CHORUS LIMITED — Capital/Financing Update 2020

Mar 1, 2020

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Chorus Limited Level 10, 1 Willis Street P O Box 632 Wellington New Zealand

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

2 March 2020

Notification of issue of CIP securities

Chorus Limited has issued further Crown Infrastructure Partners (CIP) securities as per the attached notice.

David Collins Chief Financial Officer

ENDS

For further information:

Brett Jackson Investor Relations Manager Phone: +64 4 896 4039 Mobile: +64 (27) 488 7808 Email: brett.jackson@chorus.co.nz

Updated as at 8 May 2019

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Capital Change Notice

Section 1: Issuer information
Name of issuer	Chorus Limited
NZX ticker code	CNU
Class of financial product	CIP1 Equity Securities (unquoted) CIP1 Warrants (unquoted) CIP2 Equity Securities (unquoted)
ISIN	N/a
Currency	NZD
Section 2: Capital change details
Number issued/acquired/redeemed	2,658,045 CIP1 Equity Securities (unquoted). 81,802 CIP1 Warrants (unquoted). 7,675,153 CIP2 Equity Securities (unquoted)
Nominal value (if any)	N/a.
Issue/acquisition/redemption price per security	NZ$1.000000 per CIP1 Equity Security. Nil per CIP1 Warrant. NZ$1.000000 per CIP2 Equity Security.
Nature of the payment (for example, cash or other consideration)	Cash for CIP1 Equity Securities. Cash for CIP2 Equity Securities.
Amount paid up (if not in full)	N/a.
Percentage of total class of Financial Products issued/acquired/redeemed/ (calculated on the number of Financial Products of the Class, excluding any Treasury Stock, in existence)	0.58% CIP1 Equity Securities. 0.59% CIP1 Warrants. 7.77% CIP2 Equity Securities.
For an issue of Convertible Financial Products or Options, the principal terms of Conversion (for example the Conversion price and Conversion date and the ranking of the Financial Product in relation to other Classes of Financial Product) or the Option (for example, the exercise price and exercise date)	CIP1 Equity Securities are redeemable preference shares carrying no right to vote at meetings of holders of ordinary Chorus shares, but entitle the holder to a right to a repayment preference on liquidation. Dividends will become payable on a portion of the CIP1 Equity Securities from 2025 onwards, with the portion of CIP1 Equity Securities that attract dividends increasing over time. Chorus may redeem CIP1 Equity Securities at any time: • by cash payment of the total issue price of CIP1 Equity Securities to be redeemed; or • by the issue of ordinary Chorus shares of a value equal to the total issue price of the CIP1 Equity Securities to be redeemed (with those

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ordinary Chorus shares valued at a 5% discount to the 20-day VWAP for Chorus shares traded in ordinary trading on NZX). In the event that the Network Infrastructure Project Agreement dated 24 May 2011 ( NIPA1 ) between Chorus and Crown Infrastructure Partners Limited ( CIP ) is terminated, either for a material breach by Chorus or for a challenge by Chorus to the enforceability of liquidated damages, service default payments or material breach liquidated damages under NIPA1, or in the event that the Chorus Board resolves to pay a dividend on the CIP1 Equity Securities but that dividend is not paid, a holder of CIP1 Equity Securities can elect to: • continue to hold the CIP1 Equity Securities; • exchange the CIP1 Equity Securities for voting preference shares; or • exchange the CIP1 Equity Securities for ordinary Chorus shares of a value equal to the lesser of the "fair value" and the issue price of the CIP1 Equity Securities (with those ordinary Chorus shares valued at a 5% discount to the 20-day VWAP for ordinary Chorus shares traded in ordinary trading on NZX). CIP1 Warrants are an option to acquire ordinary Chorus shares on a specified exercise date at a set strike price. CIP1 Warrants are issued for no consideration with each tranche of CIP1 Equity Securities. Each CIP1 Warrant gives the holder the right, on a specified exercise date, to purchase an ordinary Chorus share at a set strike price. The strike price is based on a total shareholder return of 16% per annum on ordinary Chorus shares over the relevant period. Therefore, a holder of a CIP1 Warrant is only likely to exercise the CIP1 Warrant if total shareholder return on ordinary Chorus shares has exceeded 16% per annum over that period. The exercise dates correspond to the repayment dates for the CIP1 Debt Securities and the dates on which dividends become payable on an increased proportion of CIP1 Equity Securities, and will therefore be between 2025 and 2036. CIP2 Equity Securities are redeemable preference shares carrying no right to vote at meetings of holders of ordinary Chorus shares, but entitle the

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holder to a right to a repayment preference on liquidation. Dividends will become payable on a portion of the CIP2 Equity Securities from 2030 onwards, with the portion of CIP2 Equity Securities that attract dividends increasing over time. Chorus may redeem CIP2 Equity Securities at any time:

• by cash payment of the total issue price of CIP2 Equity Securities to be redeemed; or • by the issue of ordinary Chorus shares of a value equal to the total issue price of the CIP2 Equity Securities to be redeemed (with those ordinary Chorus shares valued at a 5% discount to the 20-day VWAP for Chorus shares traded in ordinary trading on NZX).

In the event that the Network Infrastructure Project Agreement dated 26 January 2017 ( NIPA2 ) between Chorus and CIP is terminated, either for a material breach by Chorus, a serious health and safety event, or for a challenge by Chorus to the enforceability of liquidated damages, service default payments or material breach liquidated damages under NIPA2, or in the event that the Chorus Board resolves to pay a dividend on the CIP2 Equity Securities but that dividend is not paid, a holder of CIP2 Equity Securities can elect to:

• continue to hold the CIP2 Equity Securities; • exchange the CIP2 Equity Securities for voting preference shares; or • exchange the CIP2 Equity Securities for ordinary Chorus shares of a value equal to the lesser of the “fair value” and the issue price of the CIP2 Equity Securities (with those ordinary Chorus shares valued at a 5% discount to the 20-day VWAP for ordinary Chorus shares traded in ordinary trading on NZX). CIP or a Crown Entity (who has executed the applicable accession documentation) can also elect one of the options above in relation to the CIP2 Equity Securities it holds if a prescribed insolvency event occurs in relation to Chorus. Further information regarding the terms of the CIP1 Equity Securities and the CIP1 Warrants is set out in the summary of CIP1 Securities which is available at https://company.chorus.co.nz/reports.

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	Further information regarding the terms of the CIP2 Equity Securities is set out in the Summary of CIP2 Securities which is available at https://company.chorus.co.nz/reports.
Reason for issue/acquisition/redemption and specific authority for issue/acquisition/redemption/ (the reason for change must be identified here)	The funds are to be used by Chorus in the construction of the Ultra-Fast Broadband network in New Zealand. The CIP1 Equity Securities and CIP1 Warrants have been issued pursuant to: • the terms of the subscription agreement between Chorus and CIP dated 9 November 2011, as amended by agreements between Chorus and CIP dated 18 September 2016 and 26 January 2017 (UFB1 Subscription Agreement); • a call notice issued by Chorus to CIP on 26 February 2020 pursuant to the terms of the UFB1 Subscription Agreement; and • a Chorus Board resolution passed on 3 April 2012. The CIP2 Equity Securities have been issued pursuant to: • the terms of the subscription agreement between Chorus and CIP dated 26 January 2017 and amended 30 August 2017 (UFB2 Subscription Agreement); • a call notice issued by Chorus to CIP on 26 February 2020 pursuant to the terms of the UFB2 Subscription Agreement; and • a Chorus Board resolution passed on 24 August 2018.
Total number of Financial Products of the Class after the issue/ acquisition/ redemption/ Conversion (excluding Treasury Stock) and the total number of Financial Products of the Class held as Treasury Stock after the issue/acquisition/redemption.	460,832,333 CIP1 Equity Securities (unquoted) 13,970,171 CIP1 Warrants (unquoted) 106,421,429 CIP2 Equity Securities (unquoted). No CIP1 Equity Securities, CIP1 Warrants or CIP2 Equity Securities are held as treasury stock.
In the case of an acquisition of shares, whether those shares are to be held as treasury stock	N/a.
Specific authority for the issue, acquisition, or redemption, including a reference to the rule pursuant to which the issue, acquisition, or redemption is made	For the CIP1 Equity Securities and CIP1 Warrants, Board resolution passed on 3 April 2012. For the CIP2 Equity Securities, Board resolution passed on 24 August 2018.

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	The CIP1 Equity Securities and CIP1 Warrants have been issued under listing rule 4.2 pursuant to a waiver dated 30 November 2011. The CIP2 Equity Securities have been issued under listing rule 4.5.
Terms or details of the issue, acquisition, or redemption (for example: restrictions, escrow arrangements)	The terms of issue of the CIP1 Equity Securities and CIP1 Warrants are as set out in the UFB1 Subscription Agreement. Further information regarding the terms of the CIP1 Equity Securities is set out in the summary of CIP1 Securities which is available at https://company.chorus.co.nz/reports. The terms of issue of the CIP2 Equity Securities are as set out in the UFB2 Subscription Agreement. Further information regarding the terms of the CIP2 Equity Securities is set out in the summary of CIP2 Securities which is available at https://company.chorus.co.nz/reports.
Date of issue/acquisition/redemption	28 February 2020
Section 3: Authority for this announcement and contact person
Name of person authorised to make this announcement	David Collins Chief Financial Officer
Contact person for this announcement	Brett Jackson Investor RelationsManager
Contact phone number	+64 4 896 4039 +64 27 488 7808
Contact email address	Brett.Jackson@chorus.co.nz
Date of release through MAP	2 March 2020

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