CHORUS LIMITED — Capital/Financing Update 2020

Jan 20, 2020

==> picture [202 x 22] intentionally omitted <==

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

Email: company.secretary@chorus.co.nz

STOCK EXCHANGE ANNOUNCEMENT

21 January 2020

Notification of issue of CIP securities

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

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

==> picture [104 x 43] intentionally omitted <==

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)
ISIN	N/a
Currency	NZD
Section 2: Capital change details
Number issued/acquired/redeemed	3,857,659 CIP1 Equity Securities (unquoted).118,721 CIP1 Warrants (unquoted).
Nominal value (if any)	N/a.
Issue/acquisition/redemption price persecurity	NZ$1.000000 per CIP1 Equity Security.Nil per CIP1 Warrant.
Nature of the payment (for example,cash or other consideration)	Cash for CIP1 Equity Securities.
Amount paid up (if not in full)	N/a.
Percentage of total class of FinancialProducts issued/acquired/redeemed/(calculated on the number of FinancialProducts of the Class, excluding anyTreasury Stock, in existence)	0.84% CIP1 Equity Securities0.85% CIP1 Warrants
For an issue of Convertible FinancialProducts or Options, the principal termsof Conversion (for example theConversion price and Conversion dateand the ranking of the Financial Productin relation to other Classes of FinancialProduct) or the Option (for example, theexercise price and exercise date)	CIP1 Equity Securities are redeemable preferenceshares carrying no right to vote at meetings ofholders of ordinary Chorus shares, but entitle theholder to a right to a repayment preference onliquidation. Dividends will become payable on aportion of the CIP1 Equity Securities from 2025onwards, with the portion of CIP1 Equity Securitiesthat attract dividends increasing over time.Chorus may redeem CIP1 Equity Securities at anytime:•by cash payment of the total issue price ofCIP1 Equity Securities to be redeemed; or•by the issue of ordinary Chorus shares of avalue equal to the total issue price of the CIP1Equity Securities to be redeemed (with thoseordinary Chorus shares valued at a 5%discount to the 20-day VWAP for Chorusshares traded in ordinary trading on NZX).

Page 1 of 4

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.

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.

Page 2 of 4

Reason for issue/acquisition/redemptionand specific authority forissue/acquisition/redemption/ (thereason for change must be identifiedhere)	The funds are to be used by Chorus in theconstruction of the Ultra-Fast Broadband network inNew Zealand.The CIP1 Equity Securities and CIP1 Warrants havebeen issued pursuant to:•the terms of the subscription agreementbetween Chorus and CIP dated9 November 2011, as amended byagreements between Chorus and CIP dated18 September 2016 and 26 January 2017(UFB1 Subscription Agreement);•a call notice issued by Chorus to CIP on16 January 2020 pursuant to the terms of theUFB1 Subscription Agreement; and•a Chorus Board resolution passed on3 April 2012.
Total number of Financial Products ofthe Class after theissue/acquisition/redemption/Conversion (excluding Treasury Stock) and thetotal number of Financial Products ofthe Class held as Treasury Stock afterthe issue/acquisition/redemption.	458,174,288 CIP1 Equity Securities (unquoted)13,888,369 CIP1 Warrants (unquoted)No CIP1 Equity Securities or CIP1 Warrants are heldas treasury stock.
In the case of an acquisition of shares,whether those shares are to be held astreasury stock	N/a.
Specific authority for the issue,acquisition, or redemption, including areference to the rule pursuant to whichthe issue, acquisition, or redemption ismade	Board resolution passed on 3 April 2012.The CIP1 Equity Securities and CIP1 Warrants havebeen issued under listing rule 4.2 pursuant to awaiver dated 30 November 2011.
Terms or details of the issue,acquisition, or redemption (for example:restrictions, escrow arrangements)	The terms of issue are as set out in the UFB1Subscription Agreement. Further informationregarding the terms of the CIP1 Equity Securities isset out in the summary of CIP1 Securities which isavailable athttps://company.chorus.co.nz/reports.
Date of issue/acquisition/redemption	20 January 2020
Section 3: Authority for this announcement and contact person
Name of person authorised to make thisannouncement	Elaine CampbellGeneral Counsel & Company Secretary
Contact person for this announcement	Brett JacksonInvestor Relations Manager
Contact phone number	+64 4 896 4039+64 27 488 7808
Contact email address	Brett.Jackson@chorus.co.nz

Page 3 of 4

Date of release through MAP 21 January 2020

Page 4 of 4