only in New Zealand This Prospectus may not be used for the purposes of, and does not constitute, an offer or invitation in any jurisdiction other than New Zealand. No action has been, or will be, taken by TrustPower to register this Prospectus in any jurisdiction other than New Zealand or to otherwise permit an offer of the Senior Bonds, or possession or distribution of any offering material in connection with the Senior Bonds, in any jurisdiction other than New Zealand. No person may purchase, offer, sell, distribute or deliver any Senior Bonds, or be in possession of, or deliver or distribute to any other person, any offering material or any documents in connection with the Senior Bonds (including this Prospectus), in any jurisdiction other than in compliance with all applicable laws and regulations. TrustPower disclaims all liability to any person for any failure to comply with such laws and regulations. TrustPower does not accept any liability or responsibility to determine whether a person is eligible to participate in the Offer. By applying for Senior Bonds, each investor indemnifies TrustPower in respect of any loss, cost, liability or expense sustained or incurred by TrustPower as a result of the investor breaching the selling restrictions described above. Forward-looking statements This Prospectus includes certain forward-looking statements. As such statements relate to future matters, they are subject to inherent risks and uncertainties (many of which are beyond the control of TrustPower) which may cause the actual results, performance or achievements of the TrustPower Group or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements in this Prospectus. These risks and uncertainties include factors specific to TrustPower, as well as matters such as general economic and market conditions. Neither TrustPower, the Joint Lead Managers, the Co- Manager, the Organising Participant, the Trustee nor their respective directors, nor any other person can assure you that any estimated, projected or forecast outcomes will be achieved. In addition, under no circumstances should the inclusion of any forwardlooking statements in this Prospectus be regarded as a representation or warranty by TrustPower, the Joint Lead Managers, the Co-Manager, the Organising Participant, the Trustee or their respective directors or any other person that those forward-looking statements will be achieved. Risk factors It is important that investors read this Prospectus in its entirety before deciding whether to apply for any Senior Bonds. In particular, investors should consider the risks associated with an investment in the Senior Bonds. A description of the principal factors which may, either individually or in combination, affect the TrustPower Group are set out in the section entitled Risk factors on pages 33 to 36 of this Prospectus. Additional information Other important information about TrustPower is contained in announcements made by TrustPower to NZX. Copies of those announcements are available on NZX s website ( under the NZSX code TPW, and may be obtained free of charge by contacting TrustPower at the address shown in the Directory. In addition, TrustPower publishes an annual report and an interim report each financial year. Copies of each annual report and interim report are available on TrustPower s website ( and may be obtained free of charge by contacting TrustPower at the address shown in the Directory. Non-reliance This Prospectus does not constitute a recommendation by TrustPower, the Joint Lead Managers, the Co-Manager, the Organising Participant, the Trustee, or any of their respective directors, officers, employees or agents to subscribe for or purchase any of the Senior Bonds. Each interested investor must make their own independent investigation and assessment before deciding whether or not to apply for the Senior Bonds. To the maximum extent possible by law, neither TrustPower, the Joint Lead Managers, the Co-Manager, the Organising Participant, the Trustee, nor any of their respective directors, officers, employees or agents accepts any liability whatsoever for any loss arising from this Prospectus or its contents or otherwise arising in connection with the Offer of Senior Bonds. The Joint Lead Managers, the Co-Manager, the Organising Participant and the Trustee have not independently verified the information contained in this Prospectus. In accepting delivery of this Prospectus, the recipient acknowledges that none of the Joint Lead Managers, the Co-Manager, the Organising Participant, the Trustee nor any of their respective directors, officers, employees or agents gives any warranty or representation (express or implied) of accuracy or reliability and they take no responsibility for this Prospectus.

4 2 TRUSTPOWER Summary of the Offer Key features Issuer: Description of bonds: Guarantors: Issue Price: Interest Payment Dates: Interest Rate: Interest on application moneys: Maturity Date: Maximum Offer amount: Minimum application amount: TrustPower Limited Unsecured, unsubordinated Five Year Senior Bonds and Seven Year Senior Bonds (each a Tranche of Senior Bonds) The Subsidiaries of TrustPower listed on page 30 as at the date of this Prospectus $1.00 per Senior Bond (being the Principal Amount of each Senior Bond) 15 March, 15 June, 15 September and 15 December, commencing on 15 March 2010 until and including the Maturity Date of the relevant Senior Bonds 7.60% per annum for Five Year Senior Bonds 8.00% per annum for Seven Year Senior Bonds Interest on the Senior Bonds will accrue from the date on which a Bondholder s application moneys for the Senior Bonds have been banked 15 December 2014 for Five Year Senior Bonds 15 December 2016 for Seven Year Senior Bonds $125 million, comprising up to $75 million Five Year Senior Bonds and up to $50 million Seven Year Senior Bonds (with the ability to accept total oversubscriptions up to $50 million). Oversubscriptions (if any) accepted for each Tranche will be limited to $25 million, plus any balance of the $25 million oversubscription facility of the other Tranche which is not utilised (at the discretion of TrustPower) $5,000 (and multiples of $1,000 thereafter) for Five Year Senior Bonds or Seven Year Senior Bonds Important dates Opening Date* 27 November 2009 Closing Date* 5.00pm, 18 December 2009 Allotment date of Senior Bonds** 22 December 2009 Expected date of initial quotation and trading of the Senior Bonds on the NZDX 23 December 2009 First Interest Payment Date (payable to original subscriber) 15 March 2010 * TrustPower reserves the right to vary the Opening Date or Closing Date at its sole discretion. If the Closing Date is extended, subsequent dates may be extended accordingly. Investors are encouraged to lodge their applications as soon as possible after the Offer opens as interest on the Senior Bonds will accrue from the date application moneys have been banked. ** If TrustPower decides to extend the period of the Offer beyond 18 December 2009, it expects to allot further Senior Bonds on a weekly basis during that period until the final Closing Date.

5 TRUSTPOWER 3 Chairman s letter 27 November 2009 Dear Investor I am pleased to provide you with this Prospectus relating to an issue of TrustPower Limited Senior Bonds. This is TrustPower s first issue of unsubordinated bonds. The Senior Bonds will rank equally with TrustPower s existing bank funding and in priority to the Subordinated Bonds currently on issue. Bonds have become an important part of TrustPower s overall funding as the company looks to develop new generation capacity and achieve an efficient capital structure. The funds raised from this issue of Senior Bonds will be used by the TrustPower Group for general corporate purposes, including the repayment of debt. TrustPower has an enviable record of growth and achievement since its corporatisation in The TrustPower Group owns 34 hydropower stations, the Tararua wind farm and the recently completed Snowtown wind farm in South Australia. TrustPower has approximately 228,000 electricity customers which is a market share of approximately 12% of New Zealand total customer numbers. TrustPower recently announced a consolidated underlying surplus after tax, excluding fair value movements on financial instruments (which are inherently volatile) of $72.5 million for the TrustPower Group for the first half of the current financial year. TrustPower remains well positioned to meet its customers needs and to pursue further development of renewable generation opportunities when it is economically justifiable. This issue of Senior Bonds is part of a new Bond Programme established by TrustPower. The Bond Programme permits TrustPower to issue, from time to time, bonds with different features, particularly with different maturity dates and interest rates. In the future, we may offer bonds direct to TrustPower s shareholders and existing bondholders, to the general public, or an offer limited to selected financial institutions and other professional investors. The terms of each issue will depend on market conditions, investor demand and TrustPower s funding requirements. The Senior Bonds offered under this Prospectus are unsecured, unsubordinated debt obligations of TrustPower that offer investors a fixed rate of interest payable quarterly in arrears. The payment obligations of TrustPower under the Senior Bonds are guaranteed on an unsecured basis by the Guarantors. The Senior Bonds are offered in two Tranches, Five Year Senior Bonds, which have a Maturity Date of 15 December 2014, and Seven Year Senior Bonds, which have a Maturity Date of 15 December The interest rates applicable to the Senior Bonds are 7.60% per annum for Five Year Senior Bonds and 8.00% per annum for Seven Year Senior Bonds. Please read this Prospectus in its entirety and consider it carefully. If you wish to apply for Senior Bonds, you should lodge your application as soon as possible after the Offer opens as interest on the Senior Bonds will accrue from the date application moneys are banked. If you require additional information, I recommend you read TrustPower s 2009 annual report and our interim report for the first half of the current financial year. If you have any questions, please contact your financial adviser for assistance. If you are an existing TrustPower shareholder, bondholder or electricity customer, we thank you for your support. If this is your first investment in TrustPower, welcome. Yours faithfully Dr Bruce Harker Chairman

6 4 TRUSTPOWER Main terms of the Offer The following is a summary of the main terms of the Offer. Investors should also refer to the more detailed information in the other sections of this Prospectus. Issuer The issuer of the Senior Bonds is TrustPower Limited ( TrustPower ). Information in respect of TrustPower and the operations of the TrustPower Group is set out in the section entitled Industry and business description on pages 6 to 26 of this Prospectus. Investment description TrustPower is offering Senior Bonds under this Prospectus in two Tranches, Five Year Senior Bonds and Seven Year Senior Bonds. The net proceeds of the issue of the Senior Bonds will be used for general corporate purposes of the TrustPower Group, including repayment of debt. The Senior Bonds are unsecured, unsubordinated fixed rate debt obligations of TrustPower ranking equally and without preference among themselves, and equally with all other unsecured and unsubordinated indebtedness of TrustPower, except indebtedness preferred by law. The payment obligations of TrustPower under the Senior Bonds are guaranteed on an unsecured basis by the Guarantors on the terms set out in the Deed of Negative Pledge. The Guarantors as at the date of this Prospectus are listed on page 30 of this Prospectus. The Senior Bonds are unsecured but referred to as senior because Bondholders will rank ahead of subordinated creditors (including holders of the existing Subordinated Bonds) and Shareholders of TrustPower in the event of a liquidation of TrustPower. The Senior Bonds will not be assigned a credit rating. Offer amount Senior Bonds with an aggregate Principal Amount of up to $125 million, comprising up to $75 million Five Year Senior Bonds and up to $50 million Seven Year Senior Bonds, with the ability to accept total oversubscriptions of up to $50 million, are being offered by TrustPower. Oversubscriptions (if any) accepted for each Tranche of Senior Bonds will be limited to an aggregate amount of $25 million, plus any balance of the $25 million oversubscription facility of the other Tranche of Senior Bonds which is not utilised (at the discretion of TrustPower). The minimum aggregate Principal Amount of each Tranche of Senior Bonds to be issued under this Prospectus is $25 million. If the total application moneys received for a Tranche of Senior Bonds is less than this minimum amount, then no Senior Bonds of that Tranche will be issued under this Prospectus. Issue Price The Issue Price is $1.00 per Senior Bond, being the Principal Amount of each Senior Bond. The Issue Price must be paid in full on application for Senior Bonds under the Offer. Offer Period The Offer will be open from the Opening Date (currently 27 November 2009) until 5.00pm on the Closing Date (currently 18 December 2009). However, TrustPower reserves the right in its absolute discretion to vary the Opening Date or Closing Date. Interest Rates TrustPower will pay interest on each Five Year Senior Bond at the fixed Interest Rate of 7.60% per annum. TrustPower will pay interest on each Seven Year Senior Bond at the fixed Interest Rate of 8.00% per annum. Payment of interest Interest will be payable on the Senior Bonds quarterly in arrears on each Interest Payment Date, being 15 March, 15 June, 15 September and 15 December of each year, until and including the relevant Maturity Date. The First Interest Payment Date for the Senior Bonds is 15 March If an Interest Payment Date falls on a day that is not a Business Day, the relevant payment will be made on the next day which is a Business Day, without adjustment, interest or further payment as a result thereof. Interest payable on the First Interest Payment Date will accrue from (and include) the date on which a Bondholder s application moneys for the Senior Bonds have been banked until, but excluding, the First Interest Payment Date. Interest payable on the First Interest Payment Date will be paid to the first registered holder of the Senior Bonds (regardless of any transfer of the Senior Bonds prior to the First Interest Payment Date). A more detailed description of how interest payments will be calculated and made is set out under the heading Interest on page 39 of this Prospectus. Maturity Dates and redemption The Principal Amount of each Senior Bond will be payable by TrustPower on the Maturity Date for that Senior Bond. The Five Year Senior Bonds will have a Maturity Date of 15 December 2014 and the Seven Year Senior Bonds will have a Maturity Date of 15 December Bondholders have no right to require redemption of the Senior Bonds prior to their Maturity Date, except in the case of an Event of Default. This means that Bondholders have no ability to cash in their investment, except following an Event of Default or by selling their Bonds in the secondary market. TrustPower may elect to redeem all of the Five Year Senior Bonds or all of the Seven Year Senior Bonds (or all of the Senior Bonds on issue) for cash by giving five Business Days notice to each Bondholder for that Tranche of the date (being any Business Day so long as it is not less than 25 Business Days before the Maturity Date for that Tranche of Senior Bonds) on which TrustPower will redeem the Senior Bonds. On such early redemption of Senior Bonds by TrustPower, TrustPower will redeem each Senior Bond in the relevant Tranche by paying the Early Redemption Amount (set out under the heading Early redemption on page 28 of this Prospectus or in the Glossary on page 44 of this Prospectus). Applications Who may apply The Senior Bonds are offered to New Zealand resident investors. Applications for Senior Bonds will be accepted on a first come, first served basis, subject to Firm Allocations, as described below. All of the Senior Bonds may be reserved for subscription by clients of the Joint Lead Managers or the Co-Manager, institutional investors, Primary Market Participants and other approved financial intermediaries under Firm Allocations. The aggregate number of Senior Bonds so reserved will be determined by the Joint Lead Managers, in consultation with TrustPower, on or before the Opening Date. TrustPower reserves the right to refuse all or any part of any application without giving a reason. How to apply Applications to subscribe for Senior Bonds must be made on the Application Form contained at the back of this Prospectus and must be lodged with the Registrar before 5.00pm on the Closing Date. Alternatively, applications may be lodged with any Primary Market Participant, the Organising Participant or any other channel approved by NZX, in time to enable forwarding to the Registrar before 5.00pm on the Closing Date. Applicants who have accepted a Firm Allocation from a Primary Market Participant or approved financial intermediary must return the completed Application Form to the office of the Primary Market Participant or financial intermediary which has provided that Firm Allocation in time to enable forwarding to the Registrar before 5.00pm on the Closing Date. By signing and submitting a valid Application Form with full payment, an applicant irrevocably offers to subscribe for Senior Bonds on the terms set out in this Prospectus, the Trust Documents and the Application Form, notwithstanding any changes to the Closing Date which TrustPower is entitled to make. Additional instructions on how to apply for Senior Bonds are set out in the section entitled

7 TRUSTPOWER 5 Application instructions on page 46 of this Prospectus. Minimum application amount Applications to subscribe for Five Year Senior Bonds or Seven Year Senior Bonds must be for a minimum Principal Amount of $5,000 each and thereafter in multiples of $1,000 in relation to each Tranche of Senior Bonds subscribed for by an investor. There is no maximum amount of Senior Bonds you may apply for, but applications for less than $5,000 will not be accepted. An application cannot be withdrawn or revoked by the applicant once it has been submitted. Payments Payment in full of the total application amount must accompany the completed Application Form. Applicants must pay for the Senior Bonds applied for by a personal cheque or, if the application is for Senior Bonds of an aggregate Principal Amount of $500,000 or more, by bank cheque or other method acceptable to the Joint Lead Managers. Cheques should be in New Zealand dollars drawn on a New Zealand bank and submitted with the completed Application Form. Cheques should be made payable to TrustPower Senior Bond Offer and crossed Not Transferable, and must not be post-dated. Applicants who are members of the Austraclear System, or who are able to have payments made on their behalf through the Austraclear System, may settle their applications for Senior Bonds through the Austraclear System with the Registrar. Refunds If TrustPower accepts an application in part, the balance of the application moneys will be refunded as soon as practicable and, in any event, within five Business Days after the Closing Date. Any application moneys received in respect of an application which is not accepted by TrustPower (whether because of late receipt, failure to raise the minimum subscription amount in respect of a Tranche of Senior Bonds or otherwise) will be refunded to the applicant as soon as practicable and, in any event, within five Business Days after the Closing Date. No interest will be paid on refunds. Date of allotment TrustPower will allot the Senior Bonds in respect of applications accepted prior to 5.00pm, 18 December 2009 on 22 December 2009, or such other date as determined by TrustPower (subject to receiving applications for the minimum subscription amount for a Tranche of Senior Bonds described on page 4 of this Prospectus). If TrustPower decides to extend the period of the Offer beyond 18 December 2009, it expects to allot further Senior Bonds on a weekly basis during that period until the final Closing Date. NZDX listing Application has been made to NZX for permission to list the Senior Bonds on the NZDX and all the requirements of NZX relating thereto that can be complied with on or before the date of this Prospectus have been duly complied with. However, NZX accepts no responsibility for any statement in this Prospectus. NZX is a registered exchange (as defined in section 2(1) of the Securities Markets Act 1988). It is intended that quotation of the Senior Bonds on the NZDX will commence on 23 December Trust Documents The terms and conditions of the Senior Bonds are set out in the Trust Documents, which comprise the Master Trust Deed and the Series Supplement. To the extent of any inconsistency between the Series Supplement and the Master Trust Deed, the Series Supplement prevails. In addition, the Trustee has the benefit of the Deed of Negative Pledge in certain limited respects (described further below under the heading Guarantee under Deed of Negative Pledge ). A summary of the principal provisions of the Trust Documents is set out in the section entitled Summary of Trust Documents and Deed of Negative Pledge on pages 27 to 31 of this Prospectus. Pursuant to the Series Supplement, TrustPower covenants in favour of the Trustee on behalf of Bondholders that, amongst other things: on each Reporting Date, the ratio of Net Debt of the Consolidated Group to Total Tangible Assets of the Consolidated Group will not exceed 50%; Total Tangible Assets of the Guaranteeing Group will at no time be less than 85% of the Total Tangible Assets of the Consolidated Group; and on each Reporting Date, EBITDA of the Guaranteeing Group will not be less than 85% of EBITDA of the Consolidated Group. TrustPower has also covenanted in the Series Supplement that it will not create or permit to subsist any security interest over the whole or any part of its assets other than: a Permitted Security; or any security interests where the aggregate value of all assets of TrustPower in respect of which security interests have been created does not exceed at any time an amount equal to 7.5% of Total Tangible Assets of the Consolidated Group at that time. This covenant and certain other covenants in the Trust Documents are also described under the heading Covenants on pages 27 and 28 of this Prospectus. Trustee The Trustee for Bondholders is Trustees Executors Limited. The Trustee holds on trust for the benefit of Bondholders the right to enforce TrustPower s obligations under the Senior Bonds. The Trustee also holds the benefit of the Guarantee on behalf of all Bondholders. The Trustee does not guarantee repayment of the Senior Bonds or the payment of interest on the Senior Bonds. Guarantee under Deed of Negative Pledge Pursuant to the Deed of Negative Pledge, the payment obligations of TrustPower under the Senior Bonds are guaranteed on an unsecured basis by the Guarantors (who are all Subsidiaries of TrustPower). The benefit of the Guarantee is held by the Trustee on behalf of all Bondholders. The terms of the Guarantee are described further under the heading Deed of Negative Pledge on pages 30 and 31 of this Prospectus (including the name of each Guarantor as at the date of this Prospectus). TrustPower and the Guarantors (pursuant to the Guarantee) are the only persons legally liable to pay interest on the Senior Bonds and the Principal Amount of the Senior Bonds. No other person, including the Trustee, the Joint Lead Managers, the Co-Manager or any other Subsidiary of TrustPower, guarantees TrustPower s obligations in respect of the Senior Bonds. Further bonds Under the Bond Programme and the Master Trust Deed, TrustPower may, from time to time, without the consent of the Bondholders, issue a new Series of bonds (subject to the execution by TrustPower and the Trustee of a series supplement for that new Series). TrustPower may, subject to compliance with the Trust Documents and the Senior Finance Documents (including the Deed of Negative Pledge), issue other bonds, notes or other debt instruments which may rank ahead of, equally with, or behind, the Senior Bonds. New Zealand taxation A description of the applicable New Zealand taxes is set out under the heading Taxation of returns on pages 38 and 39 of this Prospectus.

8 6 TRUSTPOWER Industry and business description The business overview set out in this section is a summary of the TrustPower Group comprising TrustPower and its Subsidiaries. References to TrustPower include TrustPower and all Subsidiaries of TrustPower. Similarly, publications and announcements made by TrustPower, including those made to NZX pursuant to TrustPower s continuous disclosure obligations, will typically relate to the TrustPower Group. However, investors should be aware that the Guaranteeing Group as at the date of this Prospectus is limited to TrustPower and the Guarantors listed on page 30 of this Prospectus. Those entities are the only persons legally liable to pay interest on the Senior Bonds and the Principal Amount of the Senior Bonds as at the date of this Prospectus. This section should be read in conjunction with the other information contained in this Prospectus. Overview TrustPower is an electricity generator and retailer. TrustPower owns a geographically diverse portfolio of generation schemes using renewable energy sources in New Zealand. It has a customer base of approximately 228,000 customers located throughout New Zealand, generally in close proximity to its generation schemes. In addition to its New Zealand operations, TrustPower owns and operates the Snowtown wind farm in South Australia. TrustPower: owns and operates 34 hydro stations and one wind farm in New Zealand, comprising MW of hydro and wind generation capacity; owns and operates the Snowtown wind farm in South Australia, comprising 98.7 MW of wind generation capacity; generates approximately 5% of New Zealand s total annual electricity output; is New Zealand s fourth largest electricity retailer and has an estimated market share of approximately 12% of total New Zealand customer numbers; employs approximately 400 staff with a head office based in Tauranga; and is listed on NZSX with over 13,000 Shareholders, and cornerstone shareholdings held by Infratil Limited (50.5%) and the Tauranga Energy Consumer Trust through its subsidiary TECT Holdings Limited (32.9%). TrustPower is in a sound position looking forward. Higher market electricity prices and TrustPower s focus on operating efficiency and risk minimisation have delivered sound financial results over recent financial periods. In the financial year to 31 March 2009, the TrustPower Group reported a net profit after tax of $105 million. Earnings before interest, tax, depreciation, amortisation and fair value movements in financial instruments ( EBITDAF ) was $260 million, up 25% on the previous financial year. The recently announced interim results for the six months ended 30 September 2009 have continued these strong results. Half year net profit after tax was $82.4 million with EBITDAF $155 million, up 13% on the same period in TrustPower expects to continue to benefit from its innovative retail service delivery, attention to cost and risk minimisation and the proximity of its generation schemes to its customers. In addition, TrustPower continues to focus on strengthening its relations with each community served by the TrustPower Group. TrustPower is well positioned to take opportunities to expand its operations in both New Zealand and Australia through additional renewable generation. TrustPower has a pipeline of development options at varying stages of progression, which are expected to provide a base for future growth.

9 TRUSTPOWER 7 The New Zealand electricity industry Overview The electricity industry in New Zealand is divided into four main operating segments; generation, transmission, distribution and retail. A wholesale market operates to facilitate the sale and purchase of electricity between generators and retailers. There are ownership restrictions between generation/retail on one hand and transmission/ distribution on the other (above a limited threshold). TrustPower operates in the generation/ retail sectors. Each of the sectors is discussed in the following sections, with the main focus on the generation and retail sectors in which TrustPower operates. Generation In a year of average rainfall, approximately 55% of New Zealand s electricity generation is produced by hydro, 34% from thermal, with the rest coming from geothermal, wind and biogas. 1 New Zealand s high degree of reliance on renewable fuels has obvious benefits, but it can also create price uncertainty as a result of abnormal weather conditions such as drought. TrustPower is one of the big five integrated electricity generators and retailers. Each of these generators has a significant retail customer base, which has the effect of providing a hedge against the wholesale price payable by an electricity retailer to purchase electricity for its customers. Currently 60% of the industry s generation capacity is controlled by the Government owned SOEs, Meridian, Genesis and Mighty River Power. Historically, there has been volatility of hydro generation output in New Zealand. There has been an increase in wind and co-generation output in recent years. Should electricity demand continue Annual GWh 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 New Zealand Generation Production Geothermal Hydro Wind Other Renewable Other Non-renewable to grow in line with historical trends, then existing electricity supply volumes are not expected to be able to meet future demand for electricity. Market dynamics dictate that investment in new generation will be in the type of generation that has the lowest Gas Coal long run marginal cost. This in turn depends on the cost of new plant and the cost of fuel for different types of power generation. Based on current costs, it is TrustPower s view that the most likely form of new generation will be geothermal and wind. 1 Source: under the Energy & Resources and Electricity tabs.

10 8 TRUSTPOWER Wholesale electricity market and prices New Zealand has had a wholesale electricity market since All significant generators and retailers participate in the wholesale market, including the SOEs. Wholesale electricity prices are set half hourly (the spot market) to match supply and demand among generators, very large users and retailers. Prices fluctuate in daily, weekly and annual patterns with generation and demand. As there is no maximum price at which spot prices are capped, prices can rise to high levels at times of constraint usually caused by fuel or transmission capacity constraints. At other times, wholesale prices can be low driven by excess generation over demand usually caused by high hydro inflow and/or low demand periods. Fluctuations are generally predictable a few hours in advance and this predictability can benefit a generator such as TrustPower that can target production to the high value times of the day by using its stored water and hydro peaking plant capacity. Over longer periods, prices tend to be more certain and are generally trending upwards (as shown by the chart opposite). $ Per MWh Electricity Spot Prices (rolling weekly average) Apr 1994 Aug 1994 Jan 1995 May 1995 Oct 1995 Feb 1996 Jul 1996 Jan 1997 May 1997 Oct 1997 Feb 1998 Jul 1998 Nov 1998 Apr 1999 Sep 1999 Jan 2000 Jun 2000 Oct 2000 Mar 2001 Jul 2001 Dec 2001 May 2002 Sep 2002 Feb 2003 Jun 2003 Nov 2003 Mar 2004 Aug 2004 Dec 2004 May 2005 Oct 2005 Feb 2006 Jul 2006 Nov 2006 Apr 2007 Aug 2007 Jan 2008 Jun 2008 Oct 2008 Mar 2009 Jul 2009 Spot Price Trend Line Retail electricity market Electricity retailers acquire electricity from a grid exit point and use distribution networks to deliver that electricity to their customers. There are approximately two million electricity connections in New Zealand served by seven main retailers that have approximately between 20,000 and 550,000 connections each. 2 TrustPower currently has approximately 228,000 connections, making it New Zealand s fourth largest electricity retailer. Retail electricity supply is deregulated with any retailer able to offer to sell electricity in competition with other retailers to any customer. Almost all areas of New Zealand have at least two of the major retailers competing for customers. Most customers have a number of retailers and pricing options to choose from. Transmission and distribution Transpower owns and operates the high voltage transmission system that transports bulk electricity from where it is generated to local electricity distribution networks. With demand for electricity continuing to rise and a lack of investment in transmission infrastructure in the past, New Zealand s electricity transmission system has become increasingly constrained. Transpower is undertaking a significant investment programme to address this issue and to improve the reliability of the transmission system. 3 There are 29 electricity distribution companies throughout New Zealand that operate on a regional basis and take electricity from connection points on the national grid and distribute it to end users. 2 Source: 3 Source:

11 TRUSTPOWER 9 Overview of New Zealand regulatory environment The New Zealand electricity industry has been restructured on several occasions over the past 20 years. The Electricity Industry Reform Act 1998 divided the electricity sector into its current four operating segments, generation, retail, transmission and distribution, and imposed restrictions on ownership between generation/retail on the one hand, and transmission and distribution on the other. The Electricity Industry Reform Act was amended in 2008 to facilitate a greater degree of participation by electricity distribution companies in the generation and retail markets. The Electricity Commission was established in 2003 to assume responsibility for overseeing the electricity industry and for security of supply. The electricity transmission and distribution sectors are regulated by the Commerce Commission by setting thresholds (e.g. price paths and quality) against which it assesses the performance of each electricity distributor. Ministerial review of electricity market performance On 1 April 2009 the Government announced that a Ministerial review of the electricity sector had been launched to address concerns around security of supply, the affordability of electricity, and electricity sector governance. The review is being undertaken by the Electricity Technical Advisory Group and the Ministry of Economic Development. The objective of the review is to improve the performance of the electricity market and its institutions and governance arrangements in order to better achieve the Government s objectives for the electricity sector. A detailed discussion paper was released in August 2009 with 29 preliminary recommendations. The discussion paper can be found on the Ministry of Economic Development s website ( under the Energy & Resources and Electricity tabs. The proposed recommendations include: governance changes, including replacing the Electricity Commission with an Electricity Market Authority; measures to increase retail competition, including allowing electricity distribution companies back into retailing; changes to environmental regulation and policy; removing barriers to new generation, including access to fuel sources; compensation payments to be made to consumers if they face conservation campaigns; and moves to increase competition in wholesale markets, including a reallocation of assets among SOE generator/retailers. Emissions Trading Scheme (ETS) The New Zealand Government ratified the Kyoto Protocol in 2002, committing New Zealand to a specified greenhouse gas emissions target for the period between 2008 and In September 2008, the ETS was established to enable New Zealand to meet its Kyoto Protocol obligations and to encourage efforts to reduce domestic emissions. Amendments to the ETS legislation were enacted on 25 November The ETS requires those with obligations under the ETS to annually surrender emission units to the Government which match the emission levels for which they are responsible. Participants will have to purchase the necessary emission units (over and above the number of any freely allocated units) to meet their commitments and the cost of those emission units is expected to modify usage and consumption patterns. The stationary energy (electricity and heat production) sector s compliance obligations under the ETS will commence from 1 July Hydro or wind electricity generation will not be subject to the ETS. Participants in the stationary energy sector who are required to surrender emission units will only be required to cover half their emissions until 2013 and the cost of emission units will, in effect, be capped at $25 per tonne until Submissions on the discussion paper were made by TrustPower and other industry participants in September The Government has stated that it expects to make a final decision on the reform package by the end of 2009 with any legislative changes likely to be enacted by mid TrustPower considers that the proposed recommendations are well balanced and is broadly supportive of the proposed recommendations, and in particular, the retention of the current competitive market structure. While some of the recommendations need to be considered further in terms of market impact, TrustPower considers that the proposed recommendations should not materially impact its financial performance or growth aspirations. A further discussion of the Ministerial review is set out under the heading Government policy and regulation on page 35 of this Prospectus. The impact of the ETS on the forward electricity price path is expected to be positive for TrustPower. Thermal and geothermal generators will need to purchase emission units to mitigate the emission levels they produce. There is no free allocation of units to the stationary energy sector. TrustPower will not be required to surrender emission units under the ETS, although it will receive a competitive advantage should other participants pass on additional costs they incur to purchase emission units.

12 10 TRUSTPOWER The Australian electricity industry The Australian electricity industry has many of the same characteristics and underlying structures as the New Zealand industry. However, due to a much larger reliance on thermal generation, Australia also has specific policies aimed at encouraging renewable generation. It is because of the industry similarities, and more importantly the specific policies aimed at encouraging renewable generation, that TrustPower is considering further expansion in Australia. The TrustPower Group already operates the Snowtown wind farm in South Australia (described further under the heading Snowtown wind farm on page 25 of this Prospectus). TrustPower currently has no electricity retail activities in Australia, although it has been granted a retail licence in South Australia.

13 TRUSTPOWER 11 National electricity market The National Electricity Market ( NEM ) is a wholesale exchange for electricity for the Commonwealth adjacent areas and those states and territories that are electrically connected Queensland, New South Wales, ACT, Victoria, South Australia and Tasmania. A number of different regulatory bodies have responsibility for the regulation of the NEM. The Australian Energy Market Operator ( AEMO ) was established on 1 July 2009 and its functions include implementing, administering and operating the wholesale exchange and managing the security of the power system. The Australian Energy Market Commission ( AEMC ) has the role of making rule changes to the National Electricity Rules that regulate the operation of the NEM. The Australian Energy Regulator ( AER ) regulates the wholesale electricity market and it is responsible for the economic regulation of the electricity transmission and distribution networks in the NEM. State based regulatory environment Each Australian state operates its own regulation of electricity entities. In South Australia, this is managed by the Essential Services Commission of South Australia ( ESCOSA ). Retailers and owners of generation, transmission and distribution assets are required to be licensed by the ESCOSA. Mandated renewable energy scheme The expanded Renewable Energy Target ( RET ) scheme has been established to encourage additional generation of electricity from renewable energy sources to meet the Australian Government s commitment to achieving a 20% share of renewables in Australia s electricity supply by The RET legislation: places a legal liability on wholesale purchasers of electricity to proportionally contribute to an additional 45,000 GWh of renewable energy per year by 2020; and sets the framework for both the supply and demand of renewable energy certificates ( RECs ) via a REC market. Carbon pollution reduction scheme The Australian Government is proposing to introduce the Carbon Pollution Reduction Scheme ( CPRS ). If enacted, as currently proposed, the CPRS is expected to have broadly similar impacts to the ETS in New Zealand. Renewable generators such as wind farm operators can generate additional revenue by selling RECs to wholesale purchasers of electricity. There is an established spot and forward over-the-counter market for the trading of RECs.

14 12 TRUSTPOWER TrustPower s business Introduction TrustPower s origins date back to 1925 with the formation of the Tauranga Electric Power Board which, as part of a restructure of the electricity sector, was corporatised in 1993 as TrustPower Limited. Today, TrustPower generates and retails electricity across New Zealand. Electricity is provided for TrustPower s customer base from the wholesale market into which TrustPower sells the electricity it generates. TrustPower has a strong retail brand and reputation for high quality customer service. TrustPower s New Zealand generation schemes are generally in close proximity to its customer base. Additional information in respect of TrustPower s generation and retail operations is set out below on pages 16 to 26 of this Prospectus. TrustPower has approximately 13,000 Shareholders. Two cornerstone Shareholders hold approximately 83% of TrustPower s Shares. Infratil Limited, which is an NZSX listed utility investment company, has a 50.5% shareholding. TECT Holdings Limited, which manages the assets of the Tauranga Energy Consumer Trust, has a 32.9% shareholding. The beneficiaries of the Tauranga Energy Consumer Trust are TrustPower account holders situated in Tauranga City and the Western Bay of Plenty. Infratil Limited brings valuable infrastructure asset management experience to TrustPower. The Tauranga Energy Consumer Trust provides a link to TrustPower s principal customer base. None of the Shareholders of TrustPower guarantees or has any liability in respect of the Senior Bonds.

15 TRUSTPOWER 13 Recent activities The current chief executive officer of TrustPower, Keith Tempest, will retire in December 2009 following 23 years of service with TrustPower, eight of which have been as chief executive officer. The Board is well advanced in the process of appointing a new chief executive officer and an appointment is expected to be made in the near future. Within the last 18 months, TrustPower has completed two new generation projects, a 98.7 MW wind farm at Snowtown in South Australia owned by TrustPower s Subsidiary, Snowtown Wind Farm Pty Ltd, and a 6 MW hydro generation station at Deep Stream in Otago. The Snowtown wind farm represents TrustPower s first off-shore generation project. TrustPower has contracted to sell approximately 90 per cent of the Snowtown wind farm s output produced through to December 2018 to a major Australian electricity retailer. The Snowtown wind farm is described further under the heading Snowtown wind farm on page 25 of this Prospectus. The Deep Stream hydro scheme is relatively small at only 6 MW, however it is the largest hydro station built in New Zealand since the Resource Management Act was enacted in The scheme is also a significant step towards increasing the efficiency of TrustPower s existing asset base (using the previously lost opportunity from a 300 metre fall from an existing water intake that supplies the Waipori hydro scheme), whilst further enhancing TrustPower s generation diversity. In the past year, TrustPower has increased its retail market share in the face of significant price led competition, expanded its Friends Extra programme, and increased the number of telecommunications services sold to its customer base. Summary of financial performance 300 Earnings $ M s Earnings Before Interest, Tax, Depreciation, Amortisation and Fair Value Movements of Financial Instruments (EBITDAF) Profit After Tax The following tables summarise the operational and financial performance of TrustPower and the TrustPower Group over the last five financial years (to 31 March 2009). As noted in the introduction to this section of this Prospectus, TrustPower and the Guarantors (pursuant to the Guarantee) are the only persons legally liable to pay interest on the Senior Bonds and the Principal Amount of the Senior Bonds. Five year summary financial information for the Guaranteeing Group (comprising TrustPower and the Guarantors) is not available. The summary financial information in this section relating to the TrustPower Group (comprising TrustPower and all of its Subsidiaries) is included for information purposes only. However, in respect of each of the financial years shown in the TrustPower Group table on the following page: the aggregate amount of the total tangible assets of all the Subsidiaries who are not Guarantors (excluding balances with other members of the TrustPower Group) was not material in comparison with the amount of the total tangible assets of the TrustPower Group (excluding balances with other members of the TrustPower Group); the aggregate amount of consolidated profit or loss before interest and tax of all the Subsidiaries who are not Guarantors for each of those financial years was not material in comparison to the amount of consolidated profit or loss before interest and tax of the TrustPower Group for each such financial year. Copies of the separate audited consolidated financial statements for the TrustPower Group and the Guaranteeing Group for the financial year ended 31 March 2009 are available in the manner described under the heading Access to information and statements on page 43 of this Prospectus.

16 14 TRUSTPOWER FIVE YEAR ECONOMIC SUMMARY Mar 09 Mar 08 Mar 07 Mar 06 Mar 05 Electricity customer numbers 000's Telecommunication customer numbers 000's Customer sales (GWh) 4,032 4,540 4,575 4,724 5,873 Weighted average spot price of electricity purchased ($/MWh) Hydro generation production (GWh) 1,568 1,472 1,667 1,523 1,811 Wind generation production (GWh) Weighted average spot price of electricity generated ($/MWh) TrustPower Consolidated Group $M $M $M $M $M Operating Revenue EBITDAF Fair Value Movements in Financial Instruments (20) 1 Amortisation and Depreciation (44) (32) (28) (28) (28) Interest Paid (52) (40) (27) (29) (33) Tax Expense (39) (39) (44) (48) (39) OPERATING SURPLUS SHAREHOLDERS' EQUITY 1,430 1,257 1, Current and Other Assets Fixed Assets 2,373 2,057 1,905 1,263 1,257 Intangible Customer Base Assets TOTAL ASSETS 2,520 2,351 2,065 1,435 1,377 Current and Other Liabilities Deferred Tax Liability Term Debt TOTAL LIABILITIES 1,090 1, NET ASSETS 1,430 1,257 1, Earnings Per Share (cents) Dividends Per Share - excluding special dividends (cents) Return on Average Shareholders' Funds 7.8% 7.9% 9.2% 9.1% 8.3% TrustPower Limited $M $M $M $M $M Operating Revenue EBITDAF Fair Value Movements of Financial Instruments (9) Amortisation and Depreciation (20) (19) (21) (22) (22) Interest Paid (42) (40) (27) (28) (33) Tax Expense (47) (42) (44) (47) (40) OPERATING SURPLUS SHAREHOLDERS' EQUITY 1,222 1,151 1, Current and Other Assets Fixed Assets 1,546 1,425 1,413 1,006 1,010 Intangible Assets TOTAL ASSETS 2,040 1,987 1,925 1,350 1,297 Current and Other Liabilities Deferred Tax Liability Term Debt TOTAL LIABILITIES NET ASSETS 1,222 1,151 1, Earnings Per Share (cents) Dividends Per Share - excluding special dividends (cents) Return on Average Shareholders' Funds 9.1% 8.4% 10.9% 9.8% 8.8% Notes: 1. The summary financial information above has been extracted from audited financial statements. 2. The financial information for the financial years ended 31 March 2005 and 31 March 2006 has been prepared under the previous New Zealand Financial Reporting Standards. The financial information for the financial years ended 31 March 2007, 31 March 2008 and 31 March 2009 has been prepared under New Zealand equivalents to International Financial Reporting Standards. 3. The separate audited consolidated financial statements for the TrustPower Group and the Guaranteeing Group for the financial year ended 31 March 2009 are available on TrustPower s website ( and in the manner described on page 43 of this Prospectus. Annual financial statements for the TrustPower Group for previous financial years are available on TrustPower s website (

17 TRUSTPOWER 15 The financial results shown opposite, and the recently announced results for the six months to 30 September 2009, show a steady growth in financial performance as evidenced by the growth in EBITDAF. While there has been an increase in indebtedness, this has been more than matched by an increase in assets. Overall, the current level of debt is considered by TrustPower to be moderate for a company of its size and given the nature of its businesses. Additional information in respect of TrustPower s debt profile is set out below under the heading Debt funding. 45,000 40,000 35,000 30,000 Electricity Demand and Real GDP 140, , ,000 Over the last three years, TrustPower s improved financial performance has been primarily due to higher electricity prices as the era of state subsidised hydro generation and low cost gas supply ends. This has been brought about primarily by depletion of the Maui gas field (and a recognition that reserves are finite and reducing) and the ongoing increase in electricity consumption. Annual GWh 25,000 20,000 15,000 10,000 5, ,000 60,000 40,000 20,000 0 $M (95/96) Based on trends of annual demand for electricity and Gross Domestic Profit ( GDP ) over the last 34 years (refer to the graph opposite), electricity consumption is expected to continue to increase approximately in line with GDP, which in turn is likely to result in further increases in electricity prices over time, providing opportunities for TrustPower to continue to invest in renewable generation Residential Commercial Industrial Real GDP Demand data sourced from Ministry of Economic Development ( GDP data sourced from Statistics New Zealand ( Debt funding The TrustPower Group s current debt funding is provided through: bank facilities (which include a separate Australian dollar credit facility) and which provide available funds of approximately $765 million (based on current exchange rates); and the Subordinated Bonds (which mature between 2012 and 2015) with an aggregate principal amount of approximately $263 million. The graph opposite shows the maturity profile of the TrustPower Group s current debt portfolio. While approximately $325 million of debt will mature in the next two years, TrustPower expects that those facilities will be able to be refinanced on acceptable terms. In addition, approximately $200 million of this maturing debt relates to bank facilities which were established to finance new projects such as the first stage of the Snowtown wind farm. Now that these projects have been successfully completed, it is appropriate that TrustPower seek longer term debt funding to provide more balance to the TrustPower Group s debt maturity profile. The proceeds of the Offer of Senior Bonds will assist in achieving this objective. The TrustPower Group also has a significant level of unutilised bank facilities and discretionary funds on $ M s Debt Maturity Profile Utilised Unutilised hand (approximately $300 million as at the date of this Prospectus) which could be used to repay an existing facility which is not renewed on maturity or to assist in the financing of any new generation projects. Additional information in respect of the debt portfolio of the TrustPower Group is set out in Maturity - Years notes 26 and 27 to the audited consolidated financial statements for TrustPower for the financial year ended 31 March A copy of those financial statements is available on TrustPower s website (

18 16 TRUSTPOWER Electricity retailing TrustPower supplies approximately 3,800 GWh of electricity per annum to approximately 228,000 customers. Margins within electricity retailing in New Zealand have traditionally been low. TrustPower, with its focus on providing excellent customer service, operating an efficient cost structure, forming sound relationships with the communities within which it operates and using successful customer retention programmes, such as its Friends and Friends Extra loyalty programmes, has been successful at achieving margins that more fairly reflect the costs and risks of electricity retailing. About 70% of TrustPower s sales are to residential and smaller commercial and industrial customers. For these consumers, prices are typically fixed for a range of periods and the onus is on TrustPower to manage the associated price risk. The remaining sales, which represent supply to larger commercial and industrial customers, are typically on the basis that the price risk will be passed to the customer. TrustPower continues to focus on optimising its retailing activities to both enhance returns and to manage risks. TrustPower has recently embarked on a complete replacement of its customer care and billing systems. When completed, this system is expected to enable enhanced customer service and operational efficiencies. The analysis phase of this project is now complete and while taking longer than expected has resulted in a detailed understanding of how the new system will work. TrustPower is now reviewing these findings and will shortly decide whether or not to proceed with the implementation stage. If the project proceeds, then full implementation will now most likely occur in mid However, this delay in implementation is not expected to materially increase the overall cost of the project. Telecommunications As a result of purchasing the assets of Call South, a South Island-based tolls, fixed line and internet provider, TrustPower has grown its Kinect business which offers a range of telecommunications services to its residential and business customers. TrustPower now provides 31,000 telecommunications services to approximately 22,000 customers. Generation In New Zealand, the TrustPower Group operates 34 hydropower stations and the 161 MW Tararua wind farm, one of the largest wind farms in the southern hemisphere. At present, TrustPower s New Zealand generating capacity is 585 MW, which will produce output of approximately 2,258 GWh in a year of average rain and wind. TrustPower also has a long-term contract to buy the output of the Rotokawa geothermal station and has contracted for both physical supply and electricity hedging instruments from other industry participants or markets. In total, these contracts amount to approximately 1,130 GWh per annum. TrustPower s Australian Subsidiary, Snowtown Wind Farm Pty Ltd, operates the 98.7 MW Snowtown wind farm in South Australia. The Snowtown wind farm is expected to generate 385 GWh of electricity in an average wind year. TrustPower s generation schemes offer a number of competitive advantages: As a general rule, relatively small geographically dispersed stations impose higher operating and maintenance costs than would be the case with large facilities. Despite this inherent cost disadvantage, TrustPower believes its costs compare favourably with its competitors which operate larger facilities. Over the long term, TrustPower s small stations may offer upgrade options that may not exist with more developed/optimised larger schemes. TrustPower s large number of generating units, while adding to operational complexity, provide an inbuilt resilience against the impact of an individual unit failure. The generating capacity of the single largest generating unit owned by TrustPower is only 7% of the total generating capacity of TrustPower s generating units. GWh's Produced TrustPower's Sources of Generation South Island Hydro North Island Hydro Wind Generation Australian Wind The use of solely renewable fuel sources means that TrustPower does not have the fuel costs that make up a significant proportion of the cost of generation of thermal stations. These thermal fuel costs are also expected to increase with international market demands and due to the impact of carbon pricing. Hydro stations allow water to be stored for use at times of higher electricity prices. It is expected that electricity prices will become peakier over time as the capacity for wind-powered electricity generation increases within the market. TrustPower s hydro schemes provide a range of storage capabilities, allowing both short and long term energy regulation. This means that TrustPower has back-up for its wind farms, which are inherently unpredictable over the short term. Geographic diversity provides a hedge against different climatic conditions and the impact such conditions might have on individual generation schemes (late winter 2008 is an example where the North Island lake levels were well above average, while water levels of many of the major South Island lakes were still low due to severe drought conditions). Because its stations tend to be close to its customers and many are embedded in local electricity networks, TrustPower has less exposure to high transmission losses and usage costs. In addition, TrustPower s retail operations are less exposed to high regional wholesale prices as a result of localised transmission constraints. Hydro stations have very long economic lives (the Waipori scheme recently reached its centenary). Wind turbines are designed to last at least 20 years before rising maintenance costs may justify replacement. Because wind is an infinite resource, its availability for energy generation is unlimited. A gas turbine may also have a 20 year life, but any refurbishment will depend on the continued availability of suitably priced gas.

19 TRUSTPOWER 17 MEASURING ELECTRICITY Rates of Generation/Consumption kw Kilowatt: 1 kw = 1,000 watts - Enough to light 10 x 100 watt light bulbs MW Megawatt: 1 MW = 1,000 kw - i.e. 10,000 x 100 watt light bulbs Amounts of Generation/Consumption kwh 1 kwh = 1 kilowatt for 1 hour - i.e. power used for ten 100 watt light bulbs running for 1 hour - An average New Zealand household uses 8,000 kwh per year MWh 1 MW for 1 hour = 1,000 kwh - Enough electricity for one average New Zealand household for 46 days GW Gigawatt: 1 GW = 1,000,000 kw GWh 1 GWh = 1,000 MWh = 1,000,000 kwh - Enough electricity for 125 average New Zealand households for one year TRUSTPOWER GENERATION SCHEMES 1 Kaimai 11 Argyle/Wairau 2 Matahina 12 Arnold 1 3 Wheao/Flaxy 13 Kumara/Dillmans/Duffers 4 Hinemaiaia 14 Kaniere Forks/McKays Creek 5 Mangorei 15 Coleridge 6 Motukawa 16 Highbank 7 Patea 17 Montalto 8 Tararua Wind Farm 18 Wahapo 9 Cobb 19 Paerau/Patearoa 10 Waihopai 20 Waipori/Deep Stream RETAIL CUSTOMERS Far North 14 Tasman 2 Counties 15 Nelson 3 Waipa 16 Buller 4 Central Waikato 17 West Coast 5 Southern Thames Valley 18 Christchurch 6 Tauranga/Rotorua/Taupo 19 Ashburton 7 Wairoa 20 Timaru 8 Hawkes Bay 21 Oamaru 9 New Plymouth 22 Central Otago 10 Wanganui/Taranaki 23 Otago 11 Manawatu 24 Dunedin Wellington 25 Invercargill/Southland 13 Marlborough

20 18 TRUSTPOWER Trustpower s generation schemes A brief profile of TrustPower Group s seven largest generation schemes is set out in the following pages. ASSETS GENERATION CAPACITY (MW) AVERAGE OUTPUT (GWh) NORTH ISLAND Kaimai Scheme (3) Matahina Wheao & Flaxy (3) Hinemaiaia (3) Mangorei Motukawa Patea Tararua wind farm SOUTH ISLAND Cobb West Coast Stations (7) Wairau/Argyle (2) Waihopai Coleridge Highbank Paerau/Patearoa (2) Waipori Scheme (5) New Zealand Total ,258 Snowtown wind farm (South Australia) GROUP Total ,643

21 TRUSTPOWER 19 Coleridge The Coleridge power station, about 100 kilometres inland from Christchurch, was New Zealand s first major hydropower scheme. The Government completed a study of the suitability of the area for hydro electricity generation in In 1914 the power station was commissioned with three turbines and it was then progressively expanded over the next decade. The Coleridge power station is fed from Lake Coleridge via three kilometres of tunnels and pipes, and after passing through the powerhouse the water empties into the Rakaia River, approximately 140 metres below the level of the lake. TrustPower purchased Coleridge from the Electricity Corporation of New Zealand in October 1998 for $91 million and over the next two years upgraded the station at a cost of about $6 million. This investment increased capacity from 36 MW to 45 MW and target annual output from 205 GWh to 270 GWh. The scheme s capacity was later reduced to 39 MW and its target GWh output to its current level of 254 GWh when four small inefficient units were decommissioned. Two machines have recently been upgraded with new high efficiency runners. While these units are small, the improved efficiency is expected to produce 2 GWhs of additional energy from the same flow of water. Lake Coleridge can store up to two months of inflows, allowing the station to increase water storage before winter and to maximise output over the winter months when demand and electricity prices are higher. Improvements to monitoring and control at the lake intakes have improved flow capture, which translates to a 1% improvement in energy. Resource consents have recently been obtained for a small 1.4 MW enhancement to the scheme. If developed, this enhancement will increase output from the scheme by around 7 GWhs per year without using any additional water and for only a modest capital investment. Coleridge s resource consents for its existing operations are due to expire in GWh Coleridge Output: GWh per Year Actual Output Average Output 2009

22 20 TRUSTPOWER Matahina 35 kilometres south of Whakatane, the Matahina earth dam is New Zealand s second largest. It is 86 metres high, built on 24 metre deep foundations, 365 metres wide at its base, and 396 metres long. The 3.8 million cubic metres (3.8 billion litres) of water is released from behind the dam to drive the two 50,000 hp turbines that are coupled to two 40 MW generators, producing an average annual output of approximately 266 GWh. The station was commissioned in 1967, but was damaged in the 1987 Edgecumbe earthquake. Extensive strengthening work has been undertaken since the earthquake. In 1999 TrustPower purchased the station from the Electricity Corporation of New Zealand for $115 million. Although Lake Matahina has storage capacity, the high water flows of the Rangitaiki River mean that the station tends to run on a daily cycle, as opposed to storing water up over weeks or months. Since its acquisition, TrustPower has increased the station s output and enabled its use to be more focused on periods when electricity prices are higher. Further enhancements are likely if electricity prices continue to rise. The process for securing new resource consents to allow continued operation of the scheme is currently underway. TrustPower is able to continue to operate the scheme under the existing consents until the renewal process is complete. Through this process, modifications are being sought to the legal constraints imposed on the scheme, which, if granted, will allow the scheme to operate more effectively in the electricity market. TrustPower expects this process to be successfully completed. GWh Matahina Output: GWh per Year Actual Output Average Output

23 TRUSTPOWER 21 Patea the Patea power station is situated on the Patea River in South Taranaki and takes advantage of the river s good water flows, 871 km 2 catchment and long deep river gorge. The site was identified in 1974 and the dam was completed in 1983 with the station commissioned in In 1999 TrustPower acquired the power station and other generation assets from Powerco for $72 million. The dam is 82 metres high and holds back Lake Rotorangi, which at 45 kilometres is New Zealand s longest man made lake. The station has a 32.2 MW generation capacity and will generate approximately 105 GWh in a year of average hydrology. Patea has operational flexibility, allowing it to operate as a peaking station. With around one week s storage capacity, the station s generation is managed to focus output over periods when electricity prices are higher. The process for securing new resource consents to allow continued operation of the scheme is currently underway. TrustPower is able to continue to operate the scheme under the existing consents until the renewal process is complete. Through this process, modifications are being sought to the legal constraints imposed on the scheme, which, if granted, will allow the scheme, and in particular the scheme storage, to operate more effectively in the electricity market. TrustPower expects this process to be successfully completed. GWh Patea Output: GWh per Year Actual Output Average Output

24 22 TRUSTPOWER Waipori Development of the Waipori scheme commenced in The first electricity was generated in 1907 and development of the hydro capacity of the Waipori River has been ongoing ever since. In 1998 TrustPower acquired the scheme from the Dunedin City Council for $70 million. The Waipori hydro scheme is approximately 30 kilometres inland from Dunedin in the Lammerlaw Range. It comprises four individual dams and power stations that act in sequence with the powerhouses delivering output of 12 MW, 57 MW, 7 MW and 8 MW respectively as water descends down the Waipori River. The scheme s ingenious system of underground tunnels and surge chambers is regarded as a remarkable feat of engineering skill, especially given its vintage. The great strength of, and value from, Waipori is its large storage capacity. This provides greater certainty of electricity generation in periods of low water inflow, which can often coincide with high market prices for electricity. This storage capacity is a factor behind the scheme s relatively volatile annual production figures. The focus of the scheme s operation is on maximising output value rather than volume. Sometimes there will be a trade-off, meaning that output can be down even when the value of output is up. The recently completed 6 MW Deep Stream hydro scheme utilises water from an existing diversion into the Waipori storage lake. Waipori s resource consents for its existing operations are due to expire in GWh Waipori Output: GWh per Year Actual Output Average Output

25 TRUSTPOWER 23 Cobb The Cobb hydro scheme is located 50km north-west of Nelson, where the Takaka and Cobb rivers meet. Development of the scheme first started in 1935, with generation of electricity beginning in The scheme was expanded in 1954 to its current capacity of 32 MW. Cobb is owned by Cobb Power Limited, which was purchased by TrustPower in March 2003 for $92.5 million from NGC Holdings Limited. The scheme, which has an operating head of 594 metres, the highest in New Zealand, has four 3 MW and two 10 MW pelton wheel units giving normal output of approximately 178 GWh per year. The reservoir catchment is approximately 70.8 km² and lies in the Tasman Mountains (where persistent heavy north-westerly rainfall is common). The water is carried from a 32.7 metre high earth and rock-fill embankment dam to the powerhouse by penstocks and a 2.6 km tunnel through the Cobb ridge. The scheme has storage capacity of approximately 30 GWh, making it an important part of TrustPower s portfolio of generation schemes. Its proximity to the West Coast means the lake recovers quickly when depleted. New turbine runners are currently being designed for Cobb which will improve efficiency. This is anticipated to increase scheme output by about 2% without using any additional water. Cobb s resource consents for its existing operations are due to expire in GWh Cobb Output: GWh per Year Actual Output Average Output

26 24 TRUSTPOWER Tararua wind farm New Zealand is a windy country lying across the prevailing westerly weather pattern and at 41 degrees of latitude, the Tararua Ranges are in the roaring forties. The Tararua wind farm is located in the Tararua ranges and is visible from Palmerston North. The Tararua wind farm is owned by TrustPower s subsidiary Tararua Wind Power Limited. The wind farm currently comprises 103 x 0.66 MW V47 turbines and 31 x 3.0 MW V90 wind turbines, and has a total capacity of 161 MW making it one of the largest wind farms in New Zealand. Annual average production is now 620 GWh. This output level implies that the wind farm generates, on average, the equivalent to operating at full capacity for 44% of the time, which is due to the prevailing wind blowing at an average speed of 34 km/h. At a 44% capacity factor, the Tararua wind farm is one of the best performing wind farms in the world. This capacity factor can be compared with 20 30% commonly achieved in Europe and 30 40% in the United States and Australia. New Zealand s installed hydro capacity operates in an average year at around 50%. The original Tararua wind farm was purchased by TrustPower in 1999 for $49 million from CentralPower, when it consisted of only 48 x 0.66 MW V47 turbines. Since 2003, TrustPower has expanded the wind farm twice. The first expansion project added 55 x 0.66 MW V47 turbines (under the existing resource consent) at a cost of $55 million. The second expansion project involved an additional 31 x 3.0 MW V90 turbines. This project added 93 MW for a total cost of $174 million. The project was the first wind farm to be connected to the 220 kv electricity grid. These expansion projects were completed on time and under budget. Any wind facility needs to be part of a portfolio of generation stations because wind is inherently unreliable. A wind/hydro combination has the advantage that hydro storage may be built up when the wind is blowing and electricity prices are low with the water released when prices are higher. TrustPower s goal is to maintain a balance of hydro and wind powered stations to take advantage of their complementary features. TrustPower s current investment plans are to build on both wind and hydro positions to maintain an efficient balance of generation capacity. The Tararua wind farm has easements in place that provide perpetual resource consents for its current operations. The Tararua wind farm has only had one full year of production since its capacity was expanded to its current level. During that period, expected generation of 620 GWh was not achieved due to below average wind speeds. GWh Tararua Wind Farm Output: GWh per Year Actual Output

27 TRUSTPOWER 25 Snowtown wind farm The Snowtown wind farm is located approximately 170 km from the South Australian capital of Adelaide, on the rolling contours of the Barunga and Hummocks ranges. The site is also exposed to the roaring forties winds that power the Tararua wind farm, although the Snowtown site has a lower annual average wind speed of around 31 km/h. In order to achieve the yield required from the site, TrustPower chose the Suzlon S MW wind turbine, which has a larger rotor swept area relative to its generator capacity than the machines used at the higher wind speed Tararua site, and which is specifically designed for lower wind speed sites. As a result of the larger rotor to generator ratio, the capacity factor from the Snowtown wind farm is expected to be close to 45%. The Snowtown wind farm comprises 47 x S88 turbines, with a total capacity of 98.7 MW. The project was completed in early 2009 and under budget, with the first machine commissioned three months ahead of schedule. Compared to other known sites, Snowtown is considered by TrustPower to be one of the best sites for a wind farm in mainland Australia and TrustPower has planning approval for a further 235 MW of capacity.

28 26 TRUSTPOWER Generation development An important focus for TrustPower going forward is the development of new generation capacity. In TrustPower s opinion, New Zealand needs about 150 MW of additional generation each year just to supply current growth in demand. TrustPower is actively engaged in developing further capacity to meet this growing demand. Generation development is a process of identification, evaluation, pre-feasibility, resource consenting, feasibility and final business case approval for construction of new generation schemes. It is a process which requires considerable expertise and TrustPower has built up a team of highly skilled people. At present, TrustPower is working on over 40 projects in both New Zealand and Australia which have been identified as prospective. Many of these projects will be eliminated at the various stages of evaluation, consenting, feasibility, etc. based on a range of economic, environmental or technical reasons, but some are expected to proceed. The most promising projects currently under investigation are: Mahinerangi wind farm located on land bordering Lake Mahinerangi (Waipori scheme), the proposed Mahinerangi wind farm is ideally located to make use of the synergy between wind power and hydro storage. Resource consents for the project were confirmed by the Environment Court in May 2009, allowing for the construction, operation and maintenance of up to 100 wind turbines or up to 200 MW of capacity. Some of the land proposed to be used for this scheme was purchased by TrustPower as part of the Deep Stream hydro development. The site has a good wind resource and it will be ideally suited to many of the modern turbine models being brought onto the market. It is probable that the project will be completed in stages. The most likely first stage will be a relatively small 30 MW wind farm connected directly into the local electricity distribution network. Kaiwera Downs wind farm located in the hills to the east of Gore, this proposed wind farm has been granted resource consents from the Gore District Council for up to 83 wind turbines or 240 MW of capacity. With transmission access less than 2 km from the site, a remote location and very good wind resource, this wind farm is expected to be a valuable addition to TrustPower s existing portfolio of generation schemes. Wairau hydro scheme this proposed scheme would involve a major extension of TrustPower s existing Branch scheme on the Wairau River in Marlborough. If completed, capacity is expected to be about 72 MW and annual output of about 375 GWh. The project would involve part of the Wairau River flow being diverted into the existing Branch scheme and the water conveyed through canals and penstocks to five new generating stations. The canals would run along the foothills on the right hand side of the valley while the power stations would be built on the riverbank. This would enable TrustPower to meet peak load without importing electricity to the region and would alleviate the existing transmission constraints to Marlborough and Nelson and increase the reliability of supplies to local consumers. This generation could be combined with new irrigation schemes covering the southern part of the Wairau Plains/Lower Waihopai area. Coordinating hydro and irrigation water supply needs and associated canals would considerably enhance environmental and economic aspects of this project. Resource consents for this project have been granted by the local council. However, an appeal has been filed with the Environment Court and this appeal is currently being heard by the Environment Court. Arnold hydro scheme this proposed hydro scheme on the Arnold River on the West Coast has a projected capacity of 46 MW, with expected annual output of 180 GWh. The scheme has been the subject of media and political focus for some time now. Resource consents for the project have been granted. The granting of these consents was appealed by five parties, four of which have since withdrawn their objection. The appeal will be heard by the Environment Court at a hearing which has been scheduled for March Further development at Snowtown as noted above, approval has been granted for a further 235 MW of wind turbines to be added at the Snowtown wind farm in South Australia. Further development of this site is likely to feature in any further expansion of TrustPower s operations in Australia. Other opportunities TrustPower has also identified over 50 potential opportunities to make small enhancements to its existing hydro generation schemes. Some of these opportunities involve modifying existing schemes to provide irrigation. As with the major development pipeline, these opportunities go through a rigorous investigation process and only a small number will proceed each year.

29 TRUSTPOWER 27 Summary of Trust Documents and Deed of Negative Pledge Introduction TrustPower has established a Bond Programme with the intention of, from time to time, issuing bonds to provide funding for general corporate purposes, including the repayment of other debt, purchasing additional assets or repurchasing Shares. The Bond Programme permits TrustPower to issue, from time to time, bonds with different features, particularly with different maturity dates and interest rates. Under the Bond Programme, bonds are constituted and issued in Series under the Master Trust Deed and a series supplement to the Master Trust Deed specific to that Series. A Series comprises of at least one Tranche of bonds and may comprise of a further Tranche or Tranches of bonds issued under the same series supplement to the Master Trust Deed. This section contains a summary of the principal provisions of the Trust Documents under which the Senior Bonds will be constituted and issued. The Trust Documents comprise the Master Trust Deed and the Series Supplement, which contains provisions specific to the Senior Bonds to be issued under this Prospectus, although TrustPower may elect to issue further Series of bonds on the same terms. The Series Supplement provides that certain terms of the Master Trust Deed do not apply to the Senior Bonds. This section also contains a summary of the provisions of the Deed of Negative Pledge (including the Guarantee) which are applicable to the Trustee, the Bondholders and the Senior Bonds. This summary is set out under the heading Deed of Negative Pledge on pages 30 and 31 of this Prospectus. Capitalised terms that are used in this section in relation to the Trust Documents but not defined in this Prospectus have the meaning given to those terms in the Trust Documents. Trust Documents The Trust Documents comprise the Master Trust Deed and the Series Supplement. The Master Trust Deed is dated 30 October 2009 and was entered into between TrustPower and the Trustee. The Senior Bonds offered under this Prospectus will be constituted by, and issued in accordance with, the Master Trust Deed and the Series Supplement. The Senior Bonds are subject to the detailed provisions of the Master Trust Deed and the Series Supplement. The Series Supplement contains terms relating to: the payment of interest in respect of the Senior Bonds; and other specific conditions applicable to the Senior Bonds. Investors requiring further information in relation to the Trust Documents should refer to the copies of those documents which are available on the Companies Office website ( The Trust Documents are available, free of charge, from TrustPower by contacting the company at the address set out in the Directory or from TrustPower s website ( Bondholders are entitled to the benefit of, are bound by, and are deemed to have notice of, the provisions of the Trust Documents relating to the Senior Bonds. The Trustee and the Bondholders The Trustee is appointed under the Master Trust Deed to act as trustee for the Bondholders and the holders of any further Series of bonds issued under the Master Trust Deed and any series supplement to the Master Trust Deed. Trustees Executors Limited is, pursuant to a separate trust deed, also the trustee for holders of the Subordinated Bonds already on issue as at the date of this Prospectus. The Trustee does not guarantee the payment of interest or the Principal Amount of the Senior Bonds. Issue and form of the Senior Bonds The Master Trust Deed does not create any security over the assets of TrustPower or any of its Subsidiaries. The Master Trust Deed provides that TrustPower may issue bonds (including the Senior Bonds) at such times, in such amounts, to such persons, on such terms and conditions and at the prices determined by TrustPower. Without limiting the above, the Master Trust Deed provides that TrustPower may issue bonds with a fixed principal amount or a principal amount that is to be calculated by reference to an index, and, where bonds are interest-bearing, that interest will be calculated by reference to a specific interest rate (which may be fixed or a margin over a base rate) or by reference to an index or both. In addition, the Master Trust Deed provides that bonds may be: subordinated or unsubordinated as specified in the relevant series supplement to the Master Trust Deed; issued as perpetual bonds with no maturity date other than on a liquidation of TrustPower or as otherwise specified in the relevant series supplement to the Master Trust Deed; or convertible into ordinary shares in TrustPower as provided for in the Master Trust Deed and relevant series supplement to the Master Trust Deed. Unsubordinated bonds rank equally amongst themselves and with all present and future unsecured and unsubordinated indebtedness of TrustPower (except indebtedness preferred by law). Covenants The Trust Documents contain a number of covenants by TrustPower, including that for so long as any Senior Bonds are outstanding, it will: ensure that a Register is maintained in respect of the Series and give notice to the Bondholders of any resignation or removal of the Registrar and the appointment of any replacement Registrar promptly following such event; obtain, effect and promptly renew from time to time, all authorisations required under any applicable law to enable it to perform and comply fully with the Trust Documents and the accession certificate given by TrustPower in favour of the Trustee pursuant to the Deed of Negative Pledge, or required on its part for the validity or enforceability of such documents; send copies to the Trustee of all notices given by it to any of the NZX, the Bondholders, the Shareholders and the Companies Office; maintain its corporate existence; comply with and observe all laws and requirements and orders of any government agency, which are material in the context of the business of TrustPower; use its reasonable endeavours to ensure that the Senior Bonds remain quoted on NZDX; in respect of the Senior Bonds, comply with the provisions of the Securities Act and the Securities Regulations and any exemption notices issued pursuant thereto and the Listing Rules; and within 10 Business Days of receipt of a written request from the Trustee, confirm in writing to the Trustee that, except as previously notified to the Trustee, it is not aware (having made due enquiry) of any Event of Default which has occurred. Pursuant to the Series Supplement, TrustPower covenants in favour of the Trustee, on behalf of Bondholders that, amongst other things: on each Reporting Date, the ratio of Net Debt of the Consolidated Group to Total Tangible Assets of the Consolidated Group will not exceed 50%; Total Tangible Assets of the Guaranteeing Group will at no time be less than 85% of the Total Tangible Assets of the Consolidated Group; on each Reporting Date, EBITDA of the Guaranteeing Group will not be less than 85% of EBITDA of the Consolidated Group; it will not (unless the Trustee agrees otherwise) carry on any business outside of the Core Business other than in an immaterial respect. For this purpose, a business will be deemed to be immaterial if the assets utilised in carrying on that business (when aggregated with the assets in all other non-core businesses of the Consolidated

30 28 TRUSTPOWER Group at the relevant time) do not exceed 15% of Total Tangible Assets of the Consolidated Group at that time; and it will promptly notify the Trustee if it becomes aware that any breach of a Guaranteeing Group coverage ratio in the Deed of Negative Pledge has occurred or is reasonably likely to occur, or that any amendment to, or waiver of, any such ratio has occurred. Early redemption TrustPower may elect to redeem all of the Five Year Senior Bonds or all of the Seven Year Senior Bonds (or all of the Senior Bonds on issue) for cash by giving five Business Days notice to each Bondholder for that Tranche of the date (being any Business Day so long as it is not less than 25 Business Days before the Maturity Date for that Tranche of Senior Bonds) on which TrustPower will redeem the Senior Bonds. TrustPower will pay the Early Redemption Amount for each Senior Bond redeemed in that manner. The Early Redemption Amount in respect of each Senior Bond, consists of the greater of: an amount equal to the Principal Amount (less all withholding tax and other withholdings or deductions required to be made); and the average price, weighted by volume, of all trades of Senior Bonds of that Tranche through the NZDX over the 10 Business Days up to the fifth Business Day before the relevant early redemption date (or, if the Senior Bonds of that Tranche have not traded on the NZDX for at least half of such 10 Business Day period, the average price of the Senior Bonds for that period will be determined by an independent adviser appointed in accordance with the Master Trust Deed) net of accrued interest (if any), together with all accrued but unpaid interest in respect of that Senior Bond and any other amount due and payable in respect of that Senior Bond. Trustee s powers and duties The principal powers and duties of the Trustee under the Master Trust Deed in relation to the Bondholders are summarised as follows: upon the occurrence of any Event of Default specified in the Master Trust Deed or the Series Supplement which is continuing unremedied, the Trustee may in its discretion, and upon being directed to do so by an Extraordinary Resolution passed by the Bondholders, must: - declare the Bond Moneys to be immediately due and payable by notice in writing to TrustPower; and - apply all moneys received in accordance with the provisions of the Master Trust Deed; to give certain waivers and make certain determinations which will be binding on Bondholders, if in the case of a waiver the Trustee is satisfied that the interests of Bondholders will not be materially prejudiced or if the waiver is approved by an Extraordinary Resolution of Bondholders; convene meetings of Bondholders or otherwise seek directions from them or the court in respect of certain matters; in performance of its duties, and subject to its statutory duties, assume that TrustPower is not in breach of its obligations under the Trust Documents unless the Trustee has received notice to the contrary from TrustPower; delegate its discretions and responsibilities under the Trust Documents and authorise such persons as it thinks fit to represent it at any meeting; attend general meetings of Bondholders and to speak at such meetings; to perform a number of functions relating to the ongoing administration of the Trust Documents, including: - in relation to any meetings of Bondholders; - the exercise of discretions or the giving or withholding of consents (as appropriate) relating to such administration and other matters out of the ordinary (such as making an application to the High Court of New Zealand under the Securities Act and agreeing to modifications of the Trust Documents), all upon the terms set out in the Trust Documents; and on being satisfied that all Bond Moneys have been paid or provided for upon the terms of the Trust Documents, to execute a deed of release of the Trust Documents. In addition, the Trustee has a statutory duty pursuant to the Securities Act and the Securities Regulations to exercise reasonable diligence to: ascertain whether or not there has been any breach of the terms of the Trust Documents or of the terms of any offer of the Senior Bonds and to do all the things that it is empowered to do to cause any breach of those terms to be remedied (except where the Trustee is satisfied that the breach will not materially prejudice the interests of the Bondholders); and ascertain whether or not the assets of the Guaranteeing Group that are or may be available, are sufficient or likely to be sufficient to discharge the amounts of the Senior Bonds as they become due. The Trustee receives the benefit of a general indemnity from TrustPower for any liabilities and expenses incurred in the execution of or purported execution of, the powers or trusts in the Master Trust Deed and against all actions, proceedings, costs, claims and demands in respect of any matter or thing done or omitted, in any way relating to the provisions of the Master Trust Deed, unless the claim arises out of the Trustee s failure to comply with the standard of care imposed on it by the Master Trust Deed. The Trustee is not indemnified against liability for wilful breach of trust where the Trustee has failed to show the degree of care and diligence required of it having regard to the powers, authorities and discretions conferred on it under the Trust Documents and the provisions of the Master Trust Deed. Except as otherwise provided in the Trust Documents, the Trustee has absolute discretion as to the exercise or non-exercise of its powers in relation to the Senior Bonds. Under the Trust Documents, the Trustee may, amongst other things, in relation to the Senior Bonds: refrain from exercising any power until directed by an Extraordinary Resolution of Bondholders or the affected Class of Bondholders; represent and act on behalf of Bondholders in any matter concerning them generally; invest any moneys held in its capacity as Trustee, in the name of the Trustee or its nominee, in any investment, with power to vary, deal with or dispose of such investment. All income (less any commissions properly payable to the Trustee) arising from all such investments will belong to the person in respect of whom such moneys are held by the Trustee; in the performance of its duties, act on, or decline to act on, certificates signed by or on behalf of TrustPower, and the advice or opinion of professional advisers; or require TrustPower to report to Bondholders on certain matters. Reporting For so long as any Senior Bonds are outstanding, TrustPower will provide or make available to the Trustee: the annual audited financial statements of the Consolidated Group; the unaudited interim financial statements of the Consolidated Group; and on a six monthly basis, a director s certificate confirming compliance with the financial covenants referred to on page 27 and that no material amendment or waiver has been made or is proposed to be made to any provision of the Deed of Negative Pledge, during the relevant period. TrustPower covenants to supply to the Trustee, at the same time as the latest audited financial statements of the Consolidated Group are provided in accordance with the Series Supplement, a separate report by the auditors as to certain matters related to the Trust Documents. TrustPower also covenants to supply to the Trustee, upon request, the information which TrustPower is required to provide under electricity industry regulations and such other information regarding the Consolidated Group s business or financial condition as may reasonably be required by the Trustee for the purposes of the discharge of the duties, trust and powers vested in the Trustee under the Series Supplement (subject to any confidentiality restrictions). TrustPower is required to promptly notify the Trustee if it becomes aware that any breach of a Guaranteeing Group coverage ratio specified in the Deed of Negative Pledge has occurred or is reasonably likely to occur, or that any amendment to, or waiver of, any such ratio has occurred.

31 TRUSTPOWER 29 Bondholders may request from TrustPower printed copies of TrustPower s interim report (including unaudited financial statements for the first six months of each financial year) and its annual report (including annual audited financial statements) and those reports will be available on TrustPower s website ( Events of Default Upon the occurrence of any Event of Default, the Trustee may in its discretion, and it must, upon being directed to do so by an Extraordinary Resolution of Bondholders, declare the Bond Moneys to be immediately due and payable. However, none of the events specified in the Trust Documents as an Event of Default will constitute an Event of Default, and the Bond Moneys will not become immediately due and payable, unless the Event of Default is continuing unremedied and the Trustee has given a notice to TrustPower declaring such event to be an Event of Default and the Bond Moneys to be immediately due and payable. The events or circumstances which constitute an Event of Default in respect of the Senior Bonds include the following: TrustPower fails to pay any amount payable under the Master Trust Deed or the Series Supplement on its due date (or within two Business Days after its due date where non-payment on its due date has arisen solely by reason of a technical computer or similar error outside the control of TrustPower); TrustPower fails to perform or comply in any respect with any financial covenant referred to on page 27 of this Prospectus; or any representation, warranty or statement by TrustPower in or in connection with the Master Trust Deed or the Series Supplement is not true, accurate and complied with in all material respects; TrustPower fails to perform or comply in any material respect with any of its obligations under the Master Trust Deed or the Series Supplement (other than a payment obligation or in respect of the financial covenants referred to above) and, in the case of a failure that is capable of remedy, that failure is not remedied within 20 Business Days of receipt by TrustPower of a notice from the Trustee specifying the default and requiring its remedy; if TrustPower becomes insolvent, is placed into liquidation or receivership or any analogous procedure occurs in respect of it; the holder of any security interest exercises any power of sale in respect of, or otherwise enforces its security interest over, the whole or any substantial part of the assets of TrustPower; or any indebtedness of TrustPower in respect of borrowed money or under a guarantee of, or in excess of, $10 million or its equivalent in any other currency (other than indebtedness the liability for which is being contested in good faith in appropriate proceedings): - is not paid when due, or within any applicable grace period; or - is declared due before it would otherwise have been due by reason of any default or event of default (howsoever described). Meetings The Master Trust Deed contains provisions for meetings of Bondholders and the matters that may be determined by Extraordinary Resolution or other resolution of Bondholders. The Trustee or TrustPower may convene a meeting of Bondholders at any time. The Trustee must convene a meeting of Bondholders at the request in writing of the holders of at least 10% of the aggregate Principal Amount of all Senior Bonds then outstanding. In addition, TrustPower shall convene a meeting of Bondholders whenever required to do so by law. Bondholders have the power exercisable by Extraordinary Resolution to agree, approve, authorise, ratify and sanction various acts, matters or things in relation to, or in connection with, the Trust Documents, the Senior Bonds and the exercise or performance by the Trustee of its powers, duties and discretions. For example, the Bondholders may by an Extraordinary Resolution: sanction the release of TrustPower from any of its obligations under the Master Trust Deed or the release of the Master Trust Deed in whole or in part; sanction any variation, release, waiver, compromise or arrangement in respect of the rights of the Bondholders against TrustPower or against its undertakings and assets; assent to any amendment to the terms of the Trust Documents or conditions attaching to the Senior Bonds, proposed or agreed to by TrustPower; sanction any scheme for the reconstruction of TrustPower or for the amalgamation of TrustPower with any other company where such sanction is necessary; subject to the Securities Act, discharge, release or exonerate the Trustee from all liability in respect of any act or omission for which the Trustee has or may become responsible under the Trust Documents; authorise or direct the Trustee to concur in and execute any supplemental deed or other document embodying any sanction, authority, approval, assent, variation, release, waiver, compromise, direction or request; direct the Trustee to take, or to refrain from taking, any other action under or pursuant to, or in connection with, any of the provisions of the Trust Documents; subject to the provisions of the Trust Documents, remove the Trustee and approve the appointment of, or appoint, a new Trustee; and sanction the exchange of Senior Bonds for, or the conversion of Senior Bonds into, shares, stock, debentures, debenture stock or other obligations of TrustPower or any other company formed or to be formed. An Extraordinary Resolution of Bondholders is a resolution passed at a duly convened meeting of Bondholders at which at least 75% of the persons voting at the meeting on a show of hands or, if a poll is duly demanded, then at least 75% of the votes cast on such a poll, voted in favour of the resolution. An Extraordinary Resolution of Bondholders is binding on all Bondholders, whether or not they were present at such meeting. A quorum for the purpose of passing an Extraordinary Resolution of Bondholders is Bondholders, present in person or by representative (including by proxy), holding or representing at least 10% of the aggregate Principal Amount of all Senior Bonds then outstanding. Where a particular majority is not required by the Master Trust Deed or by law, any matter arising at a meeting of Bondholders duly convened and held will be determined by a simple majority of the persons voting on a show of hands or, if a poll is duly demanded, by a majority consisting of not less than 50% plus one of the votes given on such poll. Neither the Trustee nor TrustPower may take any action that affects the rights attached to the Senior Bonds unless that action has been approved by an Extraordinary Resolution of each Interest Group (as defined in the Master Trust Deed). However, the issue of further bonds, shares or other securities which rank equally with, or in priority to, any existing Senior Bonds, whether as to voting rights, distributions or otherwise, and any amendment made to the Master Trust Deed in accordance with the amendment provisions, are deemed not to be actions affecting the rights attached to the Senior Bonds. Amendments to Trust Documents The terms and conditions of the Trust Documents in relation to each Class may be amended with the approval of Bondholders of that Class by an Extraordinary Resolution at a meeting of the relevant Bondholders, and, in limited circumstances, with the approval only of the Trustee and TrustPower, as described below. A description of the requirements for an Extraordinary Resolution is set out above under the heading Meetings. The following amendments do not require Bondholder approval: amendments of a minor, formal, administrative or technical nature; amendments that are to correct a manifest error; amendments that are to comply with the requirements or a modification of the requirements of any applicable law or any rules of any stock exchange; amendments that are necessary for the purpose of obtaining or maintaining a quotation of the Senior Bonds on any stock exchange; amendments in respect of any of the provisions of the Trust Documents relating to the reporting provisions, the Trustee s powers or the exercise of the Trustee s powers; and

32 30 TRUSTPOWER amendments by way of entry into a series supplement to the Master Trust Deed for a particular Series. The above circumstances are also subject to the general requirement that TrustPower and the Trustee must each be of the opinion that the amendment will not be materially prejudicial to the interests of Bondholders of the relevant Class generally. The consent of Bondholders is not required in respect of any amendment to a term of the Master Trust Deed which is not applicable to the Senior Bonds. The Trustee may agree to amend or temporarily vary the Trust Documents for such period and on such terms as may be agreed by the Trustee to reflect an exemption granted to TrustPower, or an exemption that is applicable to TrustPower, in relation to any obligation imposed upon TrustPower by or pursuant to the Securities Act, the Companies Act 1993 or the Financial Reporting Act 1993 which is materially the same as or analogous to any obligation of TrustPower under the Trust Documents, provided two authorised officers of TrustPower certify that such amendment or temporary variation will not have a material adverse effect on TrustPower or be materially and adversely prejudicial to the general interests of Bondholders. The Trustee may also temporarily vary the provisions of the Trust Documents applicable to the Senior Bonds for such period and on such terms as may be deemed appropriate provided that the Trustee is satisfied that the interests of the affected Bondholders generally will not be materially and adversely prejudiced. Any amendment to the Trust Documents will be binding on all Bondholders and will only be effective if it is in writing and signed by TrustPower and the Trustee. Negative pledge covenant in Series Supplement The Series Supplement provides that TrustPower will not create or permit to subsist any security interest over the whole or any part of its assets other than a Permitted Security. A Permitted Security is defined in the Series Supplement as: any security interest arising by operation of law; any right of netting of indebtedness, set-off, combination or consolidation of accounts, or similar provision, contained in any Risk Management Product entered into between TrustPower and its bankers as part of normal banking arrangements; any security interest constituted by or arising under any Permitted Lease Transaction (as defined in the Series Supplement); any security interest constituted by a retention of title to, or other interest in, personal property to secure the payment of the purchase price thereunder or which is a purchase money security interest (as defined in the Personal Property Securities Act 1999) provided that the security interest arises in the ordinary course of TrustPower s business, the obligation secured is not in default and such security interest is discharged within 180 days of the obligation being incurred; any security interest created or provided for by a lease for a term of more than one year where TrustPower is the lessee (other than a lease under a sale and lease-back transaction or constituting a finance lease for the purposes of NZ GAAP) and that does not secure payment or performance of an obligation; any security interest created or provided for by a commercial consignment (as defined in the Personal Property Securities Act 1999) where TrustPower is the consignee or a transfer or purchase of an account receivable or chattel paper (in each case as defined in the Personal Property Securities Act 1999) on normal commercial arm s length terms where TrustPower is the transferor or vendor, and that does not secure payment or performance of an obligation; any security interest created in favour of coventurers pursuant to any agreement relating to an unincorporated joint venture over interests in, or assets of, such unincorporated joint venture; any security interest created or permitted to arise or subsist with the prior written consent of the Trustee; any security interest created as security over any asset acquired, developed or constructed after the date of the Series Supplement to secure the associated cost, where the financier s right of action to enforce repayment of the amount secured is limited to a right of action or claim against such assets or any assets, revenues, contracts, licences or similar rights derived from the asset acquired, developed or constructed; or any security interest of the same nature created or permitted to subsist in replacement of, or substitution for, any security interest referred to in the points above. In addition, TrustPower may create or permit to subsist security interests where the aggregate value of all assets of TrustPower in respect of which security interests have been created does not exceed at any time an amount equal to 7.5% of Total Tangible Assets of the Consolidated Group at that time. Miscellaneous provisions of Trust Documents The Trust Documents also contain detailed provisions relating to procedures for transfer and registration of the Senior Bonds and various other matters. Because the Senior Bonds are to be registered (rather than bearer) bonds, the Trustee and TrustPower are entitled to rely on the Register as the sole and conclusive record of the Senior Bonds held by a Bondholder, notwithstanding any discrepancy between the Register and any certificate issued in respect of any Senior Bonds. A certificate will not constitute a document of title and transfers must be effected using a registrable transfer form or by means of the FASTER system (or its successor) operated by NZX. A transfer will not take effect until the transferee is registered as the holder of the Senior Bond. Neither the Trustee nor TrustPower is liable to the other or to any Bondholder for relying on the Register or for accepting in good faith as valid the details recorded on the Register if they are subsequently found to be forged, irregular or not authentic. Deed of Negative Pledge TrustPower originally entered into the Deed of Negative Pledge as part of its arrangements with its bank Lenders and the Senior Finance Documents. The Trustee has the benefit of the Deed of Negative Pledge in certain limited respects. A number of provisions of the Deed of Negative Pledge are not applicable to the Trustee, the Bondholders or the Senior Bonds, as described further below under the heading Limited application of Deed of Negative Pledge. Guarantee Pursuant to the Deed of Negative Pledge, each Guarantor unconditionally guarantees to each Lender the due and punctual payment by each other member of the Guaranteeing Group of its indebtedness to that Lender as and when the same shall become due and payable. The Trustee, on behalf of the Bondholders, is to be a Lender and the Senior Bonds and all other amounts outstanding under the Series Supplement are indebtedness for the purposes of the Guarantee provided pursuant to the Deed of Negative Pledge, but subject to the limits described below under the heading Limited application of Deed of Negative Pledge. Accordingly, the payment obligations of TrustPower under the Senior Bonds are guaranteed on an unsecured basis by the Guarantors on the terms of the Guarantee included in the Deed of Negative Pledge. The obligations of each Guarantor under the Guarantee constitute joint and several obligations of the Guarantors. The Guarantee is not secured by any mortgage or charge. Guarantors Each Guarantor is a Subsidiary of TrustPower. The Guarantors as at the date of this Prospectus are: Cobb Power Limited Snowtown Wind Farm Pty Ltd Tararua Wind Power Limited TrustPower Australia Holdings Pty Ltd TrustPower Australia Holdings Pty Ltd (as general partner of TrustPower Australia Financing Partnership) TrustPower Australia (New Zealand) Limited A Subsidiary of TrustPower may become a Guarantor under the Deed of Negative Pledge by executing a supplemental deed in the form attached to the Deed of Negative Pledge. Pursuant to the Series Supplement, TrustPower has covenanted that:

33 TRUSTPOWER 31 Total Tangible Assets of the Guaranteeing Group will at no time be less than 85% of the Total Tangible Assets of the Consolidated Group; and on each Reporting Date, EBITDA of the Guaranteeing Group will not be less than 85% of EBITDA of the Consolidated Group. The Trustee, on behalf of Bondholders, will not have any rights in respect of the covenants in the Deed of Negative Pledge given by TrustPower and each Guarantor in relation to the composition of the Guaranteeing Group. Release of Guarantors Pursuant to the Deed of Negative Pledge, TrustPower may require that a Guarantor be released from all its obligations and liabilities under the Guarantee in the following circumstances: the release of that Guarantor will not breach any covenant in the Deed of Negative Pledge or any document evidencing any facility made available by any Lender to any member of the Guaranteeing Group or that Guarantor ceases or will cease to be a Subsidiary of TrustPower following a disposal of all its shares (and certain other conditions are met); that Guarantor is being or will be dissolved (and certain other conditions are met); there is no indebtedness owing by that Guarantor to any Lender and a directors certificate is provided to each Lender certifying that such release will not result in a breach of any covenant in the Deed of Negative Pledge or any document evidencing any facility made available by any Lender to any member of the Guaranteeing Group; or a Majority of Lenders have provided their written consent to such release. The release of a Guarantor will become effective on the date of execution by TrustPower of appropriate documentation recording such release. TrustPower is required to provide each Lender with 10 business days prior written notice of its intention to release a Guarantor. Ranking of Guarantee The obligations of the Guarantors under the Guarantee are unsecured and unsubordinated. In a liquidation of a Guarantor, any claim made by the Trustee under the Guarantee will rank after the claims of persons to whom preferential payments must be made (including creditors preferred by law) and secured creditors (if any). The claims of the Trustee under the Guarantee will rank equally with the claims of all other Lenders under the Guarantee and other unsecured and unsubordinated creditors of each Guarantor. This will include, for example, amounts owed to the TrustPower Group s lenders under their existing bank facilities. Limited application of Deed of Negative Pledge The Trustee has the benefit of the Deed of Negative Pledge only in certain limited respects. As noted above, a number of the provisions of the Deed of Negative Pledge are not applicable to the Trustee, the Bondholders or the Senior Bonds and (to the fullest extent effective) each of the Trustee and the Bondholders will be deemed not to be a Lender for the purposes of those provisions of the Deed of Negative Pledge. The Trustee has no rights or obligations in respect of those provisions of the Deed of Negative Pledge which are not applicable to it, the Bondholders or the Senior Bonds. However, TrustPower has provided certain undertakings and covenants in the Trust Documents which are similar to a number of those provisions of the Deed of Negative Pledge. The provisions of the Deed of Negative Pledge which are not applicable to the Trustee, the Bondholders or the Senior Bonds relate to the following matters: undertakings by TrustPower to provide financial information to each Lender; a negative pledge covenant; financial ratios and covenants relating to the composition of the Guaranteeing Group; restrictive covenants, including relating to disposals of assets, related party transactions and restrictions on dividends in respect of TrustPower or the Guaranteeing Group (as the case may be); events of default; and representations and warranties given by each member of the Guaranteeing Group. The Deed of Negative Pledge may be amended by agreement in writing of each member of the Guaranteeing Group and a Majority of Lenders at that time. This provision will not be applicable to the Trustee, the Bondholders or the Senior Bonds to the extent that it relates to any amendment to any provision of the Deed of Negative Pledge which is not applicable to the Trustee, the Bondholders or the Senior Bonds. The Trustee will have rights as a Lender under the Deed of Negative Pledge in respect of any amendment to the Guarantee provisions of the Deed of Negative Pledge. The consent of the Trustee or the Bondholders will not be required for any waiver to, or consent, confirmation or other determination required in respect of the provisions of the Deed of Negative Pledge which are not applicable to the Trustee, the Bondholders or the Senior Bonds. Accordingly, a consent, waiver, confirmation or other determination could be given in respect of any of those provisions without the consent of the Trustee. In addition, to the fullest extent effective, the Trustee and the Bondholders will be deemed not to be a Lender under the Deed of Negative Pledge for any such purpose (including for the purpose of determining a Majority of Lenders).

34 32 TRUSTPOWER Trustee s statement Level 5, 10 Customhouse Quay PO Box 3222, DX SP20011 Wellington, New Zealand Phone FAX November 2009 The Directors TrustPower Limited Truman Road Te Maunga Mount Maunganui Private Bag Tauranga 3143 Dear Directors Clause 9(3) of Schedule 12 of the Securities Regulations 2009 requires us to confirm that the offer by TrustPower Limited ( TrustPower ) of bonds (the Senior Bonds ) set out in the prospectus dated 27 November 2009 (the Prospectus ) complies with any relevant provisions of the master trust deed between TrustPower and Trustees Executors Limited (the Trustee ) dated 30 October 2009 and the series supplement dated 26 November 2009 between TrustPower and the Trustee (together, the Trust Documents ). The relevant provisions of the Trust Documents are those which: (a) entitle TrustPower to constitute and issue under the Trust Documents the Senior Bonds offered in the Prospectus; and (b) impose any restrictions on the right of TrustPower to offer the Senior Bonds, and are described in the section of the Prospectus entitled Summary of Trust Documents and Deed of Negative Pledge. We confirm that the offer of the Senior Bonds set out in the Prospectus complies with any relevant provisions of the Trust Documents. We have given the above confirmation on the basis that the Trustee relies on the information supplied to it by TrustPower pursuant to the Trust Documents and does not carry out any independent check of the statements or the figures supplied to it in that information. The Trustee draws your attention to the explanation of the Trustee s role described under the heading Trustee s powers and duties in the section of the Prospectus entitled Summary of Trust Documents and Deed of Negative Pledge. The Trustee does not guarantee the repayment of the Senior Bonds or the payment of interest on the Senior Bonds. Yours sincerely Trustees Executors Limited Sean Roberts Business Manager Corporate Trust Trustee Executors Limited Financial Protection since

35 TRUSTPOWER 33 Risk factors Investors should be aware that there are risks associated with an investment in Senior Bonds. The principal factors which may, either individually or in combination, affect the future operating performance of the TrustPower Group, and the ability of TrustPower to pay interest on, or repay the Principal Amount of, the Senior Bonds are set out below. These include risks of a general nature and those that are specific to the TrustPower Group and its business. Investors should carefully consider these risks (together with other information in this Prospectus) before applying for Senior Bonds. The summary of risks presented is not exhaustive and this Prospectus does not take account of the personal circumstances, financial position or investment requirements of any one investor in particular. It is important, therefore, that before making any investment decision, investors give consideration to the suitability of an investment in the Senior Bonds in light of their investment needs, objectives and financial circumstances. The principal risks for Bondholders in relation to the Senior Bonds are that: they may not receive timely, or any, interest payments on the Senior Bonds; or TrustPower may be unable to repay all or any of the Principal Amount of the Senior Bonds. These circumstances could arise for a number of reasons, including if: there is a material deterioration in the operating performance or profitability of the TrustPower Group and, therefore, the financial performance of TrustPower (including its ability to service its debt obligations); or TrustPower or any Guarantor becomes insolvent, is placed in liquidation, receivership or statutory management, or otherwise becomes unable to pay its debts as they fall due. The risks described below in relation to TrustPower also apply to the operating Subsidiaries of TrustPower (including the Guarantors). Any material adverse effect on the operations or financial performance of a material operating Subsidiary of TrustPower may indirectly result in a material adverse effect on the ability of TrustPower to comply with its obligations in respect of the Senior Bonds or, if that Subsidiary is a Guarantor, the performance of its obligations as a Guarantor. Economic risks Economic conditions The TrustPower Group currently operates predominantly in New Zealand. Changes in New Zealand s economic conditions generally may impact adversely on TrustPower s financial performance. Factors affecting New Zealand s economic conditions include changes in exchange and interest rates, inflation, rates of economic growth, taxation laws and the industrial relations climate. The New Zealand economy is currently experiencing a range of adverse effects which are resulting in challenging market conditions. The New Zealand economy is influenced by international economic and political events. To date this downturn has had only a limited impact on the financial performance of TrustPower. Deterioration of the New Zealand economy may have a material adverse effect on TrustPower s financial results. Australian investment Following its investment through an Australian subsidiary in the Snowtown wind farm in South Australia, the TrustPower Group is exposed to risks associated with operating in an overseas jurisdiction. The principal additional risks faced by TrustPower as a consequence of operating in Australia are (i) failure to understand the electricity market leading to reduced revenue or increased costs, (ii) exposure to foreign currency fluctuations; and (iii) regulatory risks relating to the Australian electricity market. The revenue risk has been mitigated to a large extent by an agreement to sell 90% of the output of the Snowtown wind farm at a fixed price through to December Foreign currency risk exists for the proportion of the investment not funded in Australian dollars and for ongoing earnings in Australian dollars. Neither of these values is currently significant in terms of the TrustPower Group s overall operations. However, the materiality of this risk and other associated risks related to conducting business in Australia may increase for TrustPower if the TrustPower Group expands its Australian operations in the future. Liquidity risk There is a risk that TrustPower may not be able to raise the funds required for continued development of generation opportunities or other projects. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an appropriate amount of committed credit facilities and the spreading of debt maturities. Liquidity risk is monitored by TrustPower by continuously forecasting its cash flows and endeavouring to match the profiles of financial assets and liabilities. Treasury policies are in place to ensure that minimum levels of liquidity are maintained at all times. Cost of funds TrustPower s bank borrowings are all on floating interest rates. If interest rates go up, this will increase TrustPower s cost of borrowing and will reduce TrustPower s free cash flows. TrustPower uses various interest rate financial instruments to manage exposure to fluctuations in interest rates. TrustPower s bank facilities require compliance with financial covenants. While TrustPower is confident it will continue to be able to comply with these financial covenants, a particularly significant decline in earnings could cause TrustPower not to comply with these financial covenants. A failure to comply with any financial covenant, would, depending on the financial covenant, be an event of default under TrustPower s bank facilities. Potential consequences of a failure to comply with any financial covenant may include default interest costs, cancellation of debt funding or acceleration of repayment of outstanding indebtedness for TrustPower and any member of the Guaranteeing Group. Credit risk TrustPower carries credit risk, particularly through contracts with other electricity retailers and its direct customers. A significant default could have a material adverse effect on TrustPower s financial performance. TrustPower has policies that limit the amount of credit exposure to any counterparty. TrustPower also has policies in place to ensure that sales are made to customers with an appropriate credit history. Where a potential customer does not have a suitable credit history, a bond is required before the customer is accepted. Derivative counterparties and cash transactions are limited to high credit quality financial institutions and large electricity market participants. Electricity industry risks Electricity prices Price uncertainty is a natural part of the electricity industry and TrustPower is exposed to fluctuations in the spot price of electricity. Electricity is instantly perishable and consequently prices can be volatile if there is any unexpected imbalance between supply and demand. As a generator of electricity, TrustPower s profitability is impacted by the prices it receives in the wholesale electricity market for electricity produced and the costs of generating that electricity. Factors which influence the wholesale price include the climate (refer below under the heading Climate ), competitor behaviour, fuel availability, demand for electricity at any given time, generation unit and transmission system availability and general economic conditions. The wholesale market may also be affected by the loss of key infrastructure such as elements of the transmission system and key generating capacity. Whether TrustPower is adversely affected by such events will depend on the specific circumstances, how it impacts TrustPower s portfolio of generation schemes and what hedge contracts TrustPower holds at that time. However, by having a geographically dispersed portfolio of generation schemes, TrustPower is not normally significantly impacted if, for example, there is a separation between prices in the North and South Islands. As a retailer of electricity, TrustPower s profitability

36 34 TRUSTPOWER is affected by the prices it pays for purchasing electricity from the wholesale electricity market and the retail prices it charges its customers for that electricity. The amount of electricity sold to customers depends on the size and demand of TrustPower s customer base. Over the long term, the price of electricity will depend, among other things, on the cost of new generation (i.e. new fuel and construction cost). Management of both expected and unexpected price volatility is a focus of TrustPower. TrustPower has entered into a number of electricity hedge contracts and physical supply contracts to reduce the risk from price fluctuations on the electricity spot market. These hedge contracts establish the price at which future specified quantities of electricity are purchased. These contracts, coupled with TrustPower s own generation capacity, mean that in an average year TrustPower should have sufficient capacity to supply all its customers with electricity with little exposure to the spot market. Climate The climate impacts on the price of electricity, demand for electricity from TrustPower s customers, and TrustPower s ability to generate electricity. TrustPower risks having insufficient fuel for its generation and retail needs if there is a lack of inflows to its hydro lakes or periods of low wind which impact on wind farm production. Cold wet weather may push up consumption, but it is cold, dry and calm weather that most dramatically pushes up electricity prices while also reducing TrustPower s own generation output. Electricity prices tend to be lower during warm weather (due to lower demand). Although climatic conditions create unpredictable ups and downs in output, TrustPower has considerable ability to mitigate its exposure to price risk. TrustPower has sophisticated risk management policies and systems in place which aim to ensure that it is not unduly exposed to price risk during periods of lower than average generation output. The key outcomes of this risk management strategy are an optimum level of fixed price retail customers, purchase agreements and hedging contracts with other generators, optimum use of stored water in hydro generation and a grouping of customers around key generation sites. Electricity demand Electricity demand can be affected by a number of factors, including climate, economic conditions and consumer trends. Electricity volumes related to major industrial customers are at risk from plant failure, significant downturn in the operations of these customers due to economic conditions, plant closure due to international relocation or a customer deciding to switch to another electricity supplier. A significant reduction in demand for electricity by TrustPower s customer base may have a material adverse effect on TrustPower s financial performance. Resource consents and other environmental requirements TrustPower must obtain and maintain resource consents in accordance with the Resource Management Act 1991 in respect of each of its generation schemes. There is a risk in any consent process that the relevant authority may decline to grant consent or, upon renewal of an existing consent, impose more onerous conditions on TrustPower. The consent process can also be affected by delays resulting from appeals. A failure to maintain consents for TrustPower s assets on appropriate terms, or to obtain consents at all, may have a material adverse effect on TrustPower s financial performance. A change to existing district, regional or national planning policies or environmental standards or the imposition of new requirements or standards (for example, restrictions on use of water or other natural resources) may have a material adverse effect on TrustPower s financial performance. Failure to comply with consenting conditions could result in operating restrictions being placed upon a scheme and ultimately the loss of a right to generate electricity. TrustPower has environmental monitoring systems in place to assist with management of this risk. Consents tend to be very long term, but TrustPower is continually aware of the need to maintain good relations with other responsible users of the waterways it uses for power generation. The majority of TrustPower s existing hydro consents have been extended for 35 year periods over the last few years. Health, safety and environment TrustPower s operations are subject to numerous health and safety and environmental laws and regulations. These laws and regulations set various standards regulating aspects of health and safety and environmental quality. They also provide for penalties and other liabilities for the violation of such standards. TrustPower could be liable for damages or penalties following actual or potential harm or injury to an individual or individuals or non-compliance with health and safety laws or regulations. TrustPower could also be liable for clean up costs or penalties if its operations resulted in an unauthorised discharge into the environment, environmental damage to any property or if it failed to comply with applicable environmental laws or consents. The imposition of a substantial penalty or liability on TrustPower could have a material adverse effect on TrustPower s financial performance and operations. TrustPower has been accepted as an accredited employer into the Accident Compensation Corporation s partnership programme. Its workplace health and safety procedures will be subject to external audit from time to time as a condition to its participation in the programme. Development of new generation Future growth of TrustPower s generation capabilities is dependent on identifying and successfully implementing economically viable new generation projects. TrustPower has a successful track record in the development of new generation opportunities and it employs experienced staff to carry out this work. TrustPower has a significant number of wind and hydro generation projects at various stages of feasibility assessment. Currently, none of these development opportunities has received Board approval to proceed to construction. Successful execution of these projects is dependent on a number of factors, including obtaining acceptable resource consents in a timely manner and securing sufficient funding at an acceptable cost. TrustPower is exposed to the risk that the cost of any new project may be greater than expected at the time an investment decision is made. This may be caused by factors such as delays in completion of the project or changes in the design and scope of the construction. There is also a risk that a new generation project may not achieve expected performance criteria or TrustPower may not achieve the anticipated benefits of the new project due to operational issues or conditions affecting electricity prices, electricity output or demand for electricity generally. Failure by TrustPower to complete generation projects on time and within budget, or to achieve expected performance criteria upon completion of a project, could lead to loss of market confidence and have a material adverse effect on the financial performance of TrustPower. TrustPower enters into forward foreign exchange contracts where appropriate for equipment and parts sourced from outside New Zealand and fixed price construction contracts, if they are able to be implemented, to help manage this risk. Transmission and distribution TrustPower is reliant on external network providers to deliver electricity to its customers. A failure of any of these networks could, depending on the extent and nature of the failure, impact on TrustPower s ability to provide (and sell) electricity to its customers. Under-investment in the state-owned national transmission grid combined with growth in electricity demand, has meant that the national transmission grid is rapidly reaching capacity. Consequently, there are increasing incidences of transmission constraints, leading to price separation in the wholesale electricity market. Investments to alleviate transmission constraints are now underway although decisions depend on a number of regulatory approvals and may impose new or increased costs on TrustPower s business.

37 TRUSTPOWER 35 General operational risks and catastrophic events The profitability of TrustPower s business is dependent on the efficient operation and maintenance of its generation schemes and retail business systems and processes. A breakdown or failure of a major asset, system or process, labour dispute or industrial accident could, depending on the extent and nature of the failure, impact on TrustPower s ability to generate and sell electricity. Wind technology has developed significantly in the last five years. As a result, it can be subject to operational issues associated with new technology. A significant natural disaster or catastrophic event, such as a major earthquake, volcanic eruption, landslide, fire, flood, explosion, major plant breakdown, pipeline or transmission cable rupture or other disaster could adversely affect or cause failure of part of TrustPower s operations or assets. This could include one or more of TrustPower s generation facilities. For example, the stability of a dam structure could be affected by a major earthquake. A natural disaster or catastrophic event might also affect the high voltage direct current ( HVDC ) link between the South and North Islands causing the loss or disruption for a substantial period of time of the HVDC link or other essential electricity transmission infrastructure. New Zealand is characterised by its geological activity and TrustPower s power schemes are constructed and maintained with this in mind. However, major catastrophic events, could cause significant damage to a generation facility. TrustPower insures against such events for replacement and loss of output through its insurance Subsidiary, TrustPower Insurance Limited. TrustPower does not insure against loss from machinery breakdown due to it having a large number of small generation units (the largest unit accounts for less than 7% of TrustPower s total generation capacity). TrustPower has a detailed 10 year asset management programme with the primary objective of ensuring that generation schemes are appropriately maintained. Government policy and regulation Participants in the New Zealand electricity industry are exposed to risks from new laws or regulations or from changes in policies with respect to the implementation of existing laws. It is impossible to accurately predict the form that any such changes could take but they may involve restructuring of the electricity industry or other actions that would undermine the ongoing profitability of TrustPower, for example, price controls for customers, enforced customer management practices or subsidisation of competitors activities. On 1 April 2009 the Government announced that a Ministerial review of the electricity sector had been launched to address concerns around security of supply, the affordability of electricity, and electricity sector governance. The review is being undertaken by the Electricity Technical Advisory Group and the Ministry of Economic Development. On 12 August 2009, the Government released a discussion paper setting out the review team s preliminary recommendations for improving electricity market performance for public consultation. The discussion paper offered a range of proposed recommendations, including: governance changes, including replacing the Electricity Commission with an Electricity Market Authority; measures to increase retail competition, including allowing electricity distribution companies back into retailing; changes to environmental regulation and policy; removing barriers to new generation, including access to fuel sources; compensation payments to be made to consumers if they face conservation campaigns; and moves to increase competition in wholesale markets, including a reallocation of assets among SOE generator/retailers. The media release for the discussion paper stated that the Government expects to make a final decision on the reform package by the end of 2009, with any legislative changes likely to be enacted by mid The discussion paper and media release can be found on the Ministry of Economic Development s website ( under the Energy & Resources and Electricity tabs. It is not possible to predict the final outcome of the review or the details of the legislation which Government may implement as a result of the review as at the date of this Prospectus. However, TrustPower is broadly supportive of the proposed recommendations made in the discussion paper, and in particular, the retention of the current competitive market structure. Legislative changes implemented by Government could differ from the current proposed recommendations and there is a risk that these changes may be adverse to TrustPower and could have a material adverse effect on TrustPower s operations or its financial performance. Emissions trading scheme (ETS) The stationary energy (electricity and heat production) sector s compliance obligations under the ETS will commence from 1 July Participants will be required to monitor, record and report activities that produce or remove greenhouse gas emissions and surrender to the Government emission units to cover emissions associated with their activities each year. Hydro and wind electricity generation will not be subject to the ETS. As a renewable generator (wind and hydro), the impact of the ETS on the stationary energy sector is expected to be positive for TrustPower. TrustPower will not be required to surrender emission units, although it will receive a competitive advantage should other participants pass on additional costs they incur to purchase emission units. The ETS may be changed in the future or a different climate change scheme could be implemented which would impact on TrustPower s operations or expose TrustPower to increased costs. TrustPower s generation operations could change in the future and those changes could result in some of TrustPower s assets being subject to the ETS, although this is not contemplated at present. The Australian government is proposing to introduce the Carbon Pollution Reduction Scheme, which, if enacted, is likely to affect operators of Australian wind farms broadly in the same manner as the ETS. However, as with the ETS, there is a risk that the proposed scheme may change or a different climate change scheme could be introduced in the future. Australia currently operates a Renewable Energy Target scheme which requires a proportion of electricity to be generated from renewable sources. This provides an additional revenue source for wind farm operators and its continued existence is important for the ongoing financial viability of wind farms in Australia. Competition The retail and wholesale electricity markets in New Zealand are competitive. TrustPower faces the risk of losing retail market share through the competitive actions of other participants or a new entrant to those markets. TrustPower s financial performance could be adversely affected by a significant reduction in its customer base or reduced margins that such competitive pressures may cause. TrustPower seeks to reduce this risk in respect of its retail business by offering discounts for longer term contracts, regularly reviewing and adjusting prices and focussing on offering excellent customer service and community relations. Shareholding A substantial change to the financial situation of a major shareholder or a substantial change in the composition of TrustPower s major shareholders may have an impact on TrustPower s long term financial performance. Such changes cannot be foreseen nor can the impact of the changes. However, the impact could include an inability to contribute capital, restrictions on borrowing capacity or reduced market confidence in TrustPower. Other risks In addition to the risks described above, TrustPower faces the following risks that arise in the normal course of operating its business: potential failure of information technology systems, business continuity planning and data integrity risk; a breakdown in internal control systems or operating procedures; the possibility of key personnel leaving TrustPower and the potential short-term disruption caused by seeking appropriate replacements; or

38 36 TRUSTPOWER the possibility of a dispute that results in litigation that could have a material adverse effect on TrustPower s financial position. Investors should consider these risks and other details of the Offer prior to applying for Senior Bonds. Investors are encouraged to read the entire Prospectus and to obtain advice from their financial adviser if they have any questions. Risks related to Bonds Interest rate risk and taxes Bondholders may sell their Senior Bonds at any time prior to the date on which the Senior Bonds mature or are redeemed (if at all), provided a buyer can be found. The amount received from the sale of Senior Bonds may differ from the amount paid for them. This is because changes in market interest rates after the date of acquisition or market perception of the credit risk associated with the Senior Bonds can affect their value (described further on page 42). Bondholders returns on the Senior Bonds may also be affected by taxes (refer to the information set out under the heading Taxation of returns on pages 38 and 39 of this Prospectus). Further debt or other securities Subject to the financial covenants described on page 27, the negative pledge undertaking described on pages 30 and 31 and the provisions of the Senior Finance Documents, TrustPower may, from time to time, and without the consent of Bondholders, create and issue further bonds or other securities and incur further indebtedness. Depending on their nature, these obligations may rank equally with, behind, or in priority to, the Senior Bonds and may otherwise be issued on such terms as TrustPower may determine. Disposal of assets There are no restrictions under the Trust Documents on TrustPower disposing of its assets (whether to its Subsidiaries which do not guarantee TrustPower s obligations under the Senior Bonds, or to other persons) other than the covenants described on pages 27 and 28 of this Prospectus. Enforcement The Bond Moneys are able to be declared immediately due and payable by the Trustee only if an Event of Default (as described under the heading Events of Default on page 29 of this Prospectus) has occurred and is continuing unremedied. A significant deterioration in the financial position of TrustPower might not necessarily constitute an Event of Default. Unsecured bonds The Trust Documents do not create any security over the assets of TrustPower or any of its Subsidiaries. The Senior Bonds constitute unsecured indebtedness of TrustPower. Neither the Bondholders nor the Trustee have any secured or preferential claim against the assets of TrustPower on a liquidation. Guarantee under Deed of Negative Pledge Pursuant to the Deed of Negative Pledge, the payment obligations of TrustPower under the Senior Bonds are guaranteed on an unsecured basis by the Guarantors (who are all Subsidiaries of TrustPower). The benefit of the Guarantee is held by the Trustee on behalf of all Bondholders. The terms of the Guarantee are described further under the heading Deed of Negative Pledge on pages 30 and 31 of this Prospectus (including the name of each Guarantor as at the date of this Prospectus). TrustPower and the Guarantors (pursuant to the Guarantee) are the only persons legally liable to pay interest on the Senior Bonds and the Principal Amount of the Senior Bonds. No other person, including the Trustee, or any other Subsidiary of TrustPower, guarantees TrustPower s obligations in respect of the Senior Bonds. The claims of the Trustee under the Guarantee will rank equally with the claims of all other Lenders under the Guarantee and other unsecured and unsubordinated creditors of each Guarantor. This will include, for example, amounts owed to the TrustPower Group s lenders under their existing bank facilities. While the Trustee has acceded to the Deed of Negative Pledge as a Lender to obtain the benefit of the Guarantee, a number of provisions of the Deed of Negative Pledge are not applicable to the Trustee, the Bondholders or the Senior Bonds (as described further on page 31 of this Prospectus). The Trustee has no rights in respect of those provisions of the Deed of Negative Pledge. The consent of the Trustee is not required for any amendment of, waiver to, or consent, confirmation or other determination required in respect of those provisions of the Deed of Negative Pledge which are not applicable to the Trustee, the Bondholders or the Senior Bonds. However, TrustPower has provided certain undertakings and covenants in the Trust Documents which are similar to a number of those provisions of the Deed of Negative Pledge (as described in the section entitled Summary of Trust Documents and Deed of Negative Pledge on pages 27 to 31 of this Prospectus). The Trustee will have rights as a Lender under the Deed of Negative Pledge in respect of any amendment of, waiver to, or consent, confirmation or other determination required in respect of the Guarantee provisions of the Deed of Negative Pledge. No early redemption by Bondholders Bondholders have no right to require redemption of the Senior Bonds prior to their Maturity Date, except in the case of an Event of Default. This means that Bondholders have no ability to cash in their investment, except following an Event of Default or by selling their Senior Bonds in the secondary market. Sale of Senior Bonds Bondholders may not be able to recoup their original investment if: the price at which Bondholders are able to sell their Senior Bonds is less than the amount they have paid for them due to interest rate movements or for other reasons; or Bondholders are unable to sell their Senior Bonds at all due to lack of demand or the Senior Bonds cease to be listed on the NZDX. In the absence of a liquid secondary market for each Tranche of Senior Bonds, Bondholders may not be able to sell their Senior Bonds readily or at prices that will enable them to realise a yield comparable to that of similar instruments, if any, within a developed secondary market. Even following the development of a secondary market, and depending on market conditions and other factors, Bondholders seeking to sell relatively small or relatively large amounts of Senior Bonds may not be able to do so at prices comparable to those that may be available to other Bondholders. The price at which Bondholders are able to sell their Senior Bonds may be affected by a deterioration, whether real or perceived, in TrustPower s creditworthiness. The secondary market for the Senior Bonds could also be affected by a number of other factors independent of the creditworthiness of TrustPower. These factors may include the time remaining to the relevant Maturity Date of the Senior Bonds, the outstanding amount of the Tranche of Senior Bonds, the amount of, and demand for, such Senior Bonds being sold in the secondary market from time to time, any legal restrictions limiting demand for the Senior Bonds, the availability of comparable securities, the level, direction and volatility of market interest rates and market conditions generally. Such factors will also affect the market value of the Senior Bonds.

39 TRUSTPOWER 37 Statutory information This section of this Prospectus contains the information specified in Schedule 12 of the Securities Regulations. Names, addresses and other information The issuer of the Senior Bonds is TrustPower Limited, whose registered office is at TrustPower Building, Truman Road, Te Maunga, Mount Maunganui, Tauranga. The Directors of TrustPower are Sir Ronald Powell Carter, Michael James Cooney, Dr Bruce James Harker, Ian Samuel Knowles, Hugh Richmond Lloyd Morrison and Geoffrey Jon Campbell Swier. Marko Bogoievski has been appointed as an alternate director for Mr Morrison. There are no promoters of the Senior Bonds offered pursuant to this Prospectus. The Trustee is Trustees Executors Limited, whose registered office is at Level 5, Maritime Tower, 10 Customhouse Quay, Wellington. Experts and underwriter There are no experts named in this Prospectus. The Offer of Senior Bonds made pursuant to this Prospectus is not underwritten. Terms of offer The Senior Bonds The Senior Bonds offered pursuant to this Prospectus are debt securities and constitute unsecured, unsubordinated fixed rate debt obligations of TrustPower. The Senior Bonds will rank equally and without preference among themselves, and equally with all other unsecured and unsubordinated indebtedness of TrustPower, except indebtedness preferred by law. A brief description of the Senior Bonds is set out in the section entitled Main terms of the Offer on pages 4 and 5 of this Prospectus. The Senior Bonds are offered in two Tranches, Five Year Senior Bonds having a Maturity Date of 15 December 2014 and Seven Year Senior Bonds having a Maturity Date of 15 December TrustPower will pay interest on each Five Year Senior Bond at the fixed Interest Rate of 7.60% per annum and interest on each Seven Year Senior Bond at the fixed Interest Rate of 8.00% per annum. All other terms of the Five Year Senior Bonds and the Seven Year Senior Bonds will be the same. The Principal Amount of each Senior Bond will be payable by TrustPower on the Maturity Date for that Senior Bond. Pursuant to the Deed of Negative Pledge, the payment obligations of TrustPower under the Senior Bonds are guaranteed on an unsecured basis by the Guarantors (who are all Subsidiaries of TrustPower). The benefit of the Guarantee is held by the Trustee on behalf of all Bondholders. The terms of the Guarantee are described further under the heading Deed of Negative Pledge on pages 30 and 31 of this Prospectus (including the name of each Guarantor as at the date of this Prospectus). The Senior Bonds will be entered onto the Register maintained by the Registrar. No certificates of title in respect of the Senior Bonds will be issued to Bondholders. A FASTER statement will be forwarded to Bondholders following allotment of the Senior Bonds. Title to the Senior Bonds passes by transfer and registration. TrustPower and the Registrar will rely on the Register for the purpose of determining entitlements to interest payments on each Interest Payment Date, and for repayment of the Principal Amount of the Senior Bonds when they are redeemed. Trustee The terms and conditions applicable to the Senior Bonds are contained in the Trust Documents. A summary of the principal provisions of the Trust Documents is set out in the section entitled Summary of Trust Documents and Deed of Negative Pledge on pages 27 to 31 of this Prospectus. The Trustee holds on trust for the benefit of Bondholders the right to enforce TrustPower s obligations under the Senior Bonds. The Trustee also holds the benefit of the Guarantee on behalf of Bondholders. The Trustee does not guarantee repayment of the Senior Bonds or the payment of interest on the Senior Bonds. Maximum amount of securities being offered Senior Bonds with an aggregate Principal Amount of up to $125 million, comprising up to $75 million Five Year Senior Bonds and up to $50 million Seven Year Senior Bonds, with the ability to accept total oversubscriptions of up to $50 million, are being offered by TrustPower. Oversubscriptions (if any) accepted for each Tranche of Senior Bonds will be limited to an aggregate amount of $25 million, plus any balance of the $25 million oversubscription facility of the other Tranche of Senior Bonds which is not utilised (at the discretion of TrustPower). The minimum aggregate Principal Amount of each Tranche of Senior Bonds to be issued under this Prospectus is $25 million. If the total application moneys received for a Tranche of Senior Bonds is less than this minimum amount, then no Senior Bonds of that Tranche will be issued under this Prospectus. Issue Price The Issue Price of each Senior Bond is $1.00, being the Principal Amount of each Senior Bond. The Issue Price must be paid in full on application for Senior Bonds under the Offer. Applications The Senior Bonds are offered to New Zealand resident investors. Applications for Senior Bonds will be accepted on a first come, first served basis, subject to Firm Allocations, as described below. All of the Senior Bonds may be reserved for subscription by clients of the Joint Lead Managers or the Co-Manager, institutional investors, Primary Market Participants and other approved financial intermediaries under Firm Allocations. The aggregate number of Senior Bonds so reserved will be determined by the Joint Lead Managers, in consultation with TrustPower, on or before the Opening Date. Applications to subscribe for Senior Bonds must be made on the Application Form contained at the back of this Prospectus. Applicants who have accepted a Firm Allocation from a Primary Market Participant or approved financial intermediary must return the completed Application Form (with payment) to the office of the Primary Market Participant or financial intermediary which has provided that Firm Allocation in time to enable forwarding to the Registrar prior to 5.00pm on the Closing Date (currently 18 December 2009). Application Forms from other applicants must be mailed or delivered (with payment) so that they are received by the Registrar prior to 5.00pm on the Closing Date. The details of the Registrar are as follows: Computershare Investor Services Limited Postal address: Private Bag Auckland 1142 Physical address: Level Hurstmere Road Takapuna North Shore City 0622 Alternatively, completed Application Forms (with payment) may be lodged with the Joint Lead Managers or the Co-Manager (at the addresses set out in the Directory), any Primary Market Participant, the Organising Participant or any other channel approved by NZX, in time to enable forwarding to the Registrar prior to 5.00pm on the Closing Date. TrustPower is not obliged to accept applications which are received by the Registrar after the Closing Date. Applications to subscribe for Five Year Senior Bonds or Seven Year Senior Bonds must be for a minimum Principal Amount of $5,000 each and thereafter in multiples of $1,000 in relation to each Tranche of Senior Bonds subscribed for by an investor. There is no maximum amount of Senior Bonds you may apply for, but applications for less than $5,000 will not be accepted. Applicants must pay for the Senior Bonds applied for by a personal cheque or, if the application is for Senior Bonds of an aggregate Principal Amount of $500,000 or more, by bank cheque or other

40 38 TRUSTPOWER method acceptable to the Joint Lead Managers. Cheques should be in New Zealand dollars drawn on a New Zealand bank and submitted with the completed Application Form. Cheques should be made payable to TrustPower Senior Bond Offer, crossed Not Transferable, and must not be postdated. Applicants who are members of the Austraclear System, or who are able to have payments made on their behalf through the Austraclear System, may settle their applications for Senior Bonds through the Austraclear System with the Registrar. Additional instructions on how to apply for Senior Bonds are set out in the section entitled Application Instructions on page 46 of this Prospectus. TrustPower reserves the right to refuse all or any part of any application without giving a reason. An application cannot be withdrawn or revoked by the applicant once it has been submitted. Any application moneys received in respect of an application which is not accepted by TrustPower (whether because of late receipt, failure to raise the minimum subscription amount in respect of a Tranche of Senior Bonds or otherwise), will be returned (without interest) to the applicant as soon as practicable and, in any event, within five Business Days after the Closing Date. If TrustPower accepts an application in part, the balance of the application moneys (without interest) will be refunded as soon as practicable and, in any event, within five Business Days after the Closing Date. Where any applicant s payment for Senior Bonds is dishonoured, TrustPower may reject the application or cancel any Senior Bonds issued to that applicant. In addition, TrustPower may pursue the defaulting applicant for any damages suffered by TrustPower as a result of the payment being dishonoured. Relationship with listed securities and ranking of securities The Shares and the Subordinated Bonds issued by TrustPower are listed on the NZSX and NZDX respectively as at the date of this Prospectus. As an unsecured, unsubordinated debt obligation of TrustPower, the Senior Bonds will, in a liquidation of TrustPower, rank ahead of the claims of Shareholders of TrustPower and holders of the Subordinated Bonds. The Senior Bonds offered under this Prospectus will rank equally with each other and will also rank equally with all other unsecured and unsubordinated indebtedness of TrustPower, except indebtedness preferred by law. As at the date of the latest statement of financial position contained or referred to in this Prospectus (being 30 September 2009), there were no securities of TrustPower that were secured by a mortgage or charge over any of the assets of the Guaranteeing Group ranking in point of security ahead of, or equally with, the Senior Bonds offered under this Prospectus. Issue expenses The estimated amount of expenses of the Offer is $2.5 million, based on an Offer amount of $125 million and all of the Senior Bonds being reserved for subscription under Firm Allocations. That amount includes brokerage (as referred to below), issue management fees, legal and accounting fees, registry expenses, advertising expenses and expenses in respect of the printing and distribution of this Prospectus. This estimate includes the fees payable to the Joint Lead Managers for acting as joint lead managers of the Offer. TrustPower will pay brokerage of 0.85% for Five Year Senior Bonds and 1.1% for Seven Year Senior Bonds to Primary Market Participants in respect of Senior Bonds issued by TrustPower under valid applications bearing that Primary Market Participant s stamp. Primary Market Participants may also be paid additional brokerage of 0.4% of the aggregate Principal Amount of Senior Bonds allocated pursuant to Firm Allocations. Returns Introduction The information set out below in relation to returns on the Senior Bonds should be read in conjunction with the information set out in the section entitled Risk factors on pages 33 to 36 of this Prospectus. Certain events could reduce or eliminate the returns intended to be derived from holding the Senior Bonds. The returns to Bondholders comprise interest paid on the Senior Bonds and any capital appreciation realised on an early redemption or sale of the Senior Bonds. The Senior Bonds do not benefit from any capital growth in TrustPower and Bondholders will not participate in any dividend, bonus issue, rights issue or any other distribution made in respect of the Shares of TrustPower. Key factors determining returns The key factors that will determine the returns to Bondholders are: the Interest Rate attaching to each Tranche of the Senior Bonds; TrustPower s financial condition and financial performance; the performance by TrustPower of its obligations as issuer of the Senior Bonds, including the payment of interest on the Interest Payment Dates; each Guarantor s performance of its obligations as a guarantor of the obligations of TrustPower as the issuer of the Senior Bonds; the price of the Senior Bonds if a Bondholder chooses to sell their Senior Bonds on the secondary market; early redemption of the Senior Bonds as a result of the occurrence of an Event of Default or at TrustPower s election (refer to the description of TrustPower s right to redeem each Tranche of the Senior Bonds or all Senior Bonds prior to their Maturity Date under the heading Early redemption on page 41 of this Prospectus); each Bondholder s individual circumstances for tax purposes; and the other risk factors described in the section entitled Risk factors on pages 33 to 36 of this Prospectus. No amount of returns promised It is not possible to quantify as at the date of this Prospectus the exact amount of returns Bondholders will receive. Therefore, no amount of returns on the Senior Bonds is promised by TrustPower. Taxation of returns Your returns may be affected by taxes. The Offer is made only to New Zealand residents. Therefore, the tax information provided below is limited in application to New Zealand residents. Should any Bondholder become non-resident, or a non-resident acquire any Senior Bonds, that Bondholder should seek their own specific advice. The statements below are based on applicable tax legislation current at the date of this Prospectus. All references to taxation in this Prospectus are of a general nature only under current legislation, and are not (and should not be construed as) legal or tax advice to any investor in Senior Bonds. Investors should consult their own taxation or other financial adviser concerning the taxation implications, in their particular circumstances, of owning and/or disposing of Senior Bonds. Resident withholding tax ( RWT ) will be deducted by TrustPower from interest paid to or credited to Bondholders unless a Bondholder provides TrustPower with a valid certificate of exemption from RWT or evidence that they are not otherwise liable for RWT and Trustpower is otherwise satisfied that no deduction on account of RWT is required. Bondholders should provide their IRD numbers and copies of certificates of exemption (if applicable) as stipulated in the Application Form. RWT will be deducted at the rates applicable at the time interest is paid. Where a Bondholder fails to supply its IRD number to TrustPower, RWT will be deducted at the default rate of 38%. However, if an IRD number is supplied, then the following RWT rates will apply (as appropriate): 19.5%, where the Bondholder is an individual or a trustee of a trust who chooses to apply the 19.5% rate. The 19.5% rate will also apply to individual or trustee Bondholders who fail to notify TrustPower of any chosen RWT rate; 33%, where: - the Bondholder is an individual or a trustee of a trust who chooses to apply the 33% rate; or - the Bondholder is a company (other than a corporate trustee) that chooses to apply the 33% rate. The 33% rate will also apply to

41 TRUSTPOWER 39 such corporate Bondholders who fail to notify TrustPower of any chosen RWT Rate; 38%, where: - the Bondholder is an individual or a trustee of a trust who chooses to apply the 38% rate; or - the Bondholder is a company (other than a corporate trustee) that chooses to apply the 38% rate. Bondholders who are companies (other than corporate trustees) must notify TrustPower that they are a company. Further legislative change is expected to align the RWT rates with the personal tax rates, however, the proposed RWT rates are not likely to apply until 1 April Joint Bondholders will be taxed at the highest applicable rate described above as if they were one person. A tax credit for RWT deducted will be available against any tax liability of the Bondholder. Should any Bondholder become non-resident, or a non-resident acquire any Senior Bonds, the investor should immediately notify TrustPower. TrustPower will deduct or withhold any taxes or levies required by law to be deducted or withheld from any payment made to any non-resident Bondholder. TrustPower will elect to register the Senior Bonds for approved issuer levy purposes. Unless otherwise agreed, TrustPower will, where it is lawfully able, deduct approved issuer levy (currently 2% of amounts treated as interest) from payments made or credited to Bondholders who are non-resident. TrustPower will not compensate or gross up for any taxes deducted or withheld on payments under the Senior Bonds. In addition, if in relation to any Senior Bond, TrustPower becomes liable to make any payment of, or on account of, tax payable by the relevant Bondholder, TrustPower will be indemnified by that Bondholder in respect of any such liability, and any moneys paid by TrustPower in respect of any such tax liability may be recovered from that Bondholder as a debt due to TrustPower and may be withheld from future payments to that Bondholder. For many taxpayers, withholding tax will not be the final tax liability (see below). Each Bondholder should include income from the Senior Bonds in their tax return and pay such further tax as is necessary. The Senior Bonds are financial arrangements subject to the financial arrangements rules. Cash-basis Bondholders will be taxable on interest received on the Senior Bonds in the income year in which the interest is paid or credited. RWT deducted from the interest by TrustPower will be allowed as a credit against tax payable by the Bondholder on the interest. Broadly, a cash-basis holder is a person who, in an income year: derives income or expenditure under financial arrangements of $100,000 or less; or has entered into financial arrangements the aggregate absolute value of which is $1 million or less, provided that, in each case, in the particular income year, the difference between income calculated by applying a prescribed spreading method (see below) and income calculated on a cash basis is not greater than $40,000. For Bondholders who are not cash-basis holders, income in respect of the Senior Bonds must be spread over the term of the Senior Bonds using a spreading method prescribed in the financial arrangements rules (typically, on a yield to maturity basis). RWT deducted by TrustPower from interest on the Senior Bonds will be allowed as a credit against tax payable on the income recognised under the financial arrangements rules. Both cash-basis and non cash-basis Bondholders will be required to perform a base price adjustment in the income year in which the Senior Bonds mature or are redeemed or the Bondholder transfers their Senior Bonds. The base price adjustment is a wash-up calculation which brings to account any income which has not been accounted for over the term of the Senior Bonds. Interest TrustPower will pay interest on each Five Year Senior Bond at the fixed Interest Rate of 7.60% per annum and interest on each Seven Year Senior Bond at the fixed Interest Rate of 8.00% per annum. The Interest Rate applicable to each Senior Bond will not change after that Senior Bond has been issued (irrespective of any circumstance which may arise, including a deterioration in the financial condition of TrustPower). However, if any amount payable in respect of a Senior Bond is not paid on its due date, interest will accrue on the unpaid amount at the Interest Rate plus 2% per annum. Interest will be payable on the Senior Bonds quarterly in arrears on each Interest Payment Date, being 15 March, 15 June, 15 September and 15 December of each year, until and including the relevant Maturity Date. The First Interest Payment Date for the Senior Bonds is 15 March If an Interest Payment Date falls on a day that is not a Business Day, the relevant payment will be made on the next day which is a Business Day, without adjustment, interest or further payment as a result thereof. Interest payable on the First Interest Payment Date will accrue from (and include) the date on which a Bondholder s application moneys for the Senior Bonds have been banked until, but excluding, the First Interest Payment Date. Interest will be paid in equal quarterly instalments on each Interest Payment Date, except in respect of the first interest period or a broken period upon redemption of the Senior Bonds. Interest payable on the First Interest Payment Date will be paid to the first registered holder of the Senior Bonds (regardless of any transfer of the Senior Bonds prior to the First Interest Payment Date). On Interest Payment Dates, other than the First Interest Payment Date, interest will be paid to the person registered as the Bondholder as at the Record Date immediately preceding the relevant Interest Payment Date. Maturity Date The Principal Amount of each Senior Bond will be payable by TrustPower on the Maturity Date for that Senior Bond. The Maturity Date for Five Year Senior Bonds is 15 December 2014 and the Maturity Date for Seven Year Senior Bonds is 15 December Redemption TrustPower may redeem Senior Bonds prior to their Maturity Date as described under the heading Early redemption on page 28 of this Prospectus. Bondholders have no right to require TrustPower to redeem their Senior Bonds prior to their Maturity Date, except in the case of an Event of Default (described further under the heading Events of Default on page 29 of this Prospectus) occurs. This means that Bondholders have no ability to cash in their investment, except following an Event of Default or by selling their Senior Bonds in the secondary market. If the Senior Bonds are repaid prior to their Maturity Date, the returns the Bondholders will receive will be different from the returns they would have received if the Senior Bonds are repaid on their Maturity Date. If the Senior Bonds are repaid prior to their Maturity Date, interest on each Senior Bond that has accrued will be paid to the relevant Bondholder. Person legally liable to pay returns TrustPower is legally liable to pay interest on the Senior Bonds and the Principal Amount of the Senior Bonds. The payment obligations of TrustPower in respect of the Senior Bonds are guaranteed by the Guarantors pursuant to the Guarantee. Guarantors As at the date of this Prospectus, the Guarantors are: Cobb Power Limited Snowtown Wind Farm Pty Ltd Tararua Wind Power Limited TrustPower Australia Holdings Pty Ltd TrustPower Australia Holdings Pty Ltd (as general partner of TrustPower Australia Financing Partnership) TrustPower Australia (New Zealand) Limited No other person, including the Trustee, the Joint Lead Managers, the Co-Manager or any other Subsidiaries of TrustPower, guarantees TrustPower s obligations in respect of the Senior Bonds as at the date of this Prospectus.

42 40 TRUSTPOWER After the date of this Prospectus, further Subsidiaries of TrustPower may become Guarantors and existing Guarantors may be released from their obligations under the Guarantee in accordance with the terms of the Deed of Negative Pledge. Additional information in respect of the Guarantee is set out under the heading Deed of Negative Pledge on pages 30 and 31 of this Prospectus. Provisions of Trust Deed and other restrictions on Guaranteeing Group Trust Documents Each Series of bonds forming part of the Bond Programme will be issued pursuant to the Master Trust Deed dated 30 October 2009 between TrustPower and the Trustee and a series supplement to the Master Trust Deed for that Series of bonds. The Series Supplement for the Senior Bonds offered under this Prospectus between TrustPower and the Trustee is dated 26 November A summary of the principal provisions of the Trust Documents is set out in the section of this Prospectus entitled Summary of Trust Documents and Deed of Negative Pledge on pages 27 to 31. Limitations on mortgages or charges and ratio of liabilities to assets The Senior Bonds constitute unsecured indebtedness of TrustPower. Accordingly, the Trust Documents do not contain any terms that impose limitations relating to the creation of mortgages or charges ranking in point of security ahead of, or equally with, any mortgage or charge securing the Senior Bonds. However, the Series Supplement imposes certain restrictions on the ability of TrustPower to grant security over its assets (for further information refer to the information provided under the heading Negative pledge undertaking in Series Supplement in the section of this Prospectus entitled Summary of Trust Documents and Deed of Negative Pledge on pages 27 to 31). Pursuant to the Series Supplement, TrustPower covenants in favour of the Trustee, on behalf of Bondholders that, amongst other things, on each Reporting Date, the ratio of Net Debt of the Consolidated Group to Total Tangible Assets of the Consolidated Group will not exceed 50%. Duties of the Trustee Brief particulars of the duties stated by the Trust Documents to be those of the Trustee are set out on page 28 under the heading Trustee s powers and duties. Borrowing restrictions Pursuant to banking facilities which TrustPower has with ANZ National Bank Limited, Australia and New Zealand Banking Group Limited, Bank of New Zealand, Commonwealth Bank of Australia, Commonwealth Bank of Australia, New Zealand Branch, National Australia Bank Limited, RBS (New Zealand) Limited and Westpac Banking Corporation and the Deed of Negative Pledge, TrustPower and the Guarantors have each agreed that they will not create or permit to exist any security interest over their assets (except in very limited circumstances). This covenant is substantively the same as the negative pledge covenant given under the Series Supplement, as described under the heading Negative pledge covenant in Series Supplement on page 30 of this Prospectus. TrustPower has also given various financial undertakings in relation to those banking facilities which restrict the ability of the Guaranteeing Group to borrow, namely that: the Shareholders Funds of the Consolidated Group will at no time be less than $700 million; the Shareholders Funds of the Consolidated Group will at no time be less than 50% of its Total Tangible Assets; EBITDA of the Consolidated Group will not on agreed reporting dates be less than three times the Senior Interest Expense or 2.25 times Interest Expense of the Consolidated Group; Shareholders Funds of the Consolidated Group less its Contingent Liabilities will at no time be less than 35% of Total Tangible Assets of the Consolidated Group; Total Tangible Assets of the Guaranteeing Group will at no time be less than 90% of the Total Tangible Assets of the Consolidated Group; on each Reporting Date, EBITDA of the Guaranteeing Group will not be less than 90% of EBITDA of the Consolidated Group. Capitalised terms used above have the meaning as set out below or in the Glossary on pages 44 and 45 of this Prospectus: Contingent Liabilities means liabilities of the Consolidated Group which in accordance with NZ GAAP should be classified as contingent liabilities in the financial statements or in the notes thereto. Group means the Consolidated Group or the Guaranteeing Group (as the case may be). Interest Expense means at any date, any amount equal to all interest and other financing costs incurred in respect of a Group, calculated on a consolidated basis in accordance with NZ GAAP, for the 12 months ending on that date, including (without limitation): - the amount of all discounts and similar allowances on the issue or disposal of debt instruments; - all finance charges under leases, and hire purchase agreements of a financing nature; - the amount of all dividends paid or payable (other than dividends the payment of which are solely at the discretion of TrustPower) on Redeemable Shares issued by any member of the Group; - all realised gains and losses resulting from foreign currency borrowings and financing transactions and Risk Management Products; and - all other expenses and amounts that are required by NZ GAAP to be treated as interest or financing costs, but not including: - interest and financing costs on moneys borrowed or raised to acquire, develop or improve fixed assets, to the extent that they have been capitalised in the accounts of the Consolidated Group; or - any interest the payment of which has been and continues to be suspended; or - unrealised gains and losses resulting from foreign currency borrowings, financing transactions and Risk Management Products; or - mark to market adjustment of financial instruments (including electricity hedges) required by NZ GAAP. Redeemable Shares means: - shares which are redeemable in cash, or by the issue of other redeemable shares, either compulsorily, or at the option of the holder or issuer of such shares; and - units in any trust which are analogous in nature to such shares, if that unit trust is a member of a Group, or if a member of a Group is responsible for the redemption of those units. Senior Interest Expense means Interest Expense of the Consolidated Group but excluding interest on Subordinated Debt. Shareholders Funds means Total Tangible Assets less Total Liabilities. Subordinated Debt means, at any date, a liability (whether actual or contingent) which is on a winding up of a member of a Group either to be deferred in point of payment to all other liabilities (not being liabilities which are similarly deferred) whether secured or unsecured, present or future, of that company ( Preferred Liabilities ) or in respect of which any distribution to the creditor on account thereof will be subject to an express trust to account to all of the creditors to whom Preferred Liabilities are owed, and including, without limitation, the Subordinated Bonds. Total Liabilities means at any date, the aggregate amount of all liabilities (but excluding Contingent Liabilities and deferred tax liability resulting from asset revaluations) of the Consolidated Group which would be disclosed by a Statement of Financial Position if one were prepared as at that date after deducting the aggregate principal amount outstanding in respect of Subordinated Debt and Redeemable Shares. Total Tangible Assets means at any date in relation to a Group, the aggregate amount on a consolidated basis of all assets of the relevant Group which would be disclosed by a Statement of Financial Position of such Group if one was prepared as at that date, including future asset

43 TRUSTPOWER 41 revaluations of generation assets, land and buildings, if such revaluations, in addition to complying with NZ GAAP, are conducted by an independent, qualified valuer and excluding Intangible Assets. Trustee s statement The statement required to be made by the Trustee pursuant to clause 9(3) of Schedule 12 of the Securities Regulations is set out on page 32 of this Prospectus. Consequences of insolvency Bondholders will not be liable to pay any money to TrustPower or any other person in respect of the Senior Bonds as a result of the insolvency of TrustPower. However, in the event of the insolvency of TrustPower, there is a risk that investors would not recover in full the amount of their investment or the returns referred to under the heading Introduction on page 38 of this Prospectus. It is therefore foreseeable in those circumstances that Bondholders would receive less than the amount they paid for their investment in Senior Bonds. The Senior Bonds are unsecured, unsubordinated debt obligations of TrustPower. In a liquidation of TrustPower, Bondholders rights to payment of any amounts owing under the Senior Bonds will rank after the claims of: persons to whom preferential payments must be made (including creditors of TrustPower preferred by law); and secured creditors (if any). Bondholders rights to payment of any amounts owing under the Senior Bonds will rank equally with the claims of all other unsecured and unsubordinated creditors of TrustPower (after payment of any amounts due to the Trustee pursuant to the Trust Documents). This will include, for example, bank lenders who have provided funding to TrustPower on an unsecured and unsubordinated basis and most trade creditors of TrustPower. For the avoidance of doubt, in a liquidation of TrustPower, the claims of Bondholders will rank ahead of claims of the holders of TrustPower s Subordinated Bonds and Shareholders of TrustPower. Alteration of securities Terms of Offer The terms of the Offer and the terms and conditions on which investors may apply for and acquire the Senior Bonds may be altered by an amendment to this Prospectus and, if required, the Trust Documents. Details of any amendment to the Prospectus and the Trust Documents must be filed with the Companies Office. Amendments to the Trust Documents The terms and conditions of the Trust Documents in relation to each Class may be altered with the approval of Bondholders of that Class by an Extraordinary Resolution at a meeting of Bondholders of that Class, and, in limited circumstances, with the approval only of the Trustee and TrustPower. A description of the requirements for an Extraordinary Resolution is set out on page 29 of this Prospectus under the heading Meetings. The limited circumstances in which the Trustee may approve amendments to the Trust Documents without Bondholder approval are described under the heading Amendments to Trust Documents on pages 29 and 30 of this Prospectus. Any amendment to the Trust Documents will be binding on all Bondholders and will only be effective if it is in writing and signed by TrustPower and the Trustee. Early redemption TrustPower may elect to redeem all of the Five Year Senior Bonds or all of the Seven Year Senior Bonds (or all of the Senior Bonds on issue) for cash by giving five Business Days notice to each Bondholder for that Tranche of the date (being any Business Day so long as it is not less than 25 Business Days before the Maturity Date for that Tranche of Senior Bonds) on which TrustPower will redeem the Senior Bonds. On such early redemption of Senior Bonds by TrustPower, TrustPower will redeem each Senior Bond in the relevant Tranche by paying the Early Redemption Amount (set out under the heading Early redemption on page 28 of this Prospectus or in the Glossary on page 44 of this Prospectus). Amendments to Deed of Negative Pledge The provisions of the Deed of Negative Pledge which are applicable to the Trustee, the Bondholders and the Senior Bonds may be amended only if each member of the Guaranteeing Group and a Majority of Lenders at that time agree in writing. Early termination Maturity Date The Principal Amount of each Senior Bond is payable by TrustPower on the relevant Maturity Date. However, TrustPower may redeem Senior Bonds before the Maturity Date on the basis described above under the heading Early redemption. Redemption by Bondholders Bondholders have no right to require TrustPower to redeem their Senior Bonds prior to their Maturity Date, except in the case of an Event of Default. This means that Bondholders have no ability to cash in their investment, except following an Event of Default or by selling their Senior Bonds in the secondary market. Events of Default Upon the occurrence of any Event of Default, the Trustee may in its discretion, and it must, upon being directed to do so by an Extraordinary Resolution of Bondholders, declare the Bond Moneys to be immediately due and payable. However, none of the events specified in the Trust Documents as an Event of Default will constitute an Event of Default, and the Bond Moneys will not become immediately due and payable, unless the Event of Default is continuing unremedied and the Trustee has given a notice to TrustPower declaring such event to be an Event of Default and the Bond Moneys to be immediately due and payable. The Events of Default applicable to the Senior Bonds are listed under the heading Events of Default on page 29 of this Prospectus. Right to sell securities Bondholders are entitled to sell or transfer their Senior Bonds at any time subject to the terms of the Trust Documents and applicable securities laws and regulations. Senior Bonds may be transferred using a transfer document in any commonly used form acceptable to the Registrar or by means of the FASTER system (or its successor) operated by NZX. It is intended that each Tranche of the Senior Bonds will be quoted on the NZDX as from 23 December Application has been made to NZX for permission to list the Senior Bonds and all the requirements of NZX relating thereto that can be complied with on or before the date of this Prospectus have been duly complied with. However, NZX accepts no responsibility for any statement in this Prospectus. As at the date of this Prospectus, there is no established secondary market for the Senior Bonds. On the basis that permission is expected to be granted to list the Senior Bonds on the NZDX, TrustPower considers that a secondary market for the Senior Bonds will develop following completion of the Offer. However, TrustPower gives no assurance as to the existence or liquidity of such secondary market. If a Bondholder wishes to sell Senior Bonds on the NZDX, they should contact their usual Primary Market Participant. Applicants should not attempt to sell Senior Bonds until they know whether, and how many, Senior Bonds have been allotted to them. None of TrustPower, the Joint Lead Managers, the Co-Manager, the Trustee, nor any of their respective directors or employees, nor any other person, accepts any liability or responsibility should any applicant for Senior Bonds attempt to sell or otherwise deal with any Senior Bonds before receiving a FASTER statement recording the number of Senior Bonds (if any) allotted to them. TrustPower may refuse to register a transfer if the transfer would result in the transferee holding Senior Bonds with an aggregate Principal Amount of less than $5,000. TrustPower may also refuse to register a transfer if it has a lien on the Senior Bonds or the transferor has failed to produce such evidence as TrustPower reasonably requires to establish the transferor s right to transfer the relevant Senior Bonds. No charges are payable to or by TrustPower on any sale of Senior Bonds. However, brokerage

44 42 TRUSTPOWER at applicable rates is likely to be payable by a Bondholder on any transfer of the Bondholder s Senior Bonds effected through a Primary Market Participant. The amount a Bondholder receives from a sale of Senior Bonds may differ from the amount paid for them. This may be because changes in market interest rates after the date of purchase affect the market price of the Senior Bonds. For instance, if market interest rates rise (fall), the market price of the Senior Bonds can fall (rise). The proximity of the selling date to the next Interest Payment Date can also affect the market price of the Senior Bonds. The price at which Bondholders are able to sell their Senior Bonds may also be affected by a deterioration, real or perceived, in TrustPower s creditworthiness, a lack of persons wishing to buy Senior Bonds, or the lack of an established secondary market or demand for the Senior Bonds. Additional factors which may affect the secondary market for the Senior Bonds are described under the heading Sale of Senior Bonds on page 36 of this Prospectus. TrustPower will not compensate Bondholders for any loss they incur if they choose to sell Senior Bonds. Other terms of offer and securities All of the terms of the Offer and the Senior Bonds being offered are set out in this Prospectus except those: implied by law; or which are set out in a document that has been registered with a public official, is available for public inspection, and is referred to in this Prospectus. Information available under issuer s disclosure obligations TrustPower, as a listed issuer whose Shares and Subordinated Bonds are quoted on NZSX and NZDX respectively, is subject to the continuous disclosure obligations of the Listing Rules (which are continuous disclosure provisions for the purposes of section 19D of the Securities Markets Act 1988). As such, TrustPower is required to immediately notify NZX of any information DATE OF ANNOUNCEMENT DESCRIPTION OF ANNOUNCEMENT FURTHER INFORMATION 25 November 2009 TrustPower releases a copy of its 2009 interim report 18 November 2009 TrustPower announces it is considering making an offer of Senior Bonds to the public 4 November 2009 TrustPower releases a copy of its November 2009 investor presentation in respect of its unaudited results for the six months ended 30 September 2009 (and that includes a statement that a Senior Bond issue is under consideration) 30 October 2009 TrustPower announces its unaudited results for the six months ended 30 September September 2009 TrustPower announces that it does not intend to proceed with the proposed 48 MW Myponga wind farm in South Australia 30 July 2009 TrustPower releases a copy of the script of the chairman s address to its 2009 annual Shareholders meeting 30 July 2009 TrustPower announces its first quarter operating results for the three months ended 30 June 2009 and TrustPower s operating statistics for that quarter (together with prior period comparatives) 30 July 2009 TrustPower releases a copy of the presentation given to Shareholders at its 2009 annual Shareholders meeting 25 June 2009 TrustPower releases a copy of its 2009 annual report 22 May 2009 TrustPower announces that Keith Tempest intends to resign as chief executive officer as from late May 2009 TrustPower releases a copy of its May 2009 investor presentation in respect of its results for the financial year ended 31 March May 2009 TrustPower announces that it has provided an amended copy of its results for the financial year ended 31 March May 2009 TrustPower announces its results for the financial year ended 31 March 2009 The interim report includes the unaudited interim financial statements for the TrustPower Group for the six months ended 30 September 2009 Details of the Offer of Senior Bonds are included in this Prospectus N/A The announcement includes the unaudited interim financial statements for the TrustPower Group for the six months ended 30 September 2009 N/A N/A N/A N/A Updated financial information for the TrustPower Group is included in the unaudited interim results for the six months ended 30 September 2009 Refer to the updated information on page 13 of this Prospectus A more recent investor presentation was issued by TrustPower to NZX on 4 November 2009 Updated financial information for the TrustPower Group is included in the unaudited interim results for the six months ended 30 September 2009 Updated financial information for the TrustPower Group is included in the unaudited interim results for the six months ended 30 September 2009

45 TRUSTPOWER 43 concerning TrustPower of which it is or becomes aware and which a reasonable person would expect to have a material effect on the price of the listed securities, subject to certain exceptions. Copies of announcements made by TrustPower to NZX are available on NZX s website ( under the NZSX code TPW. You are encouraged to monitor TrustPower s announcements through NZX s website. The table opposite sets out particulars of the information material to the Offer that has been notified by TrustPower to NZX prior to registration of this Prospectus in accordance with its disclosure obligations under the Listing Rules. All of the announcements opposite have been filed with NZX and the Companies Office of the Ministry of Economic Development. The announcements are also available on TrustPower s website ( Financial statements Audited consolidated financial statements for the Guaranteeing Group for the financial year ended 31 March 2009 and that comply with the Financial Reporting Act 1993 were registered at the Companies Office on 27 November 2009, and notified by TrustPower to NZX on 27 November These financial statements are available on NZX s website ( under the NZSX code TPW and are also available in the manner described below under the heading Access to information and statements. Additional interim financial statements Notification to NZX Unaudited interim consolidated financial statements for the Guaranteeing Group prepared in accordance with NZ IAS 34 for the six months ended 30 September 2009 were notified by TrustPower to NZX on 27 November These financial statements are available on NZX s website ( under the NZSX code TPW and are also available in the manner described below under the heading Access to information and statements. Material changes The TrustPower Group uses interest rate derivatives to manage its exposure to interest rate risk. Amongst other things, the fair value of interest rate derivatives is affected by movements in the underlying yield curve. There has been a significant movement in the yield curve since 31 March As a consequence, net interest rate derivative liabilities as shown in the statement of financial position for the Guaranteeing Group as at 30 September 2009 have reduced to $5.0 million from $17.0 million as at 31 March The fair value gain on financial instruments shown in the consolidated income statement has largely arisen due to this movement. There were no other material changes in matters contained in the unaudited interim consolidated financial statements for the Guaranteeing Group for the six months ended 30 September 2009 from the matters contained in the audited consolidated financial statements for the Guaranteeing Group for the financial year ended 31 March Related party transactions Details of the related party transactions under generally accepted accounting practice entered into or performed by the Guaranteeing Group in the six months ended 30 September 2009 are set out in the notes to the unaudited interim financial statements for the Guaranteeing Group for such period. None of these related party transactions are considered to be material to the Guaranteeing Group. Access to information and statements Additional information about TrustPower and the Guarantors is contained or referred to in other sections of this Prospectus, in the audited consolidated financial statements for the Guaranteeing Group for the financial year ended 31 March 2009, in the unaudited interim consolidated financial statements for the Guaranteeing Group for the six months ended 30 September 2009 and in the other documents lodged with NZX by TrustPower under the Listing Rules. Copies of the announcements referred to above under the heading Information available under issuer s disclosure obligations, the audited consolidated financial statements for the Guaranteeing Group and the unaudited interim consolidated financial statements for the Guaranteeing Group referred to above are available on request, free of charge, from TrustPower. To obtain this information, a request in writing should be made to TrustPower (Attention: Chief Financial Officer) at the address specified in the Directory. Copies of those documents are also filed on a public register at the Companies Office of the Ministry of Economic Development and are available for public inspection (including at Those documents and other documents of, or relating to, TrustPower are also available on TrustPower s website ( Other material matters There are no material matters relating to the Offer of Senior Bonds other than those set out in this Prospectus, in the NZX announcements referred to on page 42, in the audited consolidated financial statements for the Guaranteeing Group for the financial year ended 31 March 2009 or the unaudited interim consolidated financial statements for the Guaranteeing Group for the six months ended 30 September 2009, and in contracts entered into in the ordinary course of business of any member of the Guaranteeing Group. Directors statement The Directors of TrustPower, after due enquiry by them, are of the opinion that TrustPower is in compliance with the requirements of the continuous disclosure provisions that apply to it. This Prospectus has been signed by (or by a duly authorised agent of) each of the Directors of TrustPower Limited Sir Ronald Powell Carter Michael James Cooney Dr Bruce James Harker Ian Samuel Knowles Hugh Richmond Lloyd Morrison Geoffrey Jon Campbell Swier

46 44 TRUSTPOWER Glossary In this Prospectus, unless the context requires otherwise, the terms set out below have the following meanings: Application Form the application form attached to this Prospectus Board the board of Directors of TrustPower Bondholder a person whose name is entered in the Register as a holder of a Senior Bond Bond Moneys in respect of a Senior Bond, means the Principal Amount of that Senior Bond, together with all accrued but unpaid interest and any other amount due and payable in respect of that Senior Bond Bond Programme the bond programme under which TrustPower may issue bonds (including the Senior Bonds) from time to time pursuant to the Master Trust Deed Borrowed Money any indebtedness for, or in respect of, money borrowed or raised (whether or not for a cash consideration) by whatever means (including acceptances and deposits) or for the deferred purchase price of assets and services (other than assets or services supplied in the ordinary course of business on normal trade terms) Business Day a day on which NZX is open for trading Class a Series of bonds, or any two or more Series of bonds which in the reasonable opinion of TrustPower (in consultation with the Trustee if in relation to a retail Series) at any particular time, for any particular purpose, constitutes a separate class of bonds Closing Date 18 December 2009, or such other date as TrustPower may determine Consolidated Group TrustPower and its Subsidiaries (also referred to as the TrustPower Group ) Co-Manager Bank of New Zealand Core Businesses the business of generation, marketing, trading and retailing of energy and related products and services in New Zealand and generation, marketing, trading and retailing of electricity and related products and services in Australia Deed of Negative Pledge the negative pledge deed dated 28 April 2005 between TrustPower, certain guaranteeing subsidiaries and Lenders as named therein (as amended and restated from time to time) Directors directors of TrustPower Directory the directory set out in the section entitled Directory on page 49 of this Prospectus Early Redemption Amount in respect of each Senior Bond, the greater of: an amount equal to the Principal Amount (less all withholding tax and other withholdings or deductions required to be made); and the average price, weighted by volume, of all trades of Senior Bonds of that Tranche through the NZDX over the 10 Business Days up to the fifth Business Day before the relevant early redemption date (or, if the Senior Bonds of that Tranche have not traded on the NZDX for at least half of such 10 Business Day period, the average price of the Senior Bonds for that period will be determined by an independent adviser appointed in accordance with the Master Trust Deed) net of accrued interest (if any), together with all accrued but unpaid interest in respect of that Senior Bond and any other amount due and payable in respect of that Senior Bond EBITDA at any date in relation to the Consolidated Group or the Guaranteeing Group, gross revenue in the relevant period (excluding equity accounted gains, extraordinary gains or losses, capital gains or losses and unrealised gains or losses resulting from foreign currency borrowings and financing transactions, Risk Management Products and mark to market adjustment of financial instruments (including electricity hedges) required by NZ GAAP) less all operating expenses for the Consolidated Group or the Guaranteeing Group (as the case may be) for that period (excluding from operating expenses depreciation, amortisation, Interest Expense (refer to the description of this term on page 40 of this Prospectus), other non-cash charges and income taxes) EBITDAF earnings before interest, tax, depreciation, amortisation and fair value movements in financial instruments ETS the New Zealand emissions trading scheme Event of Default in relation to the Senior Bonds, means each event set out in clause 15.1 of the Master Trust Deed and clause 6 of the Series Supplement, as summarised under the heading Events of Default on page 29 of this Prospectus Extraordinary Resolution in relations to Bondholders, a resolution passed at a duly convened meeting of the Bondholders by a majority consisting of not less than 75% of the persons voting at such meeting upon a show of hands or, if a poll is duly demanded, by a majority consisting of not less than 75% of the votes given on such poll FASTER the Fully Automated Screen Trading and Electronic Registration System operated by NZX Firm Allocations Senior Bonds reserved for subscription by clients of the Joint Lead Managers or the Co-Manager, institutional investors, Primary Market Participants and other approved financial intermediaries, as determined by the Joint Lead Managers, in consultation with TrustPower, on or before the Opening Date First Interest Payment Date 15 March 2010 Five Year Interest Rate 7.60% per annum Five Year Senior Bond a Senior Bond with a Maturity Date of 15 December 2014 Franchise Amount in respect of a Lender and at any particular time, the aggregate of the following: all principal amounts of Borrowed Money outstanding to that Lender by any member of the Guaranteeing Group at that time pursuant to the facility agreements set out in the schedule to the Deed of Negative Pledge; and all amounts of Borrowed Money which are not outstanding to that Lender but which the Lender at that time is obliged to lend any member of the Guaranteeing Group pursuant to such facility agreements Guarantee the guarantee in clause 2 of the Deed of Negative Pledge pursuant to which the Guarantors have agreed to guarantee certain indebtedness to each Lender and the ancillary provision in clause 3 of the Deed of Negative Pledge relating to new Guarantors and the release of Guarantors Guaranteeing Group TrustPower and the Guarantors Guarantor each Subsidiary of TrustPower which is from time to time party to the Deed of Negative Pledge (but excluding any such Subsidiary released from its liabilities and obligations as a Guarantor pursuant to clause 3.2 of the Deed of Negative Pledge). The Guarantors as at the date of this Prospectus are listed on page 30 of this Prospectus Intangible Assets assets which according to NZ GAAP should be classified as intangible assets Interest Payment Date 15 March, 15 June, 15 September and 15 December in each year until and including the relevant Maturity Date of each Tranche of Senior Bonds, with the First Interest Payment Date on 15 March 2010 (or if that day is not a Business Day, the next Business Day) Interest Rate the Five Year Interest Rate or the Seven Year Interest Rate, as the case may be Issue Price $1.00 per Senior Bond, being the Principal Amount of each Senior Bond Joint Lead Managers ANZ, part of ANZ National Bank Limited and Craigs Investment Partners Limited Lender each person from time to time named in and holding an accession certificate under the Deed of Negative Pledge

47 TRUSTPOWER 45 Listing Rules the NZSX and NZDX listing rules as amended from time to time Majority of Lenders Lenders the aggregate of whose Franchise Amounts exceed 60% of the total Franchise Amount for all such Lenders Master Trust Deed the master trust deed between TrustPower and the Trustee dated 30 October 2009 pursuant to which certain bonds may be issued, and as amended, supplemented or replaced from time to time Maturity Date 15 December 2014 in respect of Five Year Senior Bonds and 15 December 2016 in respect of Seven Year Senior Bonds Net Debt on any date in relation to the Consolidated Group, the Total Debt on that date less an amount equal to the aggregated consolidated value of cash or cash equivalents that would be disclosed by a Statement of Financial Position if one were prepared as at that date NZDX the debt security market operated by NZX NZSX the main board equity security market operated by NZX NZX NZX Limited NZ GAAP generally accepted accounting practice as defined in section 3 of the Financial Reporting Act 1993 Offer the offer of Senior Bonds made by TrustPower under this Prospectus, to raise up to $125 million, with the ability to accept oversubscriptions of up to $50 million Opening Date 27 November 2009, or such other date that TrustPower may determine Organising Participant Craigs Investment Partners Limited Permitted Security has the meaning given to that term in the Series Supplement, as summarised on page 30 of this Prospectus Primary Market Participant has the meaning given to that term in the Listing Rules Principal Amount $1.00 per Senior Bond Prospectus this simplified disclosure prospectus dated 27 November 2009 in relation to the Offer of Senior Bonds Record Date in relation to a payment due on a Senior Bond, the tenth calendar day before the relevant Interest Payment Date or Maturity Date or if that tenth day is not a Business Day, the Business Day immediately preceding such day) Register the register in respect of the Senior Bonds maintained by the Registrar Registrar Computershare Investor Services Limited or such other person as may be appointed registrar of the Senior Bonds from time to time Reporting Date in relation to a covenant in the Series Supplement or the Deed of Negative Pledge, means the reporting date referred to in the director s certificate given to the Trustee pursuant to the Series Supplement or in the director s certificate given to each Lender pursuant to the Deed of Negative Pledge (as the case may be), and in each case, relating to the financial period ending on that reporting date Risk Management Products all swap or exchange agreements (currency or interest), forward rate agreements, option transactions and future transactions in respect of interest rates or financial instruments, and includes any agreement or transaction substantially similar to any of the foregoing RWT resident withholding tax Securities Act the Securities Act 1978 Securities Regulations the Securities Regulations 2009 Senior Bonds the Five Year Senior Bonds and the Seven Year Senior Bonds constituted and issued pursuant to the Trust Documents and offered pursuant to this Prospectus Senior Finance Documents means the arrangements entered into by TrustPower with the Lenders, including the Deed of Negative Pledge Series the bonds that are issued under the same series supplement to the Master Trust Deed (which may be issued in Tranches) Series Supplement the series supplement dated 26 November 2009 entered into by TrustPower and the Trustee pursuant to the Master Trust Deed under which the Series comprising the Senior Bonds is constituted Seven Year Interest Rate 8.00% per annum Seven Year Senior Bond a Senior Bond with a Maturity Date of 15 December 2016 Shareholder a registered holder of Shares Shares ordinary shares in TrustPower SOE New Zealand state-owned enterprise Statement of Financial Position in relation to the Consolidated Group or any person, a consolidated statement of financial position (or balance sheet) of the Consolidated Group or that person prepared as at any date in accordance with NZ GAAP Subordinated Bonds the unsecured subordinated bonds issued by TrustPower pursuant to the trust deed dated 26 July 2002 between TrustPower and Trustees Executors Limited (as amended or supplemented from time to time) Subsidiary a subsidiary, as defined in section 5 of the Companies Act 1993, or an in-substance subsidiary, in accordance with any approved financial reporting standard, of TrustPower Total Debt on any date in relation to the Consolidated Group, the gross amount of all financing liabilities calculated on an aggregated consolidated basis in accordance with NZ GAAP (without double-counting), including: the amount of all debt instruments; the principal amount of all finance leases and hire purchase agreements; the amount of all redeemable shares issued by any member of the Consolidated Group; and all other liabilities that are required by NZ GAAP to be treated as financing liabilities Total Tangible Assets at any date in relation to the Consolidated Group or the Guaranteeing Group, the aggregate amount on a consolidated basis of all assets of the Consolidated Group or the Guaranteeing Group (as the case may be) which would be disclosed in a Statement of Financial Position if one was prepared as at that date, including future asset revaluations of generation assets, land and buildings if such revaluations, in addition to complying with NZ GAAP, are conducted by an independent, qualified valuer and excluding Intangible Assets Tranche bonds of the same Series in respect of which all terms are identical (except as to issue date, maturity date, interest rate and/or frequency of payment of interest) Trust Documents the Master Trust Deed and the Series Supplement Trustee Trustees Executors Limited or such other trustee as may hold office as trustee under the Master Trust Deed from time to time TrustPower TrustPower Limited TrustPower Group TrustPower and its Subsidiaries (also referred to as the Consolidated Group )

48 46 TRUSTPOWER Application instructions You should read this Prospectus carefully before completing the Application Form. An application will constitute an irrevocable offer by the applicant to subscribe for and acquire the Principal Amount of Senior Bonds specified on the Application Form (or such lesser number which TrustPower may determine) on the terms and conditions set out in this Prospectus, the Trust Documents and on the Application Form. An application cannot be withdrawn or revoked by the applicant once it has been submitted. The Application Form Please complete all relevant sections of the Application Form using CAPITAL BLOCK LETTERS. TrustPower may accept any Application Form not correctly completed as being valid, and may correct errors and omissions, in its sole discretion. A. Full name details: Enter your FULL NAME. Up to three applicants may apply jointly. You should refer to the section on the back of the Application Form under the heading Form of registrable names for the correct form of name that can be registered. Applications using the wrong form of name may be rejected. B. Postal address details: Enter your POSTAL ADDRESS for all correspondence. All communications to you from TrustPower (statements of holding, periodic reports, correspondence etc.) will be mailed to the person(s) at the address as shown. For joint applicants, only one address is to be entered. C. Telephone numbers: Please enter your TELEPHONE NUMBER(S) in case we need to contact you in relation to your application. D. Value of Senior Bonds applied for: Please enter the TOTAL Principal Amount of Five Year Senior Bonds and/or Seven Year Senior Bonds that you wish to apply for. Each Senior Bond has a Principal Amount of $1.00. Applications for Five Year Senior Bonds and/or Seven Year Senior Bonds must be for a minimum aggregate Principal Amount of $5,000 and thereafter in multiples of $1,000. You can apply for either Five Year Senior Bonds or Seven Year Senior Bonds (or both Tranches of Senior Bonds). If you wish to apply for both Five Year Senior Bonds and Seven Year Senior Bonds, you must apply for at least $5,000 of each Tranche. E. Interest and Principal Amount payments: If you currently receive interest or dividend payments from the Registrar (Computershare Investor Services Limited) by direct credit, and wish your payments in respect of the Senior Bonds to be direct credited to the same account, then do not complete section E of the Application Form. If you wish to be paid by direct credit and the Registrar does not already hold your bank account details or you wish to have your payments credited to another bank account, please tick the box in respect of Option 1 and enter the details of the account. If payment to your cash management account with a broker is selected, tick the box in respect of Option 2, insert the name of the Primary Market Participant where your cash management account is held and provide your cash management client account number. You may also elect to receive payment by cheque posted to the address specified in section B of the Application Form by ticking the box in respect of Option 3. F. IRD number: Please enter your IRD NUMBER and elect the rate at which you wish resident withholding tax to be deducted by ticking the relevant box. For joint applicants, please fill in the IRD number of the first named applicant or the beneficiary of the trust (for application by trustees). Indicate by ticking the appropriate box whether or not you hold a resident withholding tax exemption certificate. If you hold an exemption certificate, TrustPower will be obliged to deduct resident withholding tax on interest payments, if it has not seen the relevant certificate. A copy of the certificate must be attached to the Application Form. G. Common shareholder number: If you currently have a Computershare shareholder number or a Common Shareholder Number (CSN), please enter it in the box provided. H. Declaration and signature: Read the declaration and the terms and conditions on the Application Form carefully and SIGN and DATE the Application Form. The Application Form must be signed by the applicant(s) personally. Companies or other bodies corporate must sign in the same way as they would sign a formal deed or other formal legal document. Applications may be signed by an attorney or an authorised agent of the applicant. If the Application Form is signed by an attorney, the power of attorney document is required to be lodged unless previously provided to the Registrar, and the attorney must complete the certificate of non-revocation of power of attorney on the reverse of the Application Form. If the Application Form is signed by an agent, the agent must complete the certificate of non-revocation of agent on the reverse of the Application Form. Joint applicants must each sign the Application Form. Payment Payment in full of the total application amount must accompany the completed Application Form. Payment must be made in New Zealand dollars and be for immediate value. Post-dated cheques will not be accepted. Cheques must be drawn on a New Zealand bank. Please ensure that the total of the cheque equals the amount payable. Make the cheque payable to TrustPower Senior Bond Offer and cross it Not Transferable. Staple your cheque to the Application Form. Your cheque will be banked upon receipt into a designated bank account pending allotment of Senior Bonds. The banking of application moneys does not constitute confirmation of allotment of any Senior Bonds or acceptance of an offer to purchase Senior Bonds. Sufficient cleared funds should be held in your account as cheques returned unpaid are likely to result in your application being rejected or your allotment being cancelled. In addition, TrustPower may pursue the defaulting applicant for any damages suffered as a result of the payment being dishonoured. Institutional investors must pay in immediately cleared funds. Delivery Applicants who have accepted a Firm Allocation from a Primary Market Participant or approved financial intermediary must return the completed Application Form (with payment) to the office of the Primary Market Participant or financial intermediary which has provided that Firm Allocation in time to enable forwarding to the Registrar prior to 5.00pm on the Closing Date (currently 18 December 2009). Application Forms from other applicants must be mailed or delivered (with payment) to arrive prior to 5.00pm on the Closing Date (currently 18 December 2009). The details of the Registrar are: TrustPower Senior Bond Offer c/- Computershare Investor Services Limited Postal address: Private Bag Auckland 1142 Physical address: Level Hurstmere Road Takapuna North Shore City 0622 Those applicants may also lodge an Application Form (with payment) with any Primary Market Participant, the Organising Participant or any other channel approved by NZX, in time to enable forwarding to the Registrar prior to 5.00pm on the Closing Date (currently 18 December 2009). Please lodge your Application Form AS SOON AS POSSIBLE. TrustPower is not obliged to accept applications which are received by the Registrar after the Closing Date. TrustPower may accept or reject any application without giving any reason. TrustPower will refuse to accept applications which are for less than the minimum amount specified above.

49 Broker s stamp TrustPower Limited - Application Form Adviser s code For Five Year Senior Bonds and Seven Year Senior Bonds offered by TrustPower Limited This Application Form is for Senior Bonds to be issued by TrustPower Limited ( TrustPower ), as offered under the simplified disclosure prospectus dated 27 November 2009 ( Prospectus ). Please read the Prospectus carefully. Capitalised words and certain terms used in this Application Form have the same meaning given to them in the Prospectus. Completed Application Forms, together with payment of the application amount payable in respect of the Senior Bonds applied for, must be received by the Registrar, Computershare Investor Services Limited, (by post) Private Bag 92119, Auckland 1142 or (by hand) Level 2, 159 Hurstmere Road, Takapuna, North Shore City by 5.00pm on the Closing Date (18 December 2009 or such other date as TrustPower may determine). Please refer to page 46 of the Prospectus and the reverse side of this Application Form for instructions on how to complete the form. Please complete this form using BLOCK CAPITAL LETTERS A. Full name details (see sections Form of registrable names and Type of investor overleaf) Title First Name(s) Surname Applicant #1: Joint Applicant #2: Joint Applicant #3: Corporate name: B. Postal address details Number and street: Suburb: City: Postcode: C. Telephone numbers Home: Work: Mobile: D. Value of Senior Bonds applied for Total Principal Amount of Five Year Senior Bonds applied for NZ$ NZ$ Total Principal Amount of Seven Year Senior Bonds applied for (Minimum of $5,000, and thereafter in multiples of $1,000) (Minimum of $5,000, and thereafter in multiples of $1,000) E. Interest and Principal Amount payments (please complete only one option by ticking the appropriate box to select the method of payment for all interest and principal when they become payable) If you currently receive interest or dividend payments from Computershare by direct credit, Computershare will pay interest and principal on the Senior Bonds to the same account unless you indicate otherwise. Option 1: Payment to another nominated New Zealand bank account Pay by direct credit to the following account Bank: Account: Address: Option 2: Payment to my cash management account with my broker Broker: Pay by direct credit to my management account Option 3: Payment by cheque Cash management account number: Pay by cheque to the address set out in section B above F. IRD number Current IRD Number: Are you holding a current Certificate of Exemption in respect of Resident Withholding Tax? Yes No (please tick one) If YES, please attach a copy of the Certificate. If NO, please tick the appropriate box that describes your applicable tax rate: 19.5% 33% 38% (please tick one) G. Common Shareholder Number (CSN) If you currently have a Common Shareholder Number, please insert it here H. Declaration and signature I / We hereby apply for the value of Senior Bonds shown above upon the terms and conditions set out on the reverse of this Application Form. I / We agree to accept the value of Senior Bonds as applied for or such lesser number as may be issued to me / us. Signature(s) of applicant(s) (or for companies, execute as a deed) Please read the back of this Application Form before signing as it sets out specific terms and conditions which are accepted by an applicant upon signature of this Application Form. Signature Signature Signature Applicant #1 Day Month Year Joint Applicant #2 Day Month Year Joint Applicant #3 Day Month Year