TOWER LIMITED - Capital/Financing Update 2009

Please note; this offer is made only to New Zealand Resident Investors. No offer or invitation to invest is made in any other jurisdiction.

TOWER Investment Statement and Prospectus

Fixed Rate Senior Unsecured Bonds 8.5%

INTEREST RATE PER ANNUM

Offer of up to $100 million Fixed Rate Senior Unsecured Bonds by TOWER Capital Limited Joint Lead Managers: Forsyth Barr Limited, Goldman Sachs JBWere (NZ) Limited

Important Information

The information in this section is required under the Securities Act 1978.

Investment decisions are very important. They often have long term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself.

Choosing an investment

When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below:

found on the pages noted below:
What sort of investment is this?	30
Who is involved in providing it for me?	30
How much do I pay? What are the charges?	31 31
What returns will I get? What are my risks?	32 34
Can the investment be altered?	38
How do I cash in my investment?	40
Who do I contact with enquiries about my investment?	40
Is there anyone to whom I can complain	41
if I have problems with the investment? What other information can I obtain about this investment?	41

In addition to the information in this document, important information can be found in the current registered prospectus for the investment. You are entitled to a copy of that prospectus on request.[1]

Engaging an investment adviser

An investment adviser must give you a written statement that contains information about the adviser and his or her ability to give advice. You are strongly encouraged to read that document and consider the information in it when deciding whether or not to engage an adviser.

Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes, and carry different levels of risk.

The written statement should contain important information about the adviser, including -

relevant experience and qualifications, and whether dispute resolution facilities are available to you; and
what types of investments the adviser gives advice about; and
whether the advice is limited to investments offered by one or more particular financial institutions; and
information that may be relevant to the adviser’s character, including certain criminal convictions, bankruptcy, any adverse findings by a court against the adviser in a professional capacity, and whether the adviser has been expelled from, or prohibited from joining, a professional body; and
any relationships likely to give rise to a conflict of interest.

The adviser must also tell you about fees and remuneration before giving you advice about an investment. The information about fees and remuneration must include -

the nature and level of the fees you will be charged for receiving the advice; and
whether the adviser will or may receive a commission or other benefit from advising you.
An investment adviser commits an offence if he or she does not provide you with the information required.

This Investment Statement and Prospectus (‘Offer Document’) is an important document which should be read in its entirety. If you have any questions about it, you should request advice from the Joint Lead Managers, any Primary Market Participant or from an investment adviser.

Investors should read in particular the section ‘Answers to Important Questions’ on pages 30 to 41. All amounts in this document, unless stated otherwise, are in New Zealand dollars.

A copy of this Offer Document, duly signed by or on behalf of each of the directors of TOWER Capital Limited and by TOWER Capital Limited and TOWER Limited, and having attached to it copies of the documents required by section 41 of the Securities Act 1978 (being the material contract, any agent authority forms, and an acknowledgement from NZX to the effect that application has been made for permission to list the Senior Bonds), was delivered to the Registrar of Companies for registration in accordance with section 42 of the Securities Act 1978 on the date of this Offer Document.

This Offer Document is dated and prepared as at 13 February 2009.

[1 ] This document is a combined Investment Statement and Prospectus. The wording above is required by Schedule 3D to the Securities Regulations 1983 which contemplates a separate investment statement and prospectus. Accordingly the prospectus available on request is identical to this document.

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Letter from TOWER’s Chairman	5
Summary of the Offer	8
Main Terms of Offer	10
TOWER’s Business Overview	14
Directors and Management	18
Summary Financial Information	21
Investment Statement Information
Answers to Important Questions	30
Other Information
Summary of Trust Deed	44
Conditions of Senior Bonds	48
Trustee’s Statement	60
Prospectus Statutory Information	61
Statutory Index	65
Glossary	66
Application Form and Application Instructions	71
Directory	75

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Letter from TOWER’s Chairman

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13 February 2009

Dear Investor,

On behalf of TOWER’s Board, I have pleasure in presenting New Zealand investors with the opportunity to subscribe for fixed rate senior unsecured Bonds to be issued by TOWER Capital Limited.

The TOWER Group is one of New Zealand’s leading insurance and financial services organisations with a history dating back to 1869. The TOWER Group provides essential insurance and wealth management products, including home and contents insurance, vehicle insurance, life insurance, health insurance, managed funds and KiwiSaver investments, to customers throughout New Zealand and in the Pacific Islands.

The TOWER Group has previously undertaken successful fixed interest offerings to investors in New Zealand. As part of the 2006 separation of its New Zealand business from its Australian business (now known as TOWER Australia), the TOWER Group repurchased for cash its last remaining series of fixed interest securities.

This issue of Senior Bonds, to raise up to $100 million, is intended to be used to retire existing bank debt and also to supplement the working capital requirements of the TOWER Group.

The Senior Bonds provide investors with a competitive fixed rate of interest of 8.5% per annum (paid quarterly in arrears until the Maturity Date of 15 April 2014).

TOWER Capital is a wholly owned subsidiary of TOWER, and was established to make this Offer. TOWER and TOWER Financial Services Group Limited have provided an unsubordinated and unsecured guarantee of Interest when payable and of principal when payable and on a Liquidation.

TOWER’s Board has carefully considered the contents of this Offer Document and we commend the Offer for consideration by New Zealand investors. It offers an excellent rate of return for the next five years ahead, and an opportunity to invest with one of New Zealand’s longest-standing insurance and investment organisations.

We welcome your participation in this Offer.

Yours faithfully,

A I (Tony) Gibbs, CNZM Chairman TOWER Limited

Summary of the Offer

Size of Offer

The Offer is for fixed rate senior unsecured Bonds having aggregate issue proceeds of up to $80 million. TOWER reserves the right to accept oversubscriptions for further Senior Bonds having aggregate issue proceeds of up to $20 million. Senior Bonds with aggregate issue proceeds of up to $80 million have been reserved for subscription by clients of Primary Market Participants.

Type of Investment

The Senior Bonds are unsubordinated, unsecured, fixed interest debt securities of TOWER Capital Limited (‘TOWER Capital’ or ‘the Company’). TOWER Limited (‘TOWER’), and TOWER Financial Services Group Limited (‘TFSG’) (the ‘Guarantors’) provide an unsubordinated and unsecured guarantee of Interest and principal when payable, and of principal and Accrued Interest and Unpaid Interest when payable and on commencement of Liquidation, on a joint and several basis.

The Bonds are unsecured but referred to as senior because Bondholders will rank ahead of Subordinated Creditors and shareholders of the Company and the Guarantors in the event of a Liquidation. The Bonds rank equally with other unsecured creditors of the Company and the Guarantors in the event of a Liquidation.

Other than the Guarantors, no member of the TOWER Group provides any guarantee in respect of the Senior Bonds.

Use of Proceeds

It is intended that the proceeds of the Offer will be used to retire existing bank debt and to supplement the working capital requirements of the TOWER Group.

Interest Rate

The Senior Bonds will bear Interest payable quarterly in arrears at 8.5% per annum. The first Interest Payment Date is 15 April 2009.

NZDX Listing and Quotation

Application has been made to NZX for permission to list the Senior Bonds on the NZDX market and the requirements of NZX relating thereto that can be complied with on or before the date of this Offer Document have been

duly complied with. However, NZX accepts no responsibility for any statement in this Offer Document.

The Company intends the Senior Bonds will commence quotation on the NZDX market on 24 March 2009, and in any event no later than five business days after the Closing Date.

Maturity of Senior Bonds

The Maturity Date is 15 April 2014.

At maturity Bondholders may elect to either:

have their Senior Bonds redeemed or purchased for cash; or
if New Conditions are offered by the Company, rollover their Senior Bonds on the New Conditions.

If New Conditions are offered by the Company, Bondholders who do nothing or who do not make a valid election will be deemed to have elected to retain all of their Senior Bonds on the New Conditions.

Despite a Bondholder’s election or deemed election to rollover their Senior Bonds on the Maturity Date, the Company may elect to redeem or purchase some or all of their Senior Bonds for cash at the Issue Price.

Financial Covenants

TOWER Limited (TOWER), TOWER Financial Services Group Limited (TFSG), and the Company have covenanted that while any Senior Bonds remain outstanding:

Net Assets of the TOWER Group shall be not less than $200 million;
Net Debt of the TOWER Group shall not exceed 40% of Net Assets of the TOWER Group; and
Secured Debt of the TOWER Group shall not exceed 10% of Net Assets of the TOWER Group.

If, and for so long as there is a breach of a Financial Covenant, the Company must pay Interest at the Default Rate (being 2% higher than the usual Interest Rate) and TOWER may not make any Distribution to its shareholders.

A breach of a Financial Covenant is not an Event of Default and does not entitle the Trustee to accelerate repayment of the Senior Bonds.

Further Issues of Debt

Under the Trust Deed, the Company and the Guarantors each have the power to create and issue additional debt obligations ranking behind or pari passu with the Senior Bonds without the consent of Bondholders. The Guarantors or any other company in the TOWER Group may also grant security for obligations, subject to the Financial Covenants. Such further debt obligations may be issued on such terms as the Company or TOWER thinks fit, provided the Financial Covenants are not breached.

Credit Rating

The Senior Bonds are not rated. TOWER Limited holds a bbb- (investment grade) issuer credit rating from A.M. Best Company. For more details on the credit rating of certain members of the TOWER Group see page 17.

Offer in New Zealand

The Offer is made only to New Zealand resident investors. No offer or invitation to invest is made in any other jurisdiction.

Closing Date

The Offer is intended to close on the earlier of 20 March 2009 or the date on which subscriptions are accepted for up to $100 million of Senior Bonds.

The Company reserves the right to alter any of the dates included in the timetable, subject to appropriate approvals, and to reject any application to invest in Senior Bonds in whole or in part.

Minimum Applications

$5,000 and thereafter in multiples of $1,000.

How to Apply

Instructions on completing an application are set out on the reverse of the Application Form.

Definitions

See the sections ‘Glossary’ and ‘Conditions of Senior Bonds’ for definitions of certain terms used in this Offer Document.

Important dates

Important dates
Opening Date of Offer	16 February 2009
Closing Date of Offer	20 March 2009
Allotment Date	24 March 2009 or if the Company determines,
	within three business days of the Closing Date.
Expected date of initial quotation and	24 March 2009
trading on NZDX
First Interest Payment Date	15 April 2009
(Interest payable to initial subscriber)
Subsequent Interest Payments	15 January, 15 April, 15 July and 15 October in each year
Maturity Date	15 April 2014

Main Terms of Offer

THE FOLLOWING INFORMATION

IS A SUMMARY OF THE MAIN TERMS OF THE OFFER OF FIXED RATE SENIOR UNSECURED BONDS BY TOWER CAPITAL. INVESTORS SHOULD ALSO REFER TO THE MORE DETAILED INFORMATION IN THIS OFFER DOCUMENT INCLUDING THE SECTIONS ‘ANSWERS TO IMPORTANT QUESTIONS’ AND ‘CONDITIONS OF SENIOR BONDS’.

Size of Offer

The Offer is for fixed rate senior unsecured Bonds having aggregate issue proceeds of up to $80 million. TOWER reserves the right to accept oversubscriptions for further Senior Bonds having aggregate issue proceeds of up to $20 million. Accordingly, the maximum size of the Offer is $100 million.

Senior Bonds with aggregate issue proceeds of up to $80 million have been reserved for subscription by clients of Primary Market Participants.

Issuer

The issuer of the Senior Bonds is TOWER Capital. The Company is and must remain a wholly owned subsidiary of TOWER while any of the Senior Bonds remain on issue.

Guarantee

TOWER and TFSG (the ‘Guarantors’) provide an unsubordinated and unsecured guarantee of payment of Interest on Senior Bonds on every Interest Payment Date and the principal amount of Senior Bonds together with Accrued Interest and Unpaid Interest payable to Bondholders when payable and on a Liquidation of the Company, TFSG or TOWER.

Other than the Guarantors, no member of the TOWER Group provides any guarantee in respect of the Senior Bonds.

Type of security and transferability

The Senior Bonds are unsubordinated, unsecured fixed interest debt securities of the Company. The Senior Bonds are transferable.

Application has been made to NZX for permission to list the Senior Bonds on the NZDX market and

the requirements of NZX relating thereto that can be complied with on or before the date of this Offer Document have been duly complied with. However, NZX accepts no responsibility for any statement in this Offer Document.

The Company intends the Senior Bonds will commence quotation on the NZDX market on 24 March 2009, and in any event no later than five business days after the Closing Date.

Interest Rate

The Senior Bonds will bear Interest payable quarterly in arrears at 8.5% per annum. The Interest Rate will be fixed for the period to the Maturity Date of 15 April 2014.

Payment of Interest

The first Interest Payment Date is 15 April 2009. The first Interest Payment will be made to the original subscriber for the Senior Bonds irrespective of any transfer of the Senior Bonds prior to 15 April 2009. Interest paid on the first Interest Payment Date will be calculated on a daily basis from the date a valid application is received and processed, until the day prior to the first Interest Payment Date.

Subsequent Interest Payments will be calculated on an annual basis and paid in equal instalments quarterly in arrears on 15 January, 15 April, 15 July and 15 October until the Maturity Date, to registered Bondholders on the Record Date (as defined in the Trust Deed) for determining entitlement to Interest Payments.

Options on Maturity

The Maturity Date is 15 April 2014.

Prior to the Maturity Date, the Company may offer to set New Conditions which will apply to Senior Bonds which are rolled over until the next maturity date.

At maturity Bondholders may elect to either:

have their Senior Bonds redeemed or purchased for cash; or
if New Conditions are offered by the Company, rollover their Senior Bonds on the New Conditions.

If New Conditions are offered by the Company, Bondholders who do nothing or who do not make a valid election will be deemed to have elected to rollover all of their Senior Bonds on the New Conditions.

Irrespective of any Bondholder election or deemed election to rollover their Senior Bonds, the Company may give notice to Bondholders that it will redeem or purchase for cash on that Maturity Date some or all Senior Bonds on issue. Where less than all Senior Bonds are redeemed, they will be redeemed on a pro-rata basis.

Financial Covenants

TOWER, TFSG and the Company have covenanted that while any Senior Bonds remain outstanding:

Net Assets of TOWER Group shall be not less than $200 million;
Net Debt of the TOWER Group shall not exceed 40% of Net Assets of the TOWER Group; and
Secured Debt of the TOWER Group shall not exceed 10% of Net Assets of the TOWER Group.

Interest on the Senior Bonds is payable by the Company at the Default Rate (being 2% higher than the usual Interest Rate) instead of the usual Interest Rate for so long as there is an unremedied breach of a Financial Covenant.

A breach of a Financial Covenant is not an Event of Default and does not entitle the Trustee to accelerate repayment of the Senior Bonds.

TOWER may not make any Distribution to its shareholders while any Interest has not been paid when due, while there is an unremedied Event of Default, or there remains an unremedied breach of a Financial Covenant, or where to do so would cause a breach of a Financial Covenant.

Early Repayment

The Trust Deed allows the Company at any time after 15 April 2011, to require the redemption or purchase of all or part of Senior Bonds on issue at a premium to the Issue Price, together with any Accrued Interest and Unpaid Interest on the Senior Bonds. The Redemption Price payable will be:

103% of Issue Price (if the Early Repayment is between 15 April 2011 and 14 April 2012, inclusive);
102% of Issue Price (if the Early Repayment is between 15 April 2012 and 14 April 2013, inclusive); and
101% of Issue Price (if the Early Repayment is after 14 April 2013).

If the Company wishes to redeem or purchase only part of the Senior Bonds on issue, it must do so on a pro-rata basis.

The Company may also require the redemption or purchase of all of the Senior Bonds on issue:

at no premium to the Issue Price, together with any Accrued Interest and Unpaid Interest on the Senior Bonds in the event of an adverse

change in taxation relating to the Senior Bonds from the perspective of either the Company or Bondholders, as determined by the Company, or TOWER; or

at the aggregate of 103% of the Issue Price, together with all Accrued Interest and Unpaid Interest in respect of those Senior Bonds in the event of a Major Restructuring Event prior to 15 April 2011.

Bondholders have no ability to cash in their investments prior to the Maturity Date, except following an Event of Default and acceleration of repayment of Senior Bonds by the Trustee, on a Takeover or by selling their Senior Bonds.

TOWER and subsidiaries may purchase Senior Bonds

The Trust Deed permits TOWER or any of its subsidiaries (including the Company), to purchase Senior Bonds for their own account at any time.

Takeover provision

If a Takeover of TOWER occurs where TOWER is delisted following acquisition of 90% of its shares, the Company must offer to redeem or purchase all Senior Bonds on issue at their Issue Price at the next Interest Payment Date following delisting.

See ‘Takeover Provision’ in the section ‘Conditions of Senior Bonds’ on page 53.

Events of Default

Following an Event of Default, the Trustee may declare the Senior Bonds to be immediately due and payable. The Trustee may also (and must if requested to do so by Bondholders holding more than 10% of Senior Bonds on issue) call a meeting of Bondholders. The Company has the right to attend a meeting of Bondholders and may submit proposals for Bondholders’ consideration. The Trustee must declare the Senior Bonds to be immediately due and payable if directed to do so by an Ordinary Resolution of Bondholders at such meeting.

In summary, the Events of Default are:

the Liquidation of the Company, TFSG or TOWER;
the exercise of certain cross-acceleration rights by other creditors;
in the event that Interest has not been paid on the Senior Bonds within 10 business days of an Interest Payment Date; or
in the event that principal has not been paid on the Senior Bonds within 10 business days of the Maturity Date or other due date for payment,
where the event continues and is not remedied, and the Trustee has given a notice to the

Company declaring such event to be an Event of Default. A breach of the Financial Covenants or of any other provision of the Trust Deed does not constitute an Event of Default.

Investors should refer to the Trust Deed for a fuller description of the acts and omissions that constitute an Event of Default.

See ‘Early Repayment’ in the section ‘Conditions of Senior Bonds’ on pages 50–51.

Other Breaches

If there is a breach by the Company, TOWER or TFSG of a provision of the Trust Deed other than in an Event of Default, that continues unremedied for 30 days and the Trustee considers that such breach is materially prejudicial to the interests of Bondholders, the Trustee may take such proceedings as it thinks fit against the Company, TOWER or TFSG (as the case may be), provided that the Trustee cannot accelerate payment of Interest or principal on Senior Bonds on the basis of this breach.

Liquidation and Ranking

On the Liquidation of the Company or either of the Guarantors the Senior Bonds will be redeemable by the Company in cash and will rank for payment:

ahead of subordinated creditors and shareholders of each of the Company and (in relation to their respective guarantee obligations) the Guarantors, and pari passu with other Bondholders and Senior Creditors; but
after the claims in point of security of Secured Creditors of each of the Company and the Guarantors, and to indebtedness having priority by operation of law.

Creditors of non-guaranteeing subsidiaries of the TOWER Group will rank ahead of Bondholders.

Cross-acceleration rights

Bondholders have certain cross-acceleration rights in respect of the Senior Bonds. This means that if, due to a default by the Company or either of the Guarantors, other than in respect of the Senior Bonds, a Senior Creditor (or Senior Creditors) of the Company or either of the Guarantors is entitled to and requires repayment of indebtedness in excess of $10 million (in aggregate) prior to the stated maturity of that indebtedness, that event will also be an Event of Default in respect of the Senior Bonds, unless it is remedied by the Company or the relevant Guarantor. In the event that the entitlement of a Senior Creditor to require repayment is disputed, it shall be determined by application to the courts in New Zealand and will not constitute an Event of Default pending such determination.

Trustee

The trustee is The New Zealand Guardian Trust Company Limited.

Applications

Applications for Senior Bonds must be for a minimum aggregate Issue Price of $5,000 and thereafter in multiples of $1,000. Applications must be made on the Application Form contained at the back of this Offer Document and are to be lodged with the Registrar or the Company, any Primary Market Participant or a Joint Lead Manager in time to enable forwarding to the Registrar before 5.00pm on the Closing Date. An application cannot be withdrawn or revoked by the applicant once it has been submitted.

If you have received a firm allocation from a Primary Market Participant, this should be returned to the Primary Market Participant in time for it to be forwarded to the Registrar before 5.00pm on the Closing Date.

The aggregate Issue Price of the Senior Bonds for which an application is made must be paid in full on application. Cheques should be made payable to ‘TOWER Bond Offer’, crossed ‘not transferable’ and must not be post dated.

Allotments

Allotments will be made on the Allotment Date. The Company will advise successful applicants of the allotment of Senior Bonds to them as soon as possible after the Allotment Date. The Company reserves the right to refuse all or any part of any application without giving a reason.

Underwriting

The Offer is not underwritten.

Refunds

If the Company accepts an application in part, the balance of the application moneys will be refunded (without interest) no later than five business days after the date of allotment of the Senior Bonds to the applicant.

Any application moneys received in respect of applications that are not accepted will be refunded to the applicant no later than five business days after the later of the date of receipt and the Closing Date. No interest will be paid on refunds. Any applications received after the Closing Date may not be accepted.

Offer only in New Zealand

This Offer is made only to New Zealand residents. No offer or invitation is made under this Offer Document in any jurisdiction outside New Zealand. No person may offer, sell or deliver any Senior Bonds or distribute any document

(including this Offer Document) to any person in any jurisdiction outside New Zealand, except in accordance with all of the legal requirements of that jurisdiction. Unless otherwise agreed with the Company, any person or entity subscribing for Senior Bonds will, by virtue of that subscription, be deemed to represent that that person or entity is not in a jurisdiction that does not permit the making of an offer or invitation of the kind described in this Offer Document and is not acting for the account or benefit of a person within such a jurisdiction.

Non-reliance

This Offer Document does not constitute a recommendation by the Company, any member of the TOWER Group, the Joint Lead Managers, the Trustee, nor any of their respective directors, officers, employees or agents to subscribe for or purchase any of the Senior Bonds. Neither the Company, any member of the TOWER Group, the Joint Lead Managers, the Trustee, nor any of their respective directors, officers, employees or agents accepts any liability whatsoever for any loss arising from this Offer Document, its contents or otherwise arising in connection with the offer of Senior Bonds.

Taxation

For New Zealand Bondholders (other than tax exempt entities) the Senior Bonds are financial arrangements for the purposes of the Income Tax Act 2007. All Interest paid will represent taxable income for the Bondholder. The redemption or purchase for cash, or sale of the Senior Bonds may require the Bondholder to calculate a base price adjustment for the purposes of the accrual rules.

Resident Withholding Tax (‘RWT’) will be deducted by the Company from Interest paid to or credited to Bondholders unless a Bondholder provides the Company with a valid certificate of exemption or evidence that they are not otherwise liable to RWT and the Company is satisfied that no deduction is required.

For more information in relation to tax, see the question ‘What returns will I get?’ on page 32 or consult your own adviser.

TOWER’s Business Overview

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TOWER Capital was incorporated for the purpose of issuing the Senior Bonds. It is intended that the proceeds of the Offer will be used to retire existing bank debt and to supplement the working capital requirements of the TOWER Group. This section is intended to give investors more information about the business of the TOWER Group.

The TOWER Group is a leading provider of financial services, offering insurance and investment products in New Zealand and the Pacific Islands. TOWER, the parent company of the Group, is listed on both the New Zealand and Australian Stock Exchanges and has more than 57,000 shareholders.

The TOWER Group provides essential insurance and wealth management products, including home and contents insurance, vehicle insurance, life insurance, health insurance, managed funds, superannuation and KiwiSaver.

The TOWER Group continued its strong performance with a net profit after tax from continuing operations of $40.5 million for the financial year to 30 September 2008, representing a 17.1% improvement over the comparable result for the previous year. Highlights from the 30 September 2008 year included: earnings per share of 21.12 cents (up 28.8%), a strong result from Health & Life (up 25.6%), a return on shareholders’ funds of 14.7% (up from 14.4%) and a dividend for shareholders increasing by 33.3% to 8 cents.

These results demonstrate that the TOWER Group’s underlying strengths help to serve it well in a slowing economy. The Group’s business operates in New Zealand and the Pacific Islands, and has the benefit of not having to focus on other international relationships. The results also reflect the Group’s focus on becoming more efficient with internal processes and improving customer service.

Summary of Group Results

Years ended 30 September

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Net effect
NZ $million 2008 2007 of change
in result
Health & Life 28.5 22.7 +25.6%
General Insurance 14.8 12.3 +20.3%
Investments 3.7 7.6 -51.3%
Business unit net profit after tax 47.0 42.6 +10.3%
Finance & Corporate expenses (6.5) (8.0) -18.8%
Profit after tax
40.5 34.6 +17.1%
– continuing operations net of minority interest
----- End of picture text -----

The Summary of Group Results is extracted from the Summary Financial Information for the TOWER Group which, along with explanatory notes, is set out on pages 21 to 27. Investors are encouraged to read that information. It has been included to give further details about the Guarantors. No other member of the TOWER Group provides any guarantee to Bondholders.

TOWER Group operating structure

The Group operates through the following core business units:

Health & Life Insurance
General Insurance
Investments

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TOWER Group
Structure Chart TOWER Limited
(Guarantor)
TOWER Financial Services
TOWER Capital Limited
Group Limited
(Issuer)
(Guarantor)
TOWER Health & Life TOWER General Insurance TOWER Investments
business business business
----- End of picture text -----

History

TOWER commenced in 1869 as the Government Life Insurance Office selling life insurance policies and pensions. Between 1989 and 1999 TOWER acquired many businesses in New Zealand and Australia including National Insurance in New Zealand and Friends Provident, Austrust and FAI Life in Australia. TOWER was demutualised in 1999 and listed on the Australian and New Zealand stock exchanges.

TOWER undertook a group re-organisation and recapitalisation in 2003 involving a pro rata rights issue fully underwritten by Guinness Peat Group (GPG), with the proceeds used to repay maturing senior debt. As a result of the overall recapitalisation and a small quantum of on market purchases, GPG increased its shareholding in TOWER to approximately 19.9% of all shares on issue.

TOWER Limited has (through wholly owned subsidiary TOWER Finance Limited) issued debt to the public in the past. In 2002 TOWER Finance offered $125 million of capital bonds, and in 2004, $80 million of capital notes. Outstanding debt under those capital notes and bonds was repaid on the separation of TOWER’s New Zealand and Australian businesses in late 2006. In 2005 TOWER separated its Australian Wealth Management business (‘AWM’). In 2006 TOWER separated its Australian and New Zealand businesses into two separate listed entities, which

resulted in the creation of TOWER Australia Group which is listed on the ASX. TOWER Australia Group is separate from the TOWER Group, and is not involved with this Offer.

In June 2008 GPG completed a partial takeover offer which increased its interest in TOWER to 35%.

TOWER is made up of three major trading divisions and has its head office in Auckland. The performance of each of these divisions is discussed in the following sections.

Health & Life

TOWER’s Health & Life business provides a range of health and life insurance products in both the retail and group New Zealand markets.

TOWER considers it has an in-force premium market share, relating to policies currently inforce that have not been cancelled, ranking it second and sixth in the New Zealand health and life insurance markets.[2]

Based on industry statistics published for the quarter ended 31 December 2008, TOWER had a market share in the health insurance market of 12.3% of new business by lives and 15.5% of the in-force market by premiums.[3] For the total life insurance market, TOWER had a market share of 4.5% of new business by premiums and 5.2% of the in-force market by premiums.[4] TOWER Health & Life’s continuing focus is on developing aligned and new distribution channels and

2 Sources: Health Insurance Statistics – Health Funds Association of New Zealand and Insurance Statistics – Investment Savings and Insurance Association

3 Sources: Health Insurance Statistics December 2008 – Health Funds Association of New Zealand and TOWER’s internal new business by lives data

4 Source: Insurance Statistics – December 2008 – Investment Savings and Insurance Association

improving customer retention. The majority of Health & Life products are presently sold through third party intermediaries.

The Health & Life business accounts for more than two-thirds of the TOWER Group’s annual profits, and it has achieved strong profit growth in the last two years, with profit after tax increasing by more than 49%.

Strategic partnerships with high quality distribution groups, coupled with recently created new products developed in collaboration with distributors, makes for a strong driver of new business.

Health & Life

Years ended 30 September

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Net
effect of
NZ $million 2008 2007
change
in result
Operating earnings 4.5 4.8 -6.3%
- Health
Operating earnings 17.7 14.1 +25.5%
- Life
Total operating 22.2 18.9 +17.5%
earnings after tax
Investment returns 6.3 3.8 +65.8%
Profit after tax 28.5 22.7 +25.6%
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General Insurance

TOWER provides general insurance in New Zealand and the Pacific Islands. The primary focus of TOWER’s general insurance business in New Zealand is personal lines (with products such as home and contents insurance and private motor vehicle insurance), a market segment in which it has more than 400,000 insurance policies in New Zealand. Based on TOWER Insurance’s internal personal lines data and the total market’s gross written premium for personal lines as supplied by the Insurance Council of New Zealand, TOWER understands that as at 30 September 2008, it held an 8.6% market share.[5]

TOWER also sells travel insurance and insurance for the rural sector. In the Pacific Islands, in addition to personal lines insurance, TOWER also sells commercial insurance to small and medium size enterprises.

TOWER continues to focus on developing its direct sales distribution platform, making service improvements, refining profitable product pricing, improving retention and claims management and optimising the Pacific Islands business.

In the 2008 financial year, the general insurance business produced a result which was more than 20% up on the previous year and an increase of more than 87% over the last two years.

General Insurance

Years ended 30 September

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Net
effect of
NZ $million 2008 2007
change
in result
Net premiums 189.3 184.1 +2.8%
Incurred claims (112.5) (109.1) -3.1%
Expenses (66.4) (65.4) -1.5%
Underwriting profit 10.4 9.6 +8.3%
Investment returns 11.0 12.4 -11.3%
Tax (6.6) (9.7) +32.0%
Profit after tax 14.8 12.3 +20.3%
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Investments

TOWER’s investment business operates in wholesale and retail funds management and superannuation, which includes its appointment as one of the six default providers of KiwiSaver schemes. As at 30 September 2008, TOWER Investments had $3.7 billion of total funds under management (‘FUM’). Based on figures published on the composition of the New Zealand funds market for the September Quarter 2008, TOWER held a market share of 6.5% in Retail funds and a combined Wholesale and Retail Market Share of 8.1%. TOWER considers it was ranked fourth in terms of total FUM in the New Zealand market and eighth in terms of Retail FUM.[6]

The investment business is divided into:

retail funds management (which offers a range of superannuation and retirement products). TOWER predominantly uses a network of independent financial planners to access the retail market;
wholesale funds management which provides investment management services to institutional investors, charitable trusts, and other divisions of TOWER;
superannuation: TOWER offers TOWER KiwiSaver, a default KiwiSaver scheme with approximately 7.8% share of the KiwiSaver market as at 30 September 2008, based on statistics published by the Reserve Bank of New Zealand.[7] TOWER also provides other group and individual superannuation services.
As at 30 September 2008, TOWER’s total FUM for investments was split as follows:

5 Sources: Annual Insurance Industry Statistics 2007-2008 - Insurance Council of New Zealand, available at http://www.icnz.org.nz/news/review/07-08/industry-statistics.php and TOWER Insurance’s internal personal lines data

6 Source: Wholesale and Retail Trends and Market Composition Reports, September Quarter, 2008 - FundSource Ltd

7 Source: Reserve Bank of New Zealand Statistics Table C15, available at http://www.rbnz.govt.nz/statistics/monfin/C15/data.html

retail 14.1%;
wholesale 63.9%;
superannuation 22.0%.

The overall market in which TOWER Investments operates is currently challenging with difficult investment markets affecting fund managers both locally and internationally. The amount of FUM has reduced which has had a direct impact on the revenue derived from fees. However, TOWER is in this business for the long term and continues to invest to ensure the business is well positioned for future growth.

Investments

Years ended 30 September

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Net
effect of
NZ $million 2008 2007
change
in result
Total income 56.5 63.9 -11.6%
Total expenses (51.4) (51.8) +0.7%
Operating earnings 5.1 12.1 -57.9%
Tax (1.4) (4.5) +68.9%
Profit after tax 3.7 7.6 -51.3%
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Group Financial Position

TOWER has sought to maintain a strong and conservative balance sheet in the current economic environment. Net Debt as at 30 September 2008 of $29.3 million represented 10% of Shareholders’ funds of $294.2 million, and only 2% of Total Assets.

TOWER also maintains a significant level of cash liquidity, with cash of $58.3 million as at 30 September 2008.

TOWER Group Financial Position

Years ended 30 September

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NZ $million 2008 2007
Cash 58.3 64.2
Financial Assets 1,099.0 1,106.4
Other Assets 361.7 375.6
Total Assets 1,519.0 1,546.2
Interest bearing debt 87.6 87.2
Other liabilities 1,137.2 1,197.1
Total liabilities 1,224.8 1,284.3
Equity 294.2 261.9
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Rating

Rating agency A.M. Best Company announced the following TOWER Group ratings in December 2008.

Current Rating (effective 5 December 2008)

TOWER Health & Life Limited:

Financial Strength Rating A- (Excellent)
Issuer Credit Rating a-

TOWER Insurance Limited:

Financial Strength Rating A- (Excellent)
Issuer Credit Rating a-

TOWER Life (NZ) Limited:

� Financial Strength Rating A- (Excellent) � Issuer Credit Rating a-

TOWER Limited:

Issuer Credit Rating bbb-

Financial Strength Ratings

A.M. Best Company’s Financial Strength Ratings provide an opinion of an insurer’s financial strength and ability to meet ongoing obligations to policyholders.

The following list outlines A.M. Best Company’s rating scale and associated descriptions.

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Secure Vulnerable
A++, A+ (Superior) B, B- (Fair)
A, A- (Excellent) C++, C+ (Marginal)
B++, B+ (Good) C, C- (Weak)
D (Poor)
E (Under Regulatory Supervision)
F (In Liquidation)
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Issuer Credit Ratings

A.M. Best Company’s Issuer Credit Ratings provide an opinion of an entity’s ability to meet its senior obligations (being those which are not subordinated). The following list outlines A.M. Best Company’s rating scale and associated descriptions.

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Investment Grade Non-Investment Grade
aaa (Exceptional) bb (Fair)
aa (Superior) b (Marginal)
a (Excellent) ccc, cc (Weak)
bbb (Good) c (Poor)
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Ratings from ‘aa’ to ‘ccc’ may be enhanced with a ‘+’ (plus) or ‘-’ (minus) to indicate whether credit quality is near the top or bottom of a category.

For more information on the rating process, see www.ambest.com/ratings

Directors and Management

The Board of TOWER and TOWER Capital Limited

A I (Tony) Gibbs

CNZM, FInstD Non-Executive Chairman

Tony was elected to TOWER’s board in March 2003 and brings more than 25 years history of a diverse range of management and directorship experience to the board covering mergers, acquisitions, divestments and restructuring.

Tony is the Chairman of Turners & Growers Limited and Staveley Inc, and a Director of various other companies including: Coats plc, Coats Holdings Limited, Guinness Peat Group plc, Guinness Peat Group New Zealand Limited.

Tony resides in Matakana, Auckland, New Zealand.

Bill Falconer

LLB, CNZM, DFlnstD

Non-Executive Director

Bill Falconer joined the TOWER Board in December 2003. Bill has had a successful career as a public servant, lawyer and Company Director.

Bill is currently the Chairman of Hellaby Holdings Limited, Oyster Bay Marlborough Vineyards Limited, Waterfront Partnership and the Meat Industry Association, and a Director of Westfield Trust (NZ) Limited and the New Zealand Symphony Orchestra. He is a Distinguished Fellow of the Institute of Directors in New Zealand, Inc.

Bill resides in Cambridge, New Zealand.

Rob Flannagan

ACA OPM (Harvard) AMInstD JP Group Managing Director

Rob was appointed as Chief Executive Officer of TOWER New Zealand in October 2006. In March 2008, Rob was appointed to the Board and now holds the position of Group Managing Director.

He is a qualified Chartered Accountant, a graduate of Harvard Business School and serves as a Justice of the Peace.

Rob brings a wealth of expertise to his leadership of TOWER. His diverse range of experience in senior management positions has been both within and outside of the financial services industry and he has also been a key participant

in the formation and start up of a number of businesses. He was a partner of Arthur Young Chartered Accountants until 1981 and was an indemand guest lecturer for Auckland University’s MBA Programmes.

Rob was co-founder of Medic Aid, a medical insurance company which at its time became the second largest medical insurer after Southern Cross. Subsequently, his senior executive roles have included Managing Director of the New Zealand Guardian Trust Company Limited as well as serving as Director of Group Initiatives for Royal Sun Alliance responsible for coordinating Group Strategic Planning, E-Business, Marketing and Communications, Group Purchasing, Risk Management and Group Projects. Rob was appointed CIO of the Promina Group.

Rob resides in Auckland, New Zealand.

Michael Jefferies

BCom, CA

Non–Executive Director

Michael joined the TOWER Board in December 2006. Michael is a chartered accountant with extensive experience in finance and investment and is a senior executive of GPG. Michael is currently Chairman of TAFMO Limited and a Director of Ozgrowth Limited, Metals X Limited, Capral Limited and MMC Contrarian Limited. Michael resides in Perth, Australia.

John Spencer

BCom, FCA

Non-Executive Director

John joined the TOWER Board in October 2003 and has been the Chairman of the Audit and Compliance Committee since December 2003. John brings to the Board significant financial and commercial expertise gained over many years from senior management positions with a number of major companies in New Zealand and overseas. Prior to the formation of Fonterra, John was the Chief Executive Officer of New Zealand Dairy Group.

John is Chairman of Tainui Group Holdings Limited, Telfer Young Limited and AsureQuality Limited, Deputy Chairman of Solid Energy New Zealand Limited and a Director of WEL Networks Limited, Dairy NZ Ltd and Allied Nationwide Finance Ltd.

John resides in Wellington, New Zealand.

Susie Staley

LLB (Otago), FNZIM, FInstD Non-Executive Director

Susie Staley was elected to TOWER Corporation’s Board in October 1999. She served on several due diligence committees for the TOWER Group and was chair of the capital raising programme in 2003 and the separation project in 2006.

A property and business lawyer, Susie has a background in strategic management and brings a wide range of business and corporate experience to the Board. She is currently chair of Maritime New Zealand, a Director of Global Technologies (NZ) Limited, Allied Nationwide Finance Limited, and a trustee of University of Otago Foundation Trust. She is an Accredited Member and Fellow of the Institute of Directors in New Zealand, Inc.

Susie resides in Dunedin, New Zealand.

Denis Wood

MA(Hons) Economics Non-Executive Director

Denis Wood was appointed to the TOWER Board in May 2005 and is Chairman of the TOWER Group Investment Committee. He previously had a career in investment banking and has extensive experience in investment management, corporate restructuring, strategic planning and capital raising. Denis is the Chairman of Mercy Hospice Auckland Limited.

Denis resides in Auckland, New Zealand.

Anthony Eisen

Alternate Non-Executive Director

Anthony Eisen is the alternate director for Anthony Ian Gibbs and Michael Leslie Jefferies on the Board of TOWER.

The Directors of TOWER Capital and TOWER can be contacted at Level 11, TOWER Centre, 22 Fanshawe Street, Auckland Central.

TOWER Management

Rob Flannagan

Group Managing Director

James Douglas

BCom, Dip Tchg

Chief Executive Officer – General Insurance

James Douglas took up the role as Chief Executive Officer for General Insurance in April 2007. James was previously Managing Director of The New Zealand Guardian Trust Company Limited and a director of a number of related companies such as Asteron Life NZ Limited and New Zealand Guardian Trust Funds Management Limited. James is the past Chairman of the

Trustee Corporation Association and has held senior management positions in sales and the financial services industry over the past 20 years.

Steve Boomert

MBA

Chief Executive Officer – Health & Life

Steve Boomert took up the role of Chief Executive Officer for Health & Life in June 2005. He has over 15 years’ experience in the financial services and health industries and his roles have included responsibility for business development, marketing, product and information technology. In 1989 Steve moved from New Zealand to Melbourne, Australia to join Colonial Mutual Life as IT Strategy Manager, rising to become Head of Strategic Planning for the listed Colonial Group. During this time he led a number of major business development initiatives including life company acquisitions in Australia, New Zealand and the UK. In 2000 he joined Medibank Private, Australia’s largest private health insurer as a General Manager responsible for product, marketing, strategy and corporate affairs.

Sam Stubbs

MA (first class Hons) Chief Executive Officer – Investments

Sam Stubbs joined as Chief Executive Officer of TOWER Investments in February 2008. He has 18 years experience in finance and asset management, previously as CEO of Hanover Group in New Zealand and with Goldman Sachs in London and Hong Kong.

Eric O’Sullivan

CA, FCIS

Group Chief Financial Officer and acting Company Secretary and Investor Relations Manager

Eric O’Sullivan joined TOWER in January 2007 as Company Secretary and Investor Relations Manager. In January 2009 he was appointed Group Chief Financial Officer. His background is as a Chartered Accountant with many years top level experience both in the accounting profession and in commercial finance roles. He was a partner in the Auckland office of Coopers & Lybrand for 10 years specialising in audit and corporate services. More recently he has held various senior finance roles in several New Zealand listed companies operating across a wide range of business sectors.

Eric is a qualified Chartered Accountant, a Fellow of the Institute of Chartered Secretaries and a member of the Institute of Directors.

Tony Dixon

ONC in Business Studies, ICMA Chief Information Officer

Tony Dixon became Chief Information Officer for TOWER in November 2006, bringing 38 years of IT all round experience to his role. His career has included setting up Novell in NZ during the early 80’s and working as a Programme Director at Air New Zealand on the Ansett/Air NZ merger. Tony was involved in business re-engineering in the Blue Star Group and more recently head of customer service management with Gen-i/Telecom.

Summary Financial Information

TOWER Capital was incorporated on 18 December 2008 and has not yet commenced business. The sole purpose of the Company is to issue the Senior Bonds that are the subject of this Offer.

It is intended that the funds received from the Offer will be made available by the Company to subsidiaries of TOWER by way of interest-bearing advances. The Company will receive interest from such subsidiaries to enable it to pay interest to Bondholders.

In reviewing information contained in this section, investors should bear in mind that for the purposes of the Securities Regulations 1983, the Company is the Issuer and the Borrowing Group and is the sole obligor of the Senior Bonds (the ‘Borrowing Group’ is a defined term in the Securities Regulations 1983, and means the issuer of the securities and all guaranteeing subsidiaries of the company that is the issuer).

TOWER and TFSG (the ‘Guarantors’) provide an unsubordinated and unsecured guarantee of Interest when payable, and of principal and Accrued Interest and Unpaid Interest when payable and on commencement of Liquidation. TFSG is the holding company for all the operating companies in the TOWER Group and

is itself a wholly owned subsidiary of TOWER. As such, although no guarantee is given by any companies in the TOWER Group other than the Guarantors, the obligations of the Company for the Senior Bonds are guaranteed by entities controlling substantially all the resources of the TOWER Group. Refer to page 14 for more information on the structure of the TOWER Group.

The financial information of the TOWER Group set out in this section has been included to give further background information about the Guarantors. No other person, including any subsidiary of TFSG, has guaranteed the obligations of TOWER Capital in relation to the Senior Bonds.

Financial Summary – TOWER Group

The information contained below for the five accounting periods ended 30 September 2008 has been taken from the audited financial statements of TOWER for the periods ended 30 September 2004 to 30 September 2008. The auditors’ reports on these financial statements were unqualified.

Summary Statement of Financial Performance of TOWER Group for the 12 month periods ended

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30 Sep 2008 30 Sep 2007 30 Sep 2006 30 Sep 2005 30 Sep 2005 30 Sep 2004
NZ$’000 Notes NZ IFRS NZ IFRS NZ IFRS NZ IFRS Previous NZ Previous NZ
(4) GAAP GAAP (5)
Total operating revenue 454,799 481,217 472,336 459,202 1,131,366 1,047,182
Net profit before interest (3) 32,817 60,402 54,057 22,705 143,628 121,453
and income tax
Total interest expense (8,140) (5,574) (15,258) (15,416) (17,511) (16,244)
Gain on disposal (2) - - - - 23,045 -
Profit before taxation 24,677 54,828 38,799 7,289 149,162 105,209
Taxation (credit) / expense (3) (15,791) 19,598 23,645 13,270 49,649 50,473
Profit from continuing (1) 40,468 35,230 15,154 (5,981) 99,513 54,736
operations
Profit from discontinued (2) - 198,030 49,404 126,113 - -
operations
Net profit after tax 40,468 233,260 64,558 120,132 99,513 54,736
Profit attributable to:
Shareholders 40,460 232,632 63,494 119,330 97,828 54,593
Minority interests 8 628 1,064 802 1,685 143
40,468 233,260 64,558 120,132 99,513 54,736
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Summary Statement of Financial Position of TOWER Group as at

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30 Sep 2008 30 Sep 2007 30 Sep 2006 30 Sep 2005 30 Sep 2005 30 Sep 2004
NZ$’000 Notes NZ IFRS NZ IFRS NZ IFRS NZ IFRS Previous Previous
(4) NZ GAAP NZ GAAP
Total assets 1,519,018 1,546,193 6,062,138 5,248,017 5,164,619 4,948,228
Total tangible assets 1,445,637 1,465,139 5,974,595 4,976,271 5,148,649 4,863,920
Total liabilities 1,224,798 1,284,296 5,432,765 4,701,079 4,383,879 4,151,829
Total equity (2) 294,220 261,897 629,373 546,938 780,740 796,399
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Summary other financial information of TOWER Group for the 12 months ended

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30 Sep 2008 30 Sep 2007 30 Sep 2006 30 Sep 2005 30 Sep 2005 30 Sep 2004
NZ$’000 Notes NZ IFRS NZ IFRS NZ IFRS NZ IFRS Previous Previous
(4) NZ GAAP NZ GAAP
Shares on issue 191,890,515 189,348,179 359,765,609 358,468,109 358,468,109 412,418,208
Basic earnings (cents per share) 21.12 110.16 17.66 31.57 25.88 13.37
Basic earnings continuing 21.12 16.39 3.92 (1.79) 18.30 13.37
operations (cents per share)
Diluted earnings continuing 21.10 16.37 3.92 (1.79) 18.30 13.37
operations (cents per share)
Total dividend paid to shareholders 14,844 - - - - -
(NZ$’000)
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Notes:

In relation to the TOWER Group’s five year financial summary, the following items highlight the key drivers of changes to the reported financial results over that period:

(1) Profit from continued operations

Consistent increases have been achieved in the three years of operating on a stand alone basis driven primarily by results from the Health & Life and General Insurance businesses.

(2) Discontinued operations

– Separation of the Australian and New Zealand businesses

The spin-off of the Australian Wealth Management business (effective 30 September 2005) and the separation of the Australian and New Zealand businesses (effective 30 September 2007) had a significant impact on the financial results over the period.

does not have any impact on the amount reported as Profit after Tax – Continuing Operations, which belongs to shareholders.

(4) Transition to NZ IFRS

The summary financial information for the 2005 through to 2008 financial years has been presented on the basis of the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). The information for 2004 financial year has been presented under the previous financial reporting standards (Previous NZ GAAP) The summary financial information for the 2005 financial year has been presented under both NZ IFRS and Previous NZ GAAP, for comparative purposes.

(5) 2004 Year

2004 figures have not been restated to separately identify discontinued operations.

(3) Tax expense

The financial statements for the 2008 year show an apparent fall in profit before tax and a substantial tax credit. This presentation is driven by the International Financial Reporting Standards (IFRS). Under IFRS TOWER must report both policyholder and shareholder impacts within a single Income Statement. Policyholder returns fell in the 2008 financial year due to negative investment market performance which impacted both profit before tax and the tax amount. The IFRS reporting requirement

Items 2 – 4 are discussed in more detail below.

(2) Discontinued operations

– Separation of the Australian and New Zealand businesses

Profit from discontinued operations for the 2007, 2006 and 2005 financial years includes gains on sale of Australian Wealth Management Business (AWM) and the Australian operations of TOWER Group as well as operating results of these businesses for the three years. These are included in the table below.

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30 Sep 2007 30 Sep 2006 30 Sep 2005
(NZD 000’s) NZ IFRS NZ IFRS NZ IFRS
Operating profit from Australian Wealth Management - - 7,943
Profit on Sale of Australian Wealth Management - - 72,955
- - 80,898
Operating profit / (loss) from TOWER Australia (4,560) 49,404 45,215
Profit on Sale of TOWER Australia 202,590 - -
198,030 49,404 126,113
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Separation of the Australian and New Zealand businesses

On 8 August 2006, TOWER announced its plan to separate the Australian and New Zealand businesses of the Group (separation effective 20 November 2006). TOWER remains listed on the Australian and New Zealand stock exchanges and continues to own the New Zealand and Pacific Island businesses. The Australian business is now called TOWER Australia Group Limited (TAL) and is listed on the ASX.

Spin-off of Australian Wealth Management (AWM) businesses

During the 2005 financial year TOWER separated and listed on the Australian Stock Exchange (ASX) its Australian Wealth Management business (AWM) which resulted in TOWER Group recording $73 million of gain on disposal.

The gain is included in the $126 million of profit from discontinued operations as per the summary statement of financial performance for the year ended 30 September 2005.

The financial impact of AWM’s spin-off on TOWER Group is shown in the table below:

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Summary
Statement
of Financial
(NZD 000’s) Performance Net Assets
NZ IFRS NZ IFRS
Sale Proceeds 272,460 -
Less carrying value (193,401) -
Less costs of separation (6,104) -
Gain recognised on distribution of shares 72,955 72,955
Distribution of AWM shares - (130,990)
Impact on Net Assets (58,035)
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Revenue, expenses, cash flows, assets and liabilities related to the separation of the Australian business and AWM

Revenue and expenses of the discontinued operations for the 2007, 2006 and 2005 financial years are as follows:

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(NZD 000’s) 30 Sep 2007 30 Sep 2006 30 Sep 2005
NZ IFRS NZ IFRS NZ IFRS
Revenue 216,568 746,439 641,889
Expenses (223,516) (656,650) (551,274)
Pre-tax operating profit (6,948) 89,789 90,615
Tax on operating profit 2,388 (40,385) (37,457)
After tax operating profit (4,560) 49,404 53,158
Gain on sale 198,403 - 72,955
Tax gain on sale 4,187 - -
Profit from discontinued operations 198,030 49,404 126,113
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Cash flows generated by discontinued operations are as follows:

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(NZD 000’s) 30 Sep 2007 30 Sep 2006 30 Sep 2005
NZ IFRS NZ IFRS NZ IFRS
Net operating cash flows (13,009) (74,270) (181,480)
Investing activities (71,288) (151,182) 319,024
Financing activities (20,533) 113,427 (59)
Net cash flows (104,830) (112,025) 137,485
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The carrying amount of assets and liabilities of the discontinued operations are as follows:

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(NZD 000’s) 30 Sep 2007 30 Sep 2006
NZ IFRS NZ IFRS
Assets
Cash and cash equivalents - 389,357
Receivables - 188,687
Financial Assets at fair value through profit and loss 3,148 3,282,741
Deferred acquisition costs - 77,614
Other assets - 3,677
Property, Plant and Equipment - 4,960
Assets arising from reinsurance contracts - 189,382
Deferred tax assets - 58,978
Intangible assets - 176,300
Total assets classified as held for sale 3,148 4,371,696
Liabilities
Payables - 220,092
Current tax liabilities - 17,273
Provisions - 19,910
Interest bearing liabilities - 114,325
Insurance liabilities - 59,015
Deferred tax liabilities - 74,904
Other liabilities 342 1,902
Deferred revenue liability - 115,115
Life insurance contract liabilities - 683,347
Life investment contract liabilities - 2,487,053
Total liabilities classified as held for sale 342 3,792,936
Net assets of disposal group 2,806 578,760
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(3) Tax expense

In the 2008 financial year TOWER Group recorded a taxation benefit of $15.8 million. The benefit mostly arose due to the specifics of the life insurance taxation regime. It includes $13.8 million tax benefit attributable to the policyholders as compared, for example, with $10.2 million of tax expense in 2007. Taxation attributable to the policyholders does not have an impact on the Group’s net profit after tax. The 2008 tax benefit also includes $1.3 million of tax credits resulting from the changes in the legislation in the PIE regime.

(4) Transition to NZ IFRS

TOWER Group adopted NZ IFRS for the reporting period beginning on 1 October

The financial information for the 2005 financial year had been restated to comply with NZ IFRS.

The summary financial information for the 2005 financial year includes financial information presented under Previous NZ GAAP and its restatement in accordance with NZ IFRS requirements. It has been impacted by the adjustments made upon transition to NZ IFRS and by the reclassification of the discontinued operations upon disposal of AWM.

The impact of the reclassification of discontinued operations is discussed in (2) above. The impact of adoption of NZ IFRS on the Statement of Financial Performance of TOWER is presented below.

Reconciliation of profit for the year ended 30 September 2005

Consolidated Statement of Financial Performance for the year ended 30 September 2005

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Effect of
Previous NZ transition to
NZ$’000 Notes GAAP Reclass NZIFRS NZIFRS
Revenue from continuing operations
Premium revenue 622,242 (1,471) - 620,771
Less: Outwards reinsurance expense (106,557) - - (106,557)
Net premium income 515,685 (1,471) - 514,214
Investment revenue (i)(ii) 517,079 (2,090) (33,166) 481,823
Fee and other revenue 98,602 (37,380) - 61,222
Net operating revenue 1,131,366 (40,941) (33,166) 1,057,258
Claims expense 375,641 - (30) 375,611
Less: Reinsurance recoveries revenue (63,848) - - (63,848)
Net claims expense 311,793 - (30) 311,763
Change in life insurance contract liabilities (vi) - 34,585 - 34,585
Change in life investment contract liabilities (vi)(v)(ii)(vii)(xi) 269,051 (34,047) 744 235,748
Management and sales expenses (vi) (vii) (xi) 403,453 (28,808) (2,926) 371,719
Net claims and operating expenses 984,297 (28,270) (2,212) 953,815
Amortisation expense (iv) 3,441 - (3,441) -
Financing costs 17,511 (2,095) - 15,416
Gain on disposal of AWM (iii) 23,045 (72,955) 49,910 -
Profit before taxation 149,162 (83,532) 22,397 88,027
Income tax expense (vi)(v)(ii)(iii)(vii)(xi) 49,649 (2,634) 895 47,910
Profit from continuing operations 99,513 (80,898) 21,502 40,117
Profit from discontinued operations - 80,898 - 80,898
Profit for the year 99,513 - 21,502 121,015
Profit attributable to minority interests (1,685) - - (1,685)
Profit for the year attributable to 97,828 - 21,502 119,330
shareholders
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Note that the above Consolidated Statement of Financial Performance does not reflect the accounting treatment of the Australian business as a discontinued operation and does not therefore reconcile on a line by line basis to the 2005 Summary Statement of Financial Performance.

The explanations of main adjustments made on transition to NZ IFRS are as follows:

(i) Removal of unrealised revaluations of investment in subsidiaries

Under Previous NZ GAAP, subsidiaries were carried at directors’ valuation with valuation movements going to the statement of financial performance. Upon adoption of NZ IFRS these revaluations have been reversed. The reversal had an impact on the recognised gain on the sale of AWM and the value of goodwill.

The subsidiary revaluation adjustments have also impacted the valuation of subsidiaries of life insurance entities. Under Previous NZ GAAP, life insurance entities and their parents, were required to carry investments in subsidiaries at market value and recognised the excess over the value of net assets as excess of market value over net asset (EMVONA). EMVONA included both acquired and internally generated goodwill.

On adoption of NZ IFRS, EMVONA was reclassified as goodwill and restated to the value acquired goodwill less any amortisation and impairment recognised under Previous NZ GAAP.

(ii) Adjustments from net market value to fair value

Under NZ IFRS, fair values must be determined using bid price, as compared to the use of last sale price under Previous NZ GAAP. In addition selling costs are no longer allowed for under NZ IFRS.

(iii) Adjustments to recognised gain on separation of discontinued businesses As noted in (i) and (ii) above the adoption of NZ IFRS resulted in changes to the carrying value of subsidiaries recognised on the balance sheet and as a result the gain on sale, being the difference between the net sale proceeds and the carrying value of the subsidiary, also changes.

Under Previous NZ GAAP, subsidiaries were carried at directors’ valuation with valuation movements going to the income statement. Upon adoption of NZ IFRS these revaluations have been reversed. In the case of the AWM sale this has resulted in the gain on sale increasing because the carrying value is now lower than previously reported under Previous NZ GAAP.

In addition NZ IFRS requires that any balances recognised in the foreign currency translation reserve (FCTR) that

are held against the foreign denominated subsidiary investment is reported through the income statement when it is disposed of. Under Previous NZ GAAP the balance held in the FCTR would have been transferred directly to retained earnings.

(iv) Removal of amortisation of goodwill

On transition to NZ IFRS, previously recognised amortisation of goodwill was reversed.

(v) Adjustments to DAC for non life investment contracts

Under NZ IFRS, entirely variable acquisition costs (transaction costs including initial commission and volume bonuses) are deferred and amortised over the life of the contracts. The deferred acquisition costs (DAC) asset is subject to an impairment test.

This differs from Previous NZ GAAP where non-commission acquisition costs were also deferred. The change in treatment resulted in the lower level of DAC recognised on transition to NZ IFRS.

(vi) Adjustments to valuations of life insurance and life investment contracts

The adoption of NZ IFRS required a reclassification of some of the life insurance contracts, which do not meet the definition of a life insurance contract under NZ IFRS 4 Insurance contracts , to life investment contracts.

All key actuarial assumptions for life insurance contracts used under NZ IFRS are consistent with assumptions previously applied under NZ GAAP with the exception of the discount rate applied.

To the extent that the benefits under life insurance contracts are not contractually linked to the performance of the assets held, the life insurance liabilities shall be discounted for the time value of money using risk-free discount rates. This contrasts with Previous NZ GAAP which required the use of discount rates based on market returns on the investments supporting the policy liabilities.

The investment contracts policy liabilities are computed using discounting and other fair value techniques. The computations are made with regard to relevant actuarial principles to ensure the liability best represents its fair value. Any change in fair value is recognised in the statement of financial performance.

Annual fee income for the investment services contract is recognised as revenue

on receipt and entry fees are deferred to be recognised as service is provided.

DAC is amortised over the life of the contract. The DAC asset is subject to an impairment test.

(vii) Adjustments for share based payments

Under NZ IFRS the cost of option schemes entered into with employees is recognised through the income statement as an expense over the periods in which the equity instruments vest. There is an equal and opposite adjustment made to the share based payments reserve reported in equity.

The expense recognised over the vesting period is based on the fair value of the options at the grant date which is subject to performance conditions being met.

Under Previous NZ GAAP options issued to employees under performance incentive schemes were not recognised as an expense in the statement of financial performance.

(viii) Adjustments for foreign currency translation reserve

Upon transition to NZ IFRS the foreign currency translation reserve was transferred to retained earnings.

(ix) Adjustments for non discounting of deferred tax

Under NZ IFRS discounting of tax assets and liabilities, that was previously required under Previous NZ GAAP, is prohibited. The impacts reported arise from the removal of discounting on deferred tax balances.

(x) Adjustments to general insurance liabilities As all general insurance contracts issued by TOWER meet the definition of insurance contracts as defined by NZ IFRS 4 the adoption of NZ IFRS have had minimal change on the accounting treatment of this business.

unearned premium liability is shown to be deficient, the deficiency must be recognised through the income statement.

The liability adequacy test performed on the unearned premium liability held in respect of the general insurance business has shown that the level of reserves held under NZ GAAP meet the reserves required under NZ IFRS.

The outstanding claims liability is measured as the central estimate of the present value of the expected future payments for claims incurred with an additional risk margin to allow for the inherent uncertainty in the central estimate. The adoption of NZ IFRS has not had a material effect on the unearned premium reserve in the balance sheet.

(xi) Adjustments to recognise capital guarantees TOWER provides capital guarantees to certain funds. Some funds are included on the TOWER consolidated balance sheet and some are held off balance sheet.

Under Previous NZ GAAP TOWER disclosed these guarantees as contingent liabilities but did not recognise a provision for these capital guarantees as it was assessed that it was not probable that the liability will materialise. TOWER has assessed that, in accordance with the principles of NZ IFRS, certain guarantees are embedded derivatives and therefore a provision should be raised to recognise the value of these embedded liabilities.

The impacts reported arise from adopting this approach.

The only notable changes from the adoption of IFRS is the liability adequacy testing that must be performed to support the adequacy of the unearned premium liability and the measurement of outstanding claims liabilities that must include a risk premium.

The liability adequacy test is performed at the reporting entity level by portfolios of contracts that are subject to broadly similar risks and are managed together as a single portfolio. The test must include a risk margin to reflect the inherent uncertainty in a central estimate. If the

Investment Statement Information

Answers to Important Questions

THIS PART OF THE OFFER DOCUMENT COMPRISES THE INVESTMENT STATEMENT FOR THE PURPOSES OF THE SECURITIES ACT 1978 AND SECURITIES REGULATIONS 1983.

What sort of investment is this?

The Senior Bonds are unsubordinated, unsecured fixed interest debt securities of the Company. The Guarantors provide an unsubordinated and unsecured guarantee in accordance with the terms of the Trust Deed.

The Senior Bonds are not shares and no voting rights attach to the Senior Bonds (other than the right to attend and vote at meetings of Bondholders). The Senior Bonds are transferable. The Senior Bonds will rank pari passu, and without preference, among themselves.

The Senior Bonds offer investors a fixed Interest Rate until the day before the Maturity Date. Interest will be payable quarterly in arrears on the Interest Payment Dates (15 January, 15 April, 15 July and 15 October in each year) with the first Interest Payment Date on 15 April 2009. Default Interest is payable in certain circumstances – see ‘What Returns do I get?’ in this section.

Subsequent Maturity Dates and the New Conditions, including the Interest Rate payable may be specified by the Company.

At maturity Bondholders may elect to either:

have their Senior Bonds redeemed or purchased for cash; or
if New Conditions are offered by the Company, rollover their Senior Bonds on the New Conditions which may be advised by the Company.

If New Conditions are offered by the Company, Bondholders who do nothing or who do not make a valid election will be deemed to have elected to retain all of their Senior Bonds on the New Conditions.

Despite a Bondholder’s election, on the Maturity Date the Company may elect to redeem or purchase some or all of their Senior Bonds for cash at their Issue Price.

For more information on the election procedures generally, see Condition 6 (Notice of New Conditions) in the section ‘Conditions of Senior Bonds’.

The Senior Bonds will be constituted by and issued under the Trust Deed. The Senior Bonds have the benefit of and are subject to the provisions of the Trust Deed and conditions applicable to Senior Bonds. For more detailed description of the terms of the Trust Deed and the conditions applicable to the Senior Bonds see the section ‘Summary of Trust Deed’ on page 44 and ‘Conditions of Senior Bonds’ on page 48.

The Senior Bonds will remain in existence unless and until they are either redeemed or purchased by the Company. Bondholders have no rights to early repayment, other than in the case of an Event of Default. In summary the Events of Default are:

the event of Liquidation of the Company, TFSG or TOWER; or
the exercise of certain cross-acceleration rights by other creditors; or
in the event that Interest has not been paid on the Senior Bonds within 10 business days of an Interest Payment Date; or
in the event that principal has not been paid on the Senior Bonds within 10 business days of the Maturity Date or other due date for payment,

where the event continues and is not remedied, and the Trustee has given a notice to the Company declaring such event to be an Event of Default.

See ‘Events of Default’ under ‘What returns will I get?’ in this section.

Subject to NZSX Listing Rules, the constitution of the Company and to the extent relevant the Trust Deed, and in particular the Financial Covenants, the Company may from time to time, without the consent of Bondholders create and issue further bonds, shares, or other securities or incur indebtedness or issue obligations ranking pari passu in all respects with, or subordinated to, the Senior Bonds and otherwise on such terms as the Company may determine. The Trustee is not required to consent to any issue of Senior Bonds not subject to the Trust Deed.

Who is involved in providing it for me?

Issuer

TOWER Capital Limited (company number 2198245) is the issuer of the Senior Bonds.

The Company was incorporated in New Zealand under the Companies Act 1993 on 18 December 2008 for the purpose of issuing the Senior Bonds.

TOWER has covenanted that the Company is and will remain a wholly owned subsidiary of TOWER while any Senior Bonds remain on issue. TOWER is the promoter of this Offer.

The Company and TOWER can be contacted at:

Level 11 TOWER Centre 22 Fanshawe Street PO Box 90347 Auckland 1142 Telephone 09 369 2000 Facsimile 09 369 2160

The directors of the Company, and of TOWER, and their principal places of residence are:

Anthony Ian Gibbs - Auckland, New Zealand
Robin Albert Flannagan - Auckland, New Zealand
William John Falconer - Cambridge,New Zealand
John Lewis Spencer - Wellington, New Zealand
Susannah Adair Staley - Dunedin, New Zealand
Denis Michael Wood - Auckland, New Zealand
Michael Leslie Jefferies - Perth, Australia

Anthony Eisen is the alternate director for Anthony Ian Gibbs and Michael Leslie Jefferies on the TOWER Board.

The Company has not yet commenced business. The intended activities of the Company (to issue the Senior Bonds) is described in section of this Offer Document entitled ‘Main terms of Offer’.

The activities of TOWER are summarised in the section ‘TOWER’s Business Overview’ on page 14.

Trustee

The trustee in respect of the Senior Bonds is The New Zealand Guardian Trust Company Limited. The Trustee can be contacted at:

The New Zealand Guardian Trust Company Limited Corporate Trusts Guardian Trust House 15 Willeston Street PO Box 913 Wellington 6140 Phone 04 495 7900 Facsimile 04 499 1454

Registrar

The Registrar of the Senior Bonds is Computershare Investor Services Limited. The Registrar can be contacted at:

Computershare Investor Services Limited Level 2 159 Hurstmere Road Takapuna North Shore City

How much do I pay?

Investors must pay the Issue Price of $1.00 for each Senior Bond allotted to them. An application cannot be withdrawn or revoked by the applicant once it has been submitted. Applications to subscribe for Senior Bonds must be for a minimum principal amount of $5,000 and thereafter in multiples of $1,000.

Applications must be made on the Application Form contained in the back of this Offer Document and must be lodged with the Registrar or the Company, any Primary Market Participant or a Joint Lead Manager in time to enable forwarding to the Registrar before 5.00pm on the Closing Date.

The aggregate principal amount of the Senior Bonds for which application is made must be paid in full on application. Cheques should be made payable to ‘TOWER Bond Offer’, be crossed ‘not transferable’, and must not be post-dated. Applications cannot be revoked or withdrawn.

Further information on how to apply for Senior Bonds is set out in the section ‘Application Instructions’ on the reverse of the Application Form.

The Company reserves the right to refuse all or any part of an application without giving any reason. Refunds will be paid within five business days of the Closing Date. No interest will be paid on refunded subscriptions.

What are the charges?

Investors are not required to pay any charges to the Company, TOWER, the Trustee, the Registrar or any other person in relation to the Offer, other than the amount subscribed on account of the Senior Bonds allotted to them.

Any fees or expenses payable to the Trustee or the Registrar and all expenses of the Offer are to be paid by the Company or TOWER.

Details of expenses incurred in respect of the Offer and payable by the Company are set out under ‘Issue Expenses’ in the section ‘Prospectus Statutory Information’ on page 62. Those expenses are estimated to total $2.1 million (exclusive of goods and services tax where applicable).

No brokerage is payable by any subscriber for Senior Bonds under the Offer.

What returns will I get?

The information set out in this section must be read in conjunction with the information set out in the section ‘What are my risks?’ below. Certain events could reduce or eliminate the returns which may be derived from holding Senior Bonds.

The principal factors that will determine the returns to Bondholders are:

the rate of Interest attaching to the Senior Bonds, which can be varied at any Maturity Date;
whether Interest is paid;
the level of market interest rates and other market factors which will affect the price at which Senior Bonds may be sold;
the financial condition of the Company and the Guarantors, and their respective abilities to meet their obligations; and
each Bondholder’s individual circumstances for tax purposes.

Interest

The Senior Bonds will bear Interest payable quarterly in arrears at 8.5% per annum. That Interest Rate will be fixed for the period to the Maturity Date of 15 April 2014.

Interest will be denominated and payable in New Zealand dollars.

Payment of Interest

The first Interest Payment Date is 15 April 2009. The first Interest payment will be made to the original subscriber for the Senior Bonds irrespective of any transfer of the Senior Bonds prior to 15 April 2009. Interest paid on the first Interest Payment Date will be calculated on a daily basis from the date a valid application is received and processed, until the day prior to the first Interest Payment Date.

Subsequent Interest payments will be calculated on an annual basis and paid in equal instalments quarterly in arrears on 15 January, 15 April, 15 July and 15 October until the Maturity Date, to registered Bondholders on the Record Date (as defined in the Trust Deed) for determining entitlement to Interest payments.

The person legally liable to pay Interest (if any) on Senior Bonds, and whom for the purposes of the Securities Regulations 1983 has promised to pay Interest, is the Company.

Guarantee

TOWER Limited and TOWER Financial Services Group Limited (the ‘Guarantors’) have guaranteed to each Bondholder the obligations of the Company to pay Interest on Senior Bonds on an Interest Payment Date and of the principal

amount of Senior Bonds together with Accrued but Unpaid Interest payable to Bondholders when payable and on a Liquidation of the Company, TFSG or TOWER. The Guarantors and the Company are associated persons in that both the Company and TFSG are subsidiaries of TOWER.

The guarantee is not subject to any conditions, is unsecured and subordinated to (ranks behind) the interests in point of security of Secured Creditors of the Guarantors and to indebtedness having priority by operation of law.

Other than the Guarantors no member of the TOWER Group or any other person guarantees the Senior Bonds or the returns that investors may receive as Bondholders.

If Interest is not paid on its due date interest is payable by the Company at the Default Rate on any unpaid amount due, from its due date until the unpaid amount is paid. TOWER may not make any Distribution to its shareholders while Interest remains unpaid.

Events of Default

In summary, the Events of Default are:

the Liquidation of the Company, TFSG or TOWER;
the exercise of certain cross-acceleration rights;
in the event that Interest has not been paid on the Senior Bonds within 10 business days of an Interest Payment Date; or
in the event that principal has not been paid on the Senior Bonds within 10 business days of the Maturity Date or other due date for payment,

where the event continues and is not remedied, and the Trustee has given a notice to the Company declaring such event to be an Event of Default. A breach of the Financial Covenants or of any other provision of the Trust Deed does not constitute an Event of Default.

Investors should refer to the Trust Deed for a fuller description of the acts and omissions that constitute an Event of Default.

If the Senior Bonds are repaid prior to their

Maturity Date, the returns Bondholders will receive will be different from the returns they would have received if the Senior Bonds were repaid on their Maturity Date.

Other Breaches

If there is a breach by the Company, TOWER or TFSG of a provision of the Trust Deed other than in an Event of Default, that continues unremedied for 30 days and the Trustee considers that such breach is materially prejudicial to the interests of Bondholders, the Trustee may take such proceedings as it thinks fit against the Company, TOWER or TFSG (as the case may be), provided that the Trustee cannot accelerate payment of Interest or Principal on Senior Bonds on the basis of this breach.

Taxation

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, the investor should immediately notify the Company.

The Company plans to register under the Approved Issuer Levy (‘AIL’) regime. Accordingly, unless advised otherwise, the Company will, where it is lawfully able to, deduct AIL (currently at 2% of Accrued Interest) from payments made or credited to non resident Bondholders who do not engage in business in New Zealand through a fixed establishment in New Zealand. Non resident Bondholders may request by a written notice to the Registrar that AIL not be deducted. In this case non resident witholding tax will be deducted at the appropriate rate.

The following information is based on applicable tax legislation current at the date of this Offer Document. All comments in relation to taxation in this Offer Document are of a general nature only, and are not (and should not be construed as) legal or tax advice to any investor in Senior Bonds. These comments should therefore be treated with appropriate caution.

Investors should consult their own taxation or other financial advisers concerning the taxation implications arising in their particular circumstances.

The Senior Bonds are financial arrangements for the purposes of the Income Tax Act 2007 (‘Tax Act’). All interest will represent taxable income for the Bondholder (other than tax exempt Bondholders) calculated under the financial arrangements rules of the Tax Act. Bondholders who are cash basis persons under the financial arrangements rules are (unless they elect

otherwise) excluded from the income spreading methods of the Tax Act.

The redemption or purchase for cash, or sale of the Senior Bonds may require the Bondholder to calculate a base price adjustment (‘BPA’) for the purposes of the financial arrangements rules. Any gain arising will be taxable income and losses will be deductible where the relevant criteria are met. The calculation will include all consideration both paid and received by the Bondholder, including the amount paid on the issue of the Senior Bonds, interest received, and the cash received on redemption or purchase or sale as applicable. All amounts returned as income or expenditure in prior years in relation to the Senior Bond (including interest income) are adjusted in the BPA.

Resident Withholding Tax (‘RWT’) will be deducted by the Company from Interest including an early redemption premium paid to or credited to Bondholders unless a Bondholder provides the Company with a valid certificate of exemption or evidence that they are not otherwise liable to RWT and the Company is satisfied that no deduction is required.

RWT will be deducted at the rates applicable at the time Interest is paid. The current rates are:

33% where notification is received that the Bondholder is a company (other than a company holding the Senior Bonds as trustee);
19.5% where the Bondholder is not a company (other than a company holding the Senior Bonds as trustee) and the Bondholder provides the Company its IRD number;
39% where the Bondholder does not provide its IRD number;
Bondholders who have provided their IRD numbers may elect to have RWT deducted at 33% or 39%.

The Taxation (Urgent Measures and Annual Rates) Act 2008 has introduced an optional 38% rate to replace the 39% rate for the 2010 income year only. It applies at the option of TOWER to interest paid from 1 April 2009 to 31 March 2010. TOWER currently intends to use the 38% rate where applicable. A further legislative change is expected to align the RWT rates with the personal tax rates starting from the 2011 income year.

Joint Bondholders will be taxed at the rates described above as if they were one person. A tax credit for RWT deducted will be available against any tax liability of the Bondholder.

No transactional taxes such as Goods and Services Tax will be applicable to the issue, redemption, purchase or sale of the Senior Bonds.

Sale of Senior Bonds

Bondholders are entitled to sell their Senior Bonds at any time subject to the terms of the Trust Deed, applicable securities laws and regulations. See ‘How do I cash in my investment?’ on page 40.

Maturity

Maturity Notice

If New Conditions are offered by the Company, the Company must send a maturity notice to Bondholders not less than 30, but not more than 60, business days before the Maturity Date specifying New Conditions as to Interest Rate, Interest Payment Dates, the New Maturity Date, early repayment options and otherwise varying the Conditions applying to Senior Bonds after the Maturity Date.

Bondholder Election

At maturity Bondholders may (within 15 business days of receipt of a maturity notice) elect to either:

have their Senior Bonds redeemed or purchased for cash; or
if New Conditions are offered by the Company, rollover their Senior Bonds on the New Conditions which may be advised by the Company.

If New Conditions are offered by the Company, Bondholders who do nothing or who do not make a valid election will be deemed to have elected to retain all of their Senior Bonds on the New Conditions.

For more information on the election procedure generally, see Condition 6 (Notice of New Conditions) in the section ‘Conditions of Notes’.

Option to Redeem

No later than 10 business days before the Maturity Date and irrespective of any Bondholder election or deemed election to rollover their Senior Bonds, the Company may give notice to Bondholders that it will redeem or purchase for cash on that Maturity Date some or all Senior Bonds on issue. Where less than all Senior Bonds are redeemed, they will be redeemed on a pro-rata basis.

What are my risks?

The principal risks for investors in Senior Bonds are related to the financial performance and/or position of the Company, the Guarantors and the TOWER Group which could mean that:

they may not receive Interest Payments on the Senior Bonds, or they may receive them late;
due to either increases in market interest rates and/or actual or perceived poor financial condition of the Company or the TOWER

Group, or for any other reason, they may not be able to sell Senior Bonds for their full Issue Price;

they may not receive back all or any of the Issue Price invested into Senior Bonds in the event of a Liquidation of the Company, TFSG or TOWER.

These factors could mean that a Bondholder may receive on the realisation of the investment, less than the Issue Price paid for that Senior Bond.

The principal factors that may affect the performance or position of the Company and of the TOWER Group are summarised below:

The performance of the Company and risks inherent in TOWER’s business

The performance of the TOWER Group is influenced by a range of risk factors, many of which are beyond the control of TOWER and the Company. Investors should consider carefully the risk factors below and other information contained in this Offer Document.

General risks of TOWER and its operating subsidiaries

Failure of strategy and growth

The successful implementation of TOWER’s strategies for its three business units will drive TOWER’s financial performance. Any material failure of those strategies to deliver expected results could have a significant adverse impact on TOWER’s profitability. Failure of TOWER’s strategies to deliver growth will ultimately impact on the appraisal values of strategic assets, and on TOWER’s performance. TOWER has a robust governance structure in place to monitor performance and the likely impact on strategy of changes in economic conditions and to make the necessary adjustments to optimise returns.

Change in economic conditions

The performance of TOWER’s operations depends on global economic conditions, particularly as they affect conditions in New Zealand. TOWER cannot predict the impact that future economic conditions will have on its business - be they positive or negative. Changes in economic conditions can impact on the financial results of TOWER through investment returns and through changes in consumer demand for TOWER’s products and services, or the value of assets under management. Economic downturns can also result in higher claims’ costs for specific classes of business, and in turn, higher premium costs.

There can be no assurance that future conditions will not materially adversely affect TOWER’s

profitability. Recent turmoil in the global credit and financial markets, and economic recession is likely to affect insurance and financial services sector companies like TOWER through investment volatility and decreased customer spend on products.

Changes in industry conditions affecting insurance and investments businesses

Insurance markets are increasingly cyclical in nature. Whilst this has been evident in general insurance premiums and claims, trends in life, disability and health insurance are also becoming more cyclical. These cyclical trends may influence the demand for, and the pricing of, TOWER’s products and services. Consequently, this may impact on TOWER’s financial performance and position.

TOWER’s Group companies maintain significant investment portfolios for both shareholder and policyholder funds. Investment returns are typically expected to generate a significant proportion of TOWER’s revenue. For TOWER’s life insurance businesses, investment returns are divided between shareholders and policyholders. The components of these returns directly impact on the Group’s profitability. Approximately one third of TOWER’s shareholder funds is invested in equities, with approximately two thirds invested in fixed interest securities. Poor investment market conditions, or a deterioration in investment markets (particularly in equity markets which are typically more volatile than fixed interest markets) may significantly reduce TOWER’s investment income, and adversely affect TOWER’s investment business. Interest rate fluctuations will also impact on the performance of TOWER’s fixed interest portfolios. The condition of investment markets generally may also adversely impact on TOWER’s ability in the future to raise further capital to fund capital requirements, and impact on surplus assets, and therefore on TOWER’s capital adequacy.

The main source of income for the retail funds management section of TOWER Investments is fees derived from managed investment products. As approximately 97% of these fees are directly related to the level of funds under management, this source of income is exposed to the state of investment markets generally and the level of funds flow that TOWER receives. If the level of funds under management falls, so will the income from these fees.

Impact of hostilities, political instability, terrorism and health epidemics

The threat of war, outbreak of hostilities or terrorist attacks could impact on TOWER’s financial performance. TOWER Insurance operates in the Pacific Islands. Political instability

there could similarly impact on its financial performance. The outbreak of a major global health epidemic may also impact on TOWER’s claims’ experience or on general business conditions.

Business continuity and disaster recovery

There is a risk that some current business continuity and disaster recovery plans will not effectively provide for continuity in the event of a disaster. These plans are presently under review to ensure that they represent the current business structure and systems.

Competition in the financial services industry

The financial services industry is highly competitive. TOWER’s competitors include a large number of life insurers and general insurers as well as non-insurance financial services companies such as banks. Consolidation of the financial services industry is expected. In addition, the entry of new participants, development of innovative products and new methods of distribution may threaten TOWER’s market share, access to distribution networks, and could force more price competition amongst participants. This may impact on TOWER’s financial performance and financial position.

Crown Deposit Guarantee Scheme

In October 2008, in response to the global credit crisis, New Zealand’s government announced a deposit guarantee scheme, extending to certain debt securities for a two year period. There is a risk that it could result in funds flowing from traditional managed funds which are not subject to the guarantee into guaranteed debt. This could adversely impact on TOWER’s investment business.

Exchange rate fluctuations

TOWER holds investment portfolios containing securities in foreign currencies. Exchange rate movements affecting the currencies may impact on the financial performance of TOWER to the extent that such exposures are not hedged, and may impact on the TOWER Group’s profitability.

Changes in government policy and regulatory compliance

Financial services industry participants like TOWER are subject to a broad range of regulation and supervision. The regulatory regimes in New Zealand and the Pacific Islands in which TOWER operates are subject to change. An example is the current government proposal for the prudential regulation and supervision of the insurance sector by the Reserve Bank (which will prescribe and enforce insurer compliance with the regulatory prudential requirements), and the regulation of non-bank deposit takers, which will apply to TOWER

Capital Limited. TOWER will also be affected by legislative changes in the taxation regimes for financial service companies, funds and individuals. TOWER is committed to ensuring that all reasonable measures are taken to maintain a responsible compliance environment through which legislative obligations are fully met. The TOWER Compliance Plan establishes a framework to implement and monitor compliance. Non-compliance with regulations may give rise to adverse publicity for TOWER. In addition, as the complexity of the regulatory regime increases, so may the cost of compliance and the risk of non-compliance. TOWER cannot predict the impact of future legislative changes, taxation changes, or stricter regulatory controls on its business. Such changes may have an adverse impact on TOWER’s financial performance and on the way in which it may undertake future business.

Reinsurance

TOWER enters into a number of reinsurance arrangements in its insurance operations. The availability and cost of reinsurance depend on prevailing market conditions and TOWER’s own financial position. A number of reinsurers are taking a more conservative position on reinsurance arrangements. In the general insurance market, TOWER Insurance may be exposed to multiple catastrophic events, however the catastrophe reinsurance they purchase includes one automatic reinstatement. Should that automatic reinstatement be triggered they would then need to source and purchase further catastrophe reinsurance, the cost and availability of which would depend on the reinsurance market at the time. In the last 25 years TOWER Insurance has only had five events that exceeded $5 million, those events occurred in 2006, 2004, 1994, 1985 and 1983. TOWER Insurance also has other reinsurance contracts on individual risks that are purchased to reduce its exposure from a single non catastrophic event.

TOWER is exposed to the risk that its reinsurers may default on their obligations and can give no assurances that it will be able to obtain reinsurance on terms and conditions that it deems appropriate.

TOWER Insurance also has various inwards reinsurance treaties that are in run off. These treaties may be subject to adverse experience however TOWER believes it is adequately reserved for these.

Group taxation

TOWER Limited and its New Zealand whollyowned subsidiaries comprise a New Zealand tax consolidated group of which TOWER Limited

is the nominated company. Large prepaid tax assets exist in TOWER. Adverse market movements may affect the ability to realise the tax asset or recognise it for financial reporting purposes.

Taxation – life insurance

The Taxation (International Taxation, Life Insurance, and Remedial Matters) Bill introduced on 2 July 2008 proposes the introduction of a whole new tax regime for the taxation of life insurance. With the dissolution of Parliament the Bill had lapsed and has recently been reinstated under the new Government. If the Bill is enacted in its entirety it will affect the taxation of TOWER Group’s life insurance business: the Bill proposes an introduction date of the new regime for TOWER on 1 October 2009, the new regime as currently drafted will result in more tax to pay for new term life business, the effect of grandfathering provisions will however reduce the impact of these changes for the first five years. The proposed regime is still under consultation and is likely to be subject to further change.

Taxation - over paid tax

In February 2004, the Inland Revenue Department (IRD) refunded TOWER $30 million in respect of over paid tax. The IRD now believes it ought not to have paid this refund and has written to TOWER disputing TOWER’s entitlement to this refund. The IRD has not issued demand for payment. TOWER has received strong legal advice that it is fully entitled to the refund.

TOWER has commenced IRD’s formal dispute resolution process in relation to the refund paid plus potential use of money interest and penalty amounts. The IRD has agreed that no tax in respect of this matter will be payable until this process is complete which is expected to take up to one year. In the unlikely event that TOWER is unsuccessful, the $30 million could be repaid to the IRD plus penalties of up to $16 million could be levied. The payment (excluding penalties) would reinstate a tax asset representing prepaid taxes that would be available to offset future tax liabilities.

Taxation - use of money interest

The IRD has advised TOWER it is considering TOWER’s entitlement to use of money interest paid to TOWER on prepaid tax assets for the income tax years 1996 to 2006. The amount of interest involved is $13.9 million which has been fully provided for in the financial statements. In the unlikely event that TOWER is unsuccessful and is required to repay the use of money interest received, there would be no impact on profit.

TOWER has received independent advice

supporting the position taken by TOWER and will defend its position if the matter is formally challenged by the IRD.

Legacy risks

Compliance errors can on occasion be identified in older financial products and systems which are complex or require significant manual processes. TOWER has a number of historical complex products and manual processes which may have undetected compliance breaches. The costs to rectify compliance breaches can be material in both compensation costs to policyholders and rectification costs. Should material compliance breaches arise this could result in TOWER’s financial performance and brand being adversely affected.

Systems risk and IT

TOWER and its operating subsidiaries are highly reliant on information technology systems to operate, and any failure or inadequacies of the systems or increased cost of technology could adversely affect the Group’s profitability. Some of these systems are coming to the end of their useful lives and will need to be replaced or the products they support migrated to alternate systems. These projects have significant associated risks including: legacy system failures, failed implementation, unexpected costs to migrate data, install and run new systems, or in migrating clients from one product to another, which could adversely affect TOWER’s profitability.

TOWER is proposing to replace the legacy information technology systems that support the TOWER Insurance and TOWER Health & Life businesses to provide a more stable and functional system. In addition to the IT risks outlined above, the implementation programme for the proposed migration is both complex and has a long period of delivery. If the legacy systems are not successfully replaced or the implementation is delayed, there is a significant risk the legacy systems could fail to perform to competitors’ standards.

Alliances

TOWER’s primary product and service distribution channel is through third parties and, in particular, through financial planners and alliances. The loss of any one of these relationships (which may be a consequence of any change of ownership of a party to an alliance contract) could have a negative impact over time on the earnings of the General Insurance business in particular. ANZ National Bank Limited has purported to terminate the alliance relationship in New Zealand for the provision of general insurance, and that is currently subject to a legal dispute. TOWER

cannot at this stage predict what effect this will have on the earnings of TOWER’s insurance business, as this will depend on a number of factors, including ongoing renewals and the extent to which that business is profitably replaced.

Actual claims experience differing from underwriting and reserving assumptions

The TOWER Group’s earnings depend significantly on the claims paid under its insurance contracts, and will vary from period to period depending upon the amount of claims incurred in the relevant periods. The Group establishes and carries liabilities which are actuarially determined or set by management to provide for such claims. In addition to determining the estimated level of policy liabilities, the TOWER Group has a reinsurance programme to manage, to an extent, its exposure to claims. Owing to the nature of the underlying risks and the high degree of uncertainty associated with the determination of the liabilities of unpaid policy benefits and claims, TOWER cannot determine precisely the amounts that will ultimately be paid to settle these liabilities. If the actual claims’ experience is greater than the amount provided for on the basis of actuarial determination or management provision, estimated claim costs will be exceeded. Any increase in claims’ liabilities as a result may have a materially adverse effect on TOWER’s business, results of operation and financial performance.

Credit ratings

Credit ratings for various TOWER Group members are referred to on page 17. A number of TOWER’s businesses rely on the credit rating to write business. A deterioration in those credit ratings may result in some agents, brokers, distributors and other alliance partners and customers ceasing to do business with TOWER.

Reliance on key personnel

The TOWER Group has qualified and experienced management and investment personnel. There are a relatively small number of key senior executives actively involved in major strategic decisions and who are integral to the control and profitability of the TOWER Group operations. The loss of any of these key management or investment personnel may have an adverse affect on the Group’s operations.

Brand and reputation

TOWER’s brand name and those of its operating companies are important to maintaining existing business and sourcing new business. Poor financial performance and/or compliance issues may result in adverse media coverage and

changed perceptions. The negative impact on TOWER’s brand reputation is liable to result in a decrease in new business and the withdrawal of existing business. Damage to the reputation of the TOWER name may have an adverse impact on the financial performance of the TOWER Group.

Risks relating to the nature of the Senior Bonds

Other risks relate to the nature of the Senior Bonds.

The Senior Bonds may only be redeemed or purchased for cash:

at the Maturity Date or, in certain circumstances, earlier (see ‘Early Repayment’ under ‘Can the investment be altered?’ in this section);
after an Event of Default;
at the next Interest Payment Date following a Takeover of TOWER.

The Senior Bonds will remain in existence unless and until they are redeemed. Senior Bonds cannot be converted into shares.

The Trustee’s role is limited. Other than the Financial Covenants and the limited Events of Default there are no other covenants in the Trust Deed or restrictions as to how the Company or TOWER operates its business. Other than in relation to the Events of Default, a breach by the Company of the representations, warranties or covenants contained in the Trust Deed (including the Financial Covenants) does not entitle the Trustee to require the Company to redeem or purchase Senior Bonds but if and for so long as there is a breach of a Financial Covenant Interest is payable at the Default Rate (instead of the usual Interest Rate) and no Distributions may be made by TOWER to its shareholders.

Further details on the limitations on payment and enforcement rights are set out under ‘Status of the Senior Bonds’, in the section ‘Conditions of Senior Bonds’ on page 48.

Further Issues of Debt

However, TOWER, TFSG and the Company have covenanted that while any Senior Bonds remain

outstanding:

Net Assets of TOWER Group shall be not less than $200 million;
Net Debt of the TOWER Group shall not exceed 40% of Net Assets of the TOWER Group;
Secured Debt of the TOWER Group shall not exceed 10% of Net Assets of the TOWER Group.

Interest on the Senior Bonds is payable by the Company at the Default Rate instead of the usual Interest Rate for so long as there is an unremedied breach of a Financial Covenant.

TOWER may not make any Distribution to its shareholders while any Interest is unpaid, while there is an unremedied Event of Default, or there remains an unremedied breach of a Financial Covenant, or where to do so would cause a breach of a Financial Covenant.

Secured Creditors

As the Senior Bonds are not secured all of the obligations of the Company and the Guarantors, and the rights of Bondholders rank behind the rights of all Secured Creditors of the Company and the Guarantors in point of security.

The Company and the Guarantors may issue further Senior Bonds which rank equally with or behind the Senior Bonds.

Consequences of insolvency

No Bondholder will be liable to pay any further amounts to the Company or any other person in respect of those Senior Bonds if the Company or either of the Guarantors becomes insolvent.

In the event of the Liquidation of the Company or either of the Guarantors, the Trustee can prove in the Liquidation on behalf of Bondholders for the principal amount of their Senior Bonds plus any Accrued or Unpaid Interest that is payable. The claims of all Secured Creditors and other creditors having priority by operation of law will be paid, in respect of the security held, ahead of Bondholders. This means that no payment will be made to Bondholders until all of the other Secured Debts of the Company and the Guarantors are paid in full to the extent of the security given. The interests of Bondholders will, however, rank ahead of subordinated creditors and shareholders in the Company and the Guarantors. Bondholders under this Offer will rank pari passu with each other and other Senior Creditors.

Can the investment be altered?

The terms of this Offer and the terms and conditions on which investors may apply for and purchase Senior Bonds may be altered by an amendment to this Offer Document by

the Company. Any amendment that altered the fundamental terms and conditions of the Offer would be notified to investors. Details of any such amendment must be filed with the Registrar of Companies.

On the Maturity Date, the New Condition Interest Rate payable on Senior Bonds may be set by the directors of the Company at their discretion.

Amendment to Trust Deed

The provisions of the Trust Deed, and the Conditions of Senior Bonds under the Trust Deed may be altered by the Company and the Guarantors with the approval of the Trustee.

Certain amendments do not require Bondholder approval under the terms of the Trust Deed. Other amendments must be approved by an extraordinary resolution of Bondholders. More information on Trust Deed amendments is contained under ‘Amendment of Trust Deed’ in the section ‘Summary of Trust Deed’ on page 47.

Early repayment by the Company

The redemption price payable will be:

103% of Issue Price (if the Early Repayment is between 15 April 2011 and 14 April 2012, inclusive);
102% of Issue Price (if the Early Repayment is between 15 April 2012 and 14 April 2013, inclusive); and
101% of Issue Price (if the Early Repayment is after 14 April 2013).

The Company may also require the redemption or purchase of all of the Senior Bonds on issue:

at no premium to the Issue Price, together with any Accrued Interest and Unpaid Interest on the Senior Bonds in the event of an adverse change in taxation relating to the Senior Bonds from the perspective of either the Company or Bondholders, as reasonably determined by the Company or TOWER; or
at the aggregate of 103% of the Issue Price, together with all Acrued Interest and Unpaid Interest in respect of those Senior Bonds in the event of a Major Restructuring Event prior to 15 April 2011.

See ‘Early Repayment’ in the section ‘Conditions of Senior Bonds’ on page 50.

Takeover of TOWER

The obligations of the Company and TOWER under the Trust Deed will not change as a result of any change in the shareholding of TOWER, whether by Takeover or otherwise. If a Takeover offer is made for TOWER Shares, the offeror may also choose to offer to acquire the Senior Bonds.

If a party acquires a relevant interest in 90% or more of TOWER Shares, the compulsory acquisition provisions of applicable law would be invoked. The Trust Deed provides that should a Takeover of TOWER occur, (which is defined to occur when a party obtains a relevant interest in 90% or more of TOWER Shares and where TOWER Shares cease to be listed on NZX and ASX), the Company must offer to redeem or purchase all Senior Bonds on issue for cash at the Issue Price at the next Interest Payment Date. See the section ‘Conditions of Senior Bonds’.

Senior Bonds cannot be converted into TOWER Shares on the occurrence of a Takeover.

Other early repayment

Liquidation and ranking

On the Liquidation of the Company or either of the Guarantors the Senior Bonds will be redeemable by the Company in cash and will rank for payment:

ahead of subordinated creditors and shareholders of the Company and (in relation to their respective guarantee obligations) the Guarantors, and pari passu with other Bondholders and Senior Creditors; but
after the claims in point of security of Secured Creditors of the Company or of either of the Guarantors, and to indebtedness having priority by operation of law.

Creditors of non-guaranteeing subsidiaries of the TOWER Group will rank ahead of Bondholders.

Cross-acceleration

the Senior Bonds, unless it is remedied by the Company or the relevant Guarantor. In the event that the entitlement of a Senior Creditor to require repayment is disputed, it shall be determined by application to the courts in New Zealand and will not constitute an Event of Default pending such determination.

Non-payment of Interest or principal

If Interest is not paid within 10 business days of an Interest Payment Date or if principal is not paid within 10 business days of the Maturity Date or other due date for payment, Bondholders may also be entitled to early repayment. See ‘Events of Default’ on page 32.

How do I cash in my investment?

Bondholders may sell or transfer their Senior Bonds at any time, subject to the terms of the Trust Deed and applicable securities laws and regulations. Bondholders also have limited rights to repayment and redemption. See the section ‘Limitation of rights’ under ‘Summary of the Trust Deed’.

As the Offer contained in this Offer Document is an initial issue of Senior Bonds, there is currently no established market for sale of the Senior Bonds. An application has been made 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 Offer Document have been duly complied with. However, NZX accepts no responsibility for any statement in this Offer Document.

Senior Bonds may be transferred using a transfer document in the form prescribed by the Trust Deed or otherwise approved by the Company or by any other method to transfer securities which is not contrary to any law, and which may be operated in accordance with NZSX Listing Rules. Applicants for Senior Bonds should not attempt to sell those Senior Bonds until they know whether, and how many, Senior Bonds have been allotted to them. None of the Company, the Guarantors, TOWER, nor any of its related companies, the Joint Lead Managers, the Trustee, nor any of their respective directors, officers or employees or any other person accepts any liability or responsibility should any applicant for Senior Bonds attempt to sell or otherwise deal with Senior Bonds before receiving a FASTER statement recording the number of Senior Bonds (if any) allotted to that applicant.

Bondholders can generally sell Senior Bonds by contacting a Primary Market Participant. Except as approved by the Company or as required under NZSX Listing Rules, no transfer of Senior Bonds will be registered if registration (together with the registration of all contemporaneous transfers) would result in the vendor or purchaser holding a parcel of less than the minimum holding (currently 5,000) of Senior Bonds. The

Company may give notice to any Bondholder holding less than the minimum holding of Senior Bonds requiring the sale of those Senior Bonds in accordance with the Trust Deed. Brokerage may be payable by Bondholders on any transfer of Senior Bonds.

Senior Bonds may be redeemed or purchased for cash in certain circumstances. See ‘What returns will I get?’ in the section ‘Answers to Important Questions’.

Who do I contact with enquiries about my investment?

Inquiries about this Offer should be directed to any Primary Market Participant or:

Company Secretary TOWER Limited Level 11 TOWER Centre 22 Fanshawe Street PO Box 90347 Auckland 1142 Telephone 09 369 2000 Facsimile 09 369 2160

And to:

Arranger, Joint Lead Manager and Organising Participant

Goldman Sachs JBWere (NZ) Limited Level 38 Vero Centre 48 Shortland Street PO Box 887 Auckland 1140 Telephone 09 357 3200 Facsimile 09 357 3222

And to:

Joint Lead Manager Forsyth Barr Limited The Octagon Private Bag 1999 Dunedin 9054 Telephone 0800 367 227 Facsimile 03 477 4928

Inquiries about Senior Bonds should be directed to the Registrar:

Computershare Investor Services Limited Level 2 159 Hurstmere Road Takapuna North Shore City 0622 Private Bag 92119 Auckland 1142 Freephone 0800 222 065 Telephone 09 488 8777 Facsimile 09 488 8787

Is there anyone to whom I can complain if I have problems with the investment?

Complaints about Senior Bonds can be made to:

Company Secretary TOWER Limited Level 11 TOWER Centre 22 Fanshawe Street PO Box 90347 Auckland 1142 Telephone 09 369 2000 Facsimile 09 369 2160

And to: The Trustee The New Zealand Guardian Trust Company Limited Guardian Trust House 15 Willeston Street PO Box 913 Wellington 6140 Telephone 04 495 7900 Facsimile 04 499 1454

And to:

Computershare Investor Services Limited Level 2 159 Hurstmere Road Takapuna North Shore City 0622 Private Bag 92119 Auckland 1142 Telephone 09 488 8777 Facsimile 09 488 8787

There is no ombudsman to whom complaints about the Senior Bonds can be made in New Zealand.

What other information can I obtain about this investment?

Other information about the Senior Bonds, and on the Company is contained or referred to in this Offer Document, the Trust Deed and in the financial statements for the Company (once available). You may obtain copies of these documents (once available), and other documents of, or relating to the Company (including the constitution of the Company and the material contracts referred to in this Offer Document) without fee during normal business hours at the Company, Level 11, TOWER Centre, 22 Fanshawe Street, PO Box 90347, Auckland 1142.

You can also obtain copies of this Offer Document free of charge on request in writing, or by telephone, from the Joint Lead Managers, Primary Market Participants, and the Registrar.

This Offer Document, the Trust Deed and the financial statements of the Company (once available) are also filed on a public register which may be inspected on the Companies Office website at www.companies.govt.nz, or (for a fee) at the Companies Office, Level 18, ASB Centre, 135 Albert Street, Auckland.

Bondholders will be sent annually a copy of the financial statements for the Company, together with such other information as is required to be sent to Bondholders in accordance with the Securities Act 1978, NZSX Listing Rules, and other relevant law.

On request information

Applicants may receive copies of:

the audited annual financial statements of the Company;
the constitution of the Company;
the Trust Deed;
this Offer Document;
the material contracts referred to in this Offer Document; and
any other information that may be requested under regulation 23A of the Securities Regulations 1983.

This information will be provided to you at no cost if you request it in writing from the Registrar at the above address prior to the Closing Date. In any other case a reasonable fee may be charged.

In addition, a copy of this Offer Document, TOWER’s annual and half-yearly reports and the TOWER Group’s latest financial statements can also be found on TOWER’s website:

www.towerlimited.com

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Other Information
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Summary of Trust Deed

The Trust Deed, the parties to which are the Company, the Guarantors and the Trustee, is dated 12 February 2009. The Senior Bonds offered under this Offer Document are all subject to the detailed provisions of the Trust Deed.

The following is a summary of the principal provisions of the Trust Deed which comprises three main parts: the general trust deed provisions setting out the rights and the obligations of the Company, the Guarantors and the Trustee in respect to the Senior Bonds, detailed Senior Bond Conditions and meeting procedures. An extract of the Senior Bond Conditions is contained in the section ‘Conditions of Senior Bonds’ on page 48.

Investors requiring further information should refer to the Trust Deed, which is available for inspection at the places referred to in this Offer Document under the heading ‘What other information can I obtain about this investment?’, in the section ‘Answers to Important Questions’ on page 41.

Bondholders are entitled to the benefit of, are bound by, and are deemed to have notice of the provisions of the Trust Deed.

Introduction

The Senior Bonds offered under this Offer Document will be constituted by and issued in accordance with the Trust Deed. The Trustee acts as trustee for the Bondholders. The Trust Deed provides for the issue of the Senior Bonds by the Company.

Ranking of the Senior Bonds

The Senior Bonds constitute unsubordinated, unsecured fixed interest debt securities of the Company and an unsubordinated, unsecured contingent liability of the Guarantors.

No security is given over the assets of the Company (being the borrowing group for the purposes of the Securities Act). No securities are therefore secured by a mortgage or charge over any of the assets of the borrowing group (being the Company) that rank in point of security equally with, or ahead of, the Senior Bonds.

Under the Trust Deed, the rights of Bondholders on Liquidation of the Company, TFSG or TOWER will rank ahead of the rights of Shareholders of the Company, pari passu with each other, but in

respect of security held, rank behind in right of payment to the claims of all Secured Creditors of TFSG and TOWER and indebtedness having priority by operation of law.

Under the Trust Deed, the Company is permitted to create and issue additional Senior Bonds, subject to the Trust Deed, with the consent of the Trustee. The consent of the Trustee will not be required to issue debt which is not subject to the Trust Deed.

Guarantee

There are no guaranteeing subsidiaries of the Company.

The Guarantors have guaranteed on an unsubordinated, unsecured basis payment of Interest on Senior Bonds which becomes due for payment on an Interest Payment Date, and the principal amount of Senior Bonds including Accrued but Unpaid Interest payable to Bondholders when payable and on a Liquidation of the Company, TFSG or TOWER.

No person or company (other than the Guarantors) guarantees the Senior Bonds or the returns that investors may receive as Bondholders.

No Restrictions on Borrowing

Other than the Financial Covenants, the Trust Deed does not restrict TOWER and its subsidiaries (including the Company) from incurring, varying or dealing with any borrowings or issuing obligations or creating new mortgages or charges ranking equal with or subordinate to the interests of Bondholders.

The Company’s covenants

The Company has covenanted with the Trustee in the Trust Deed that it will:

promptly notify the Trustee and each Bondholder if interest will not be paid, or if the Company fails to make a payment of interest or any amount due in respect of the Senior Bonds, when payable including an Event of Default of which the Company is aware;
send copies to the Trustee of all notices given by it to Bondholders generally;
whenever so requested, whether or not at the relevant time there are any Senior Bonds outstanding, give to the Trustee or any person authorised by the Trustee to receive it, such

information as may reasonably be required with respect to all matters necessary for the purpose of the discharge of the duties, trusts and powers vested in the Trustee under the Trust Deed or imposed upon it by law and for this purpose produce and facilitate the provision of information to the Trustee by the auditors of the Company or TOWER (as the case may be) as required by any applicable law and for this purpose will procure and facilitate the provision of information to the Trustee by the auditors of the Company under the procedures contemplated by section 50 of the Securities Act;

use all reasonable endeavours to maintain quotation of the Senior Bonds on the Stock Exchange and to provide to the Stock Exchange such information as it may require in accordance with its normal requirements, or in accordance with any arrangements for the time being made with the Stock Exchange;
promptly notify the Trustee if the Company becomes aware that any provision of the Trust Deed or any terms of issue of the Senior Bonds has not been or, as the case may be, cannot be complied with by the Company, TFSG or TOWER;
if and to the extent that a Senior Bond can be transferred or traded under a system authorised or approved under the Securities Transfer Act 1991, at all times use reasonable endeavours to comply (or procure that the Registrar complies) with all material requirements of, or otherwise relating to, such system (including any applicable arrangement made between the Company and the Stock Exchange or requirement imposed on the Company by the Stock Exchange);
advise the Trustee and each Bondholder in accordance with any terms of issue of the Senior Bonds promptly upon becoming aware of a Takeover;
pay all duties, registration fees, and other similar duties or fees, including penalties (if any) payable on or in connection with the constitution and issue of the Senior Bonds, the execution and registration of the Trust Deed and the admissibility in evidence of the foregoing;
carry on its business in a proper manner and with sufficient assets to meet all its obligations under the Trust Deed and in respect of the Senior Bonds as they fall due;
unless otherwise permitted by the Trustee:
ensure that the net proceeds of the issue of the Senior Bonds are utilised in favour of or for the benefit of, any one or more of TOWER or TOWER’s related companies; and
not engage in any business or activities not permitted by the Company’s constitution or other relevant laws applicable to its continued corporate existence;
comply with the provisions of each of the Securities Act 1978 and the Listing Rules applicable to the Senior Bonds; and
comply with its obligations under the Conditions.

TOWER’s Covenants

TOWER has covenanted with the Trustee in the Trust Deed that it will:

send copies to the Trustee of all notices given by it to Bondholders generally;
whenever so requested, give to the Trustee or any person authorised by the Trustee to receive it, such information as may reasonably be required with respect to all matters necessary for the purpose of the discharge of the duties, trusts and powers vested in the Trustee under the Trust Deed or imposed on it by law;
forward to the Trustee and all Bondholders (other than those to whom the same are sent as holders of TOWER Shares) copies of all notices, reports and financial statements which it sends to its shareholders at the same time as those communications are distributed;
ensure that the Company remains a wholly owned subsidiary of the TOWER Group;
procure that the Company complies with its covenants;
carry on its business in a proper manner as a full, effective and valid going concern;
unless otherwise permitted by the Trustee:
ensure the net proceeds of the issue of the Senior Bonds are utilised in favour of or for the benefit of, any one or more of TOWER or TOWER’s related companies; and
not engage in any business or activities not permitted by TOWER’s constitution or other relevant laws applicable to its continued corporate existence;
deliver to the Trustee on time all reports required to be given by it;
not make any Distribution:
while there is Unpaid Interest; or
while there is an unremedied breach of a Financial Covenant; or
where to do so would cause a breach of a Financial Covenant; or
while there is an unremedied Event of Default.
comply with its obligations under the Conditions.

Financial Covenants

TOWER, TFSG and the Company have covenanted that while any Senior Bonds remain outstanding:

the Net Assets of TOWER Group shall be not less than $200 million;
Net Debt of the TOWER Group shall not exceed 40% of Net Assets of the TOWER Group; and
Secured Debt of the TOWER Group shall not exceed 10% of Net Assets of the TOWER Group.

If, and for so long as a breach of either of the Financial Covenants occurs, the Company must pay interest at the Default Rate (instead of the usual Interest Rate), and TOWER may not make any Distribution to its shareholders. Bondholders and the Trustee have no other remedies if these covenants are breached – see ‘Limitation on Rights’ in this section.

Early Repayment

Events of Default

Events of Default are set out on page 32.

Limitation on Rights

The Senior Bonds carry only limited rights of enforcement. Under the Trust Deed, the Trustee has a limited role to act on behalf of Bondholders in restricted circumstances, and to take any steps necessary to protect the interests of Bondholders in respect of amounts payable to Bondholders on an Event of Default of the Company, TFSG or TOWER.

Other than in the case of an Event of Default, such matters as a breach of a Financial Covenant, or a breach by the Company or TOWER of any representation, warranty or covenant contained in the Trust Deed or the Conditions will not entitle the Trustee or Bondholders to exercise any rights of acceleration against the Company, TFSG or TOWER. The only right of the Trustee or a Bondholder to require redemption or purchase of Senior Bonds prior to the Maturity Date is following an Event of Default.

The Company must offer to redeem Senior Bonds at the Issue Price at the next Interest Payment Date in the event of a Takeover of TOWER.

Where a material breach of the Trust Deed occurs, the Trustee may take such proceedings

as it thinks fit against the Company, TOWER or TSFG (as the case may be), but cannot in that event accelerate repayment of the Senior Bonds.

Trustee’s Duties

The Trustee shall exercise reasonable diligence to ascertain whether or not any breach of the terms of the Trust Deed or of the Conditions of the Senior Bonds has occurred and, except where it is satisfied that the breach shall not materially prejudice the interests of the Bondholders, shall do all such reasonable things as it is empowered to do to cause any breach of those terms to be remedied. The Trustee is also required under clause 1 of the Fifth Schedule to the Securities Regulations 1983 to exercise reasonable diligence to ascertain whether or not the assets of the borrowing group (being the Company) that are or may be available, whether by way of security or otherwise, are sufficient or likely to be sufficient to discharge Senior Bonds as they become due. The Trustee’s duties under the Trust Deed as prescribed by clause 1 of the Fifth Schedule to the Securities Regulations 1983 shall be construed and interpreted to recognise and take into account the following characteristics of the Senior Bonds:

Subject to the Trust Deed, the Company, TFSG and TOWER (including its subsidiaries), may freely incur further indebtedness;
The limited Events of Default;
Outside an Event of Default, the limitations on the rights of the Bondholders or the Trustee (including in respect of any breach by the Company, TFSG or TOWER of the Financial Covenants) provided in the Trust Deed and the Conditions;
the limitations on the rights of the Trustee to make any directions or otherwise interfere in the conduct of the business of the Company, TFSG or TOWER;

and, the Trustee’s duties, shall, to the maximum extent possible, be limited accordingly.

Under section 62 of the Securities Act 1978, the Trustee cannot lawfully be exempted from, or indemnified against, liability for breach of trust where the Trustee fails to show the degree of care and diligence required of the Trustee as trustee having regard to the provisions of the Trust Deed. All Bondholders shall be deemed to have knowledge of and to have accepted that the duties and obligations of the Trustee under clause 1 of the said Fifth Schedule shall be construed, interpreted and limited as provided above.

Without limiting the generality of the foregoing the Trust Deed also provides that:

the Trustee may and is entitled to assume without enquiry, until the Trustee receives actual notice of a Liquidation of the Company,

TFSG or TOWER, that the Senior Bonds remain valid and (if not redeemed or purchased in accordance with the Conditions) remain debt securities which are not and will not fall due for payment;

other than in the case of an Event of Default, the Trustee will not be bound to take steps to ascertain whether or not the Company, TFSG or TOWER has committed any breach of the provisions of the Trust Deed or any of the Senior Bonds and cease to be entitled to assume without enquiry that no such breach is occurring or has occurred only upon either:
the Trustee receiving specific advice that a breach has, or appears to have, occurred or threatens to occur, from the directors of TOWER, TFSG or the Company or the auditors; or
the Trustee receives actual notice of a Liquidation of the Company, TFSG or TOWER;
the Trustee is not required to monitor compliance by the Company, TFSG, TOWER or any other party with NZSX Listing Rules and, in the absence of notice to the contrary from the Company, TFSG, TOWER or NZX, shall be entitled to assume that they are complying;
nothing expressed in the Trust Deed or implied by law shall prohibit the Trustee or any of its related companies or the officers of the Trustee from being a Bondholder, Shareholder or creditor of, or having any further interests in, the Company, TFSG or TOWER or from acting in any representative capacity for a Bondholder in relation to other engagements or transactions with the Company, TFSG or TOWER. The Trustee may enter into any transactions with the Company, TFSG or TOWER and shall not be accountable to the Company, TFSG, TOWER or the Bondholders for any profits arising from any such transactions.

transfer and trading of the Senior Bonds on the NZDX or otherwise; or

if it is necessary or desirable in order to ensure compliance with any statutory or regulatory requirements.

The Trustee may also concur with the Company, TFSG and TOWER in making any variation or addition to the Trust Deed or the Conditions if it is authorised by an extraordinary resolution of Bondholders.

Miscellaneous

The Trust Deed also contains detailed provisions relating to meetings of Bondholders, the register of Senior Bonds, the transfer of Senior Bonds, reporting obligations, and various other matters. For further information on the transfer of Senior Bonds see Condition 8 (‘Transfers of Senior Bonds’) in the section ‘Conditions of Senior Bonds’ on page 53.

The Trustee, TFSG, TOWER and the Company are entitled to rely on the Register as the sole and conclusive record of the Senior Bonds.

Neither the Trustee nor the Company is liable to the other or to any Bondholder or former Bondholder for accepting in good faith as valid any certificate subsequently found to be forged, irregular or not authentic.

Amendment of Trust Deed

The Trustee may, subject to the requirements of NZX, without the consent of Bondholders, concur with the Company, TFSG and TOWER in making any variation or addition to the Trust Deed or the Conditions in certain circumstances, being:

if in the Trustee’s opinion it is made to correct a manifest error, or is of a formal or technical nature or is made to comply with law, or is convenient for the purposes of obtaining or maintaining any quotation of the Senior Bonds on the NZDX; or
if it is the Trustee’s opinion that it is not, or is not likely to become, materially prejudicial to the general interests of the Bondholders; or
if it is necessary or desirable to facilitate the

Conditions of Senior Bonds

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This section contains an extract from the Trust Deed which describes the conditions applying to the Senior Bonds. References in this section to clause numbers and conditions relate to the clauses and conditions set out in the Trust Deed.

The extracts of the Trust Deed describing the Conditions of Senior Bonds set out below are subject to the detailed provisions of the Trust Deed. Words and expressions defined in the Trust Deed have those meanings where they are used in the extracts set out below, unless they are given different meanings below or are otherwise defined elsewhere in this Offer Document.

Interpretation

Some definitions from the Trust Deed which are relevant to the Conditions of Senior Bonds are set out at the end of this section.

1 Trust Deed

1.1 The Senior Bonds are constituted under the Trust Deed dated 12 February 2009 between TOWER Capital Limited ( Company ), TOWER Financial Services Group Limited ( TFSG ), TOWER Limited ( TOWER ) and The New Zealand Guardian Trust Company Limited ( Trustee ).
1.2 The statements in these Conditions include summaries of, and are subject to the detailed provisions of, the Trust Deed. If there is a discrepancy between the provisions of the Trust Deed and these Conditions, the provisions of the Trust Deed will prevail.
1.3 The Trust Deed provides for only limited Events of Default which entitle acceleration of payment of outstanding Senior Bonds on issue. An Event of Default (as defined in the Trust Deed) is if:
1.3.1 the Company or either TOWER or TFSG becomes insolvent, is placed in Liquidation or any analogous procedure occurs in respect of it; or
1.3.2 the Company or either TOWER or TFSG defaults on Senior Debt (other than that incurred under the Trust Deed) and Senior

Creditors are entitled to, and demand accelerated repayment of that Senior Debt in excess of (in aggregate) $10,000,000. If entitlement to demand accelerated repayment is disputed by TOWER, that entitlement shall be determined by application to the courts in New Zealand; or

1.3.3 any amount of interest payable in respect of any Senior Bond is not paid in the manner specified in the Trust Deed within 10 business days of the relevant Interest Payment Date where the event continues and is not remedied, and the Trustee has given a notice to the Company declaring such event to be an Event of Default; or
1.3.4 any amount of principal payable in respect of any Senior Bond is not paid in the manner specified in the Trust Deed within 10 business days of when payment is required, including on the Maturity Date.
1.4 The Bondholder is entitled to the benefit of, is bound by, and is deemed to have notice of, the provisions of the Trust Deed.
1.5 Words and expressions defined in the Trust Deed not otherwise defined in these Conditions shall, unless the context otherwise requires, have the same meanings where used in these Conditions.

2 Status of the Senior Bonds

Issue

2.1 Each of the Senior Bonds to be issued will have an Issue Price and face value of $1.00 per Senior Bond, and must be paid for in full on application.

Status

2.2 The Senior Bonds constitute unsecured unsubordinated obligations of the Company and rank pari passu and without priority or preference amongst themselves and with all other outstanding unsecured and unsubordinated debt obligations of the Company.

3 Interest

Interest Rate and Calculation of Interest

3.1 Subject to this Condition 3, each Senior Bond will accrue interest on a daily basis calculated on its Issue Price as recorded in the Register at the Record Date, from the relevant Issue Date and at the rate determined by the Company on each issue of Senior Bonds. In respect of the Senior Bonds to be issued on or about March 2009, in accordance with these Conditions, the Interest Rate will be fixed by the Company on the basis and applicable from that date as specified in the Offer Documents relating to such Senior Bonds. On any offer of Senior Bonds, the Company may issue and allot Senior Bonds both conditionally and progressively over the offer period as is specified in the Offer Documents.
3.2 All calculations of interest on the Senior Bonds will be to two decimal places. For the purpose of making any interest payment in respect of a Bondholder’s aggregate Senior Bonds, any fraction of a cent will be disregarded.
3.3 Interest will cease to accrue on each Senior Bond on the earliest of:
3.3.1 the date on which the Senior Bond is redeemed or purchased for cash by the Company in accordance with these Conditions; and
3.3.2 in the event of Liquidation, the date on which the Senior Bond is redeemed by payment of the Liquidation Amount.

Interest Payment Dates

3.4 Subject to this Condition 3, interest on each Senior Bond will be calculated from the date that a valid application is received and processed until the First Interest Payment Date. Thereafter interest shall be calculated on an annual basis at the applicable rate and payment will be made in arrears on each Interest Payment Date of an amount being one quarter of such annual sum.
3.5 Any interest paid on the First Interest Payment Date shall be paid to the original subscriber of the Senior Bonds, whether or not on that date the Bondholder of the Senior Bonds is some other person. All subsequent interest is only payable to those persons registered in the Register as holders of Senior Bonds at the Record Date during the relevant Interest Period.

Default Interest

3.6 If any interest is not so paid on its due date or if there is an unremedied breach of the Financial Covenants contained in clause 5.5 of the Trust Deed then:
3.6.1 in respect of any Unpaid Interest, interest shall be payable at the Default Rate on such Unpaid Interest, from its due date for so long as such interest remains unpaid; and
3.6.2 in respect of any unremedied breach of the Financial Covenants, interest shall be paid on the Senior Bonds at the Default Rate in lieu of the Interest Rate payable, from the date of breach until such time as the breach is remedied.
3.7 Any interest payable at the Default Rate in accordance with Condition 3.6 will accrue daily and compound on each subsequent Interest Payment Date. All such interest will fall due for payment on the subsequent Interest Payment Date.
3.8 The Company may, at its option and upon giving not more than 14 business days’, nor less than seven business days’ notice to the Bondholders (which notice may be accompanied by a post-dated cheque), pay all or part of any Unpaid Interest. If part only is paid, it must be paid on a pro rata basis across all Senior Bonds. Unpaid Interest relating to any Interest Period may not be paid before the Unpaid Interest relating to any earlier Interest Period has been paid. All Unpaid Interest shall become due and payable in and upon the Commencement of Liquidation of the Company, TFSG or TOWER, but subject to section 2 of the Trust Deed.
3.9 TOWER will not make any Distribution:
3.9.1 while there is Unpaid Interest; or
3.9.2 while there is an unremedied breach of the Financial Covenants; or
3.9.3 where to make any Distribution would cause a breach of a Financial Covenant; or
3.9.4 while there is an unremedied Event of Default.
3.10 The Company agrees that it will promptly notify the Trustee and each Bondholder if the Company intends not to or fails to make a payment of interest on the Senior Bonds when due in accordance with these Conditions.

Certificate by Company conclusive

3.11 A certificate by the Company as to the amount of interest payable to a Bondholder on an Interest Payment Date is, in the absence of manifest error, conclusive and binding on the Bondholder.

4 Payments

Method of payment
4.1 All payments in relation to a Senior Bond may be satisfied by:
4.1.1 mailing cheques to the address of; or
4.1.2 direct credit to any bank account nominated in writing (prior to the Record Date) by,

the Bondholder entered in the Register on the Record Date. Such mailing or direct credit will occur prior to 5.00pm on the relevant Interest Payment Date (or, if that date is not a business day, the next business day after that date) or other date on which payment is required to be made.

Deduction for withholding tax

4.2 All payments or credits to, or to the account of, Bondholders (including payments of, and credits in respect of, interest) will be made net of any tax in respect thereof required by any Government Agency in New Zealand to be withheld, deducted or paid by the Company, except to the extent that the Company is satisfied that the Bondholder is exempt from any such tax or is a person in respect of whom any such withholding, deduction or payment is not required to be made. Any Bondholder claiming any such exemption or to be such a person must provide the Company and the Registrar with such evidence as the Company or the Registrar may from time to time require to satisfy itself in respect of the validity of that claim.

Time limit for claims

4.3 A claim against the Company for a payment under or in respect of a Senior Bond is void unless made within six years of the due date for that payment.

5 Early repayment

Call Option

5.1 The Company may at any time after 15 April 2011 and having given Bondholders (and the Trustee) at least 45 business days’ written notice, require redemption of all or any portion of the

Senior Bonds. If the Company proposes to redeem or purchase any portion of the Senior Bonds, such redemption or purchase must be made on a prorata basis across all Bondholders. The Company agrees that if a pro-rata redemption or purchase would result in a Bondholder holding:

5.1.1 Senior Bonds that have an aggregate Issue Price that is less than the Minimum Holding, then the Company will redeem or purchase all Senior Bonds held by that Bondholder; or
5.1.2 Senior Bonds that have an aggregate Issue Price other than the Minimum Holding and thereafter integral multiples of $1,000, the Company shall redeem or purchase the number of Senior Bonds necessary to reduce the Bondholder’s holding to an aggregate Issue Price of the nearest multiple of $1,000 over the Minimum Holding of $5,000,

in each case such redemptions or purchases will be made in accordance with Conditions 5.2 and 5.7.

Redemption Price

5.2 Subject to Condition 5.3, if the Company exercises its right to redeem or purchase all or any portion of the Senior Bonds under Condition 5.1, the redemption price paid to Bondholders shall be:
5.2.1 The aggregate of 103% of the Issue Price of, plus any Accrued Interest and Unpaid Interest as at the date of payment of the redemption price in respect of, such Senior Bond, if redeemed or purchased between 15 April 2011 and 14 April 2012 (inclusive);
5.2.2 The aggregate of 102% of the Issue Price of, plus any Accrued Interest and Unpaid Interest as at the date of payment of the redemption price in respect of, such Senior Bond, if redeemed or purchased between 15 April 2012 and 14 April 2013 (inclusive); or
5.2.3 The aggregate of 101% of the Issue Price of, plus any Accrued Interest and Unpaid Interest as at the date of payment of the redemption price in respect of, such Senior Bond, if redeemed or purchased after 14 April 2013 but before the Maturity Date.

5.3 Notwithstanding any other Condition, the Company shall have the option to redeem or purchase all (but not part only) of Senior Bonds outstanding on any date following a Tax Event, at the Issue Price, together with all Accrued Interest and Unpaid Interest in respect of those Senior Bonds, and the provisions of Conditions 5.2.1 to 5.2.3 shall not apply.
5.4 Notwithstanding any other Condition, the Company shall have the option to redeem or purchase all (but not part only) of Senior Bonds outstanding prior to 15 April 2011 following a Major Restructuring Event, at the aggregate of 103% of the Issue Price, together with all Accrued Interest and Unpaid Interest in respect of those Senior Bonds.
5.5 Other than in respect of a redemption under Conditions 5.2 and 5.4, the redemption price shall be the aggregate of 100% of the Issue Price of, plus any Accrued Interest and Unpaid Interest as at the date of payment of the redemption price in respect of, such Senior Bond.
5.6 If and to the extent that the Company elects to exercise the option contained in clause 5.3 it shall give notice of such exercise to the relevant Bondholders and the Trustee not later than 90 days prior to the date of payment of the redemption price in such manner as the Company determines to be the most practicable in all the circumstances (including by telephone subject to later confirmation in writing), but any omission to give such notice and/or the non receipt of such notice by a Bondholder shall not invalidate or otherwise affect the rights and obligations of the Company to redeem or purchase Senior Bonds.

For this purpose:

Tax Event means the introduction of, or any change in, any law or directive or in its interpretation by any relevant agency or authority or court which, in the reasonable opinion of the Company, TFSG or TOWER, is likely to have a material adverse effect on the taxation position (other than on account of a change in the rate of tax on overall net income) of either the Company, TFSG, TOWER or the Bondholders generally in respect of their respective rights and/or obligations under the Senior Bonds.

5.7 Payment of the redemption price for such Senior Bonds shall be made without any deduction (other than any deductions or

withholdings on account of taxes which are required by law to be made from such payments).

5.8 Each such payment, when cleared, shall (notwithstanding Conditions 8.1 to 8.4) operate as a transfer of the Senior Bond, or the relevant part thereof, to the Company (or its nominee) (and the Registrar shall amend, or be deemed to have amended, the Register accordingly) and shall be a complete satisfaction and discharge of any obligation of the Company, TFSG and TOWER to the relevant Bondholder in relation to payment of principal, interest and any other sums payable under the relevant part of such Senior Bond, including any obligation to issue Ordinary Shares in conversion of the relevant Senior Bonds or the relevant part thereof, and the Company, TFSG and TOWER shall have no further obligations or liabilities to the relevant Bondholder in respect of such Senior Bond or part thereof.

6 Notice of New Conditions

Election Notice

6.1 The Company may give to each Bondholder (and send a copy to the Trustee) not later than three business days after the Election Record Date, a notice ( Election Notice ) in a form reasonably satisfactory to the Trustee specifying if applicable, the New Conditions as to Interest Rate, Interest Payment Dates, New Maturity Date, early repayment options (as set out in Condition 5), and otherwise varying the Conditions to apply to the Senior Bonds after the Maturity Date. The Election Notice must also clearly state the Bondholders may elect not to accept the New Conditions, and specify the date by which such an election must be received. The Company shall seek the Trustee’s confirmation that it is prepared to continue to act as Trustee in respect of the Senior Bonds to be subject to the proposed New Conditions (such confirmation not to be unreasonably delayed or withheld, and not being required where the New Conditions differ from the previous terms and Conditions of the Senior Bonds only as to Interest Rate, Interest Payment Dates or New Maturity Date).
6.2 The Election Notice shall be given to the Bondholders whose names appear on the Register on the Election Record Date.

Bondholder’s election to retain or redeem

6.3 Subject to the Company’s right to redeem or purchase Senior Bonds contained in these Conditions, Bondholders may elect by notice in writing to the Company within 15 business days of the date of the Election Notice:
6.3.1 to retain some (subject to the Bondholder retaining the Minimum Holding) or all of their Senior Bonds on any New Conditions offered; or
6.3.2 to have their Senior Bonds redeemed or purchased for cash.
6.4 If, in relation to a Senior Bond:
6.4.1 the Company does not receive an Election Notice from the Bondholder on or before the Notification Date; or
6.4.2 the Election Notice requires a declaration to be completed by the Bondholders as to the name and domicile of the beneficial owner of the Senior Bonds and such declaration is not duly completed; or
6.4.3 if for any other reason (not attributable to the Company, TFSG or TOWER) the Election Notice is defective,

the Company must send a notice ( Maturity Notice ) not later than 10 business days before and including the Maturity Date to the Bondholder which advises whether the Bondholder will be deemed to have accepted the New Conditions in respect of all such Senior Bonds, or those Senior Bonds will be redeemed or purchased on the Maturity Date in such proportion as the Company in its discretion decides, in accordance with Conditions 6.11 and 6.12.

6.5 Where the Company:
6.5.1 receives an Election Notice from the Bondholder under Condition 6.3.1 electing to retain only some of that Bondholder’s Senior Bonds; or
6.5.2 receives an Election Notice from the Bondholder under Condition 6.3.2 electing to have their Senior Bonds redeemed or purchased for cash; the Company will, in respect of Senior Bonds that are not being retained by the Bondholder, redeem or purchase the Senior Bonds on the Maturity Date in

accordance with Conditions 6.11 and 6.12.

6.6 For Senior Bonds that are to be redeemed or purchased on the Maturity Date, the Company will redeem or purchase such Senior Bonds in accordance with Conditions 6.11 and 6.12.

Acceptance of New Conditions

6.7 As from the Maturity Date, in respect of the Senior Bonds which the Bondholder has (or is deemed to have) accepted the New Conditions, the New Conditions will be deemed to be amended by incorporation into the Conditions as if such New Conditions were expressly set out in such Conditions. As soon as practicable after the Maturity Date the Company will give to the Bondholder a notice setting out such New Conditions, or if there is a valid Certificate for such Senior Bonds, the Company will give to the Bondholder a new Certificate incorporating (whether by endorsement or reference) such New Conditions.

Redemption or purchase at option of Company on Maturity Dates

6.8 No later than 10 business days before and including the Maturity Date the Company may, notwithstanding any election by Bondholders under Condition 6.3, elect that it redeems, or that it compulsorily purchases, for cash some or all of the Senior Bonds held by Bondholders by giving notice in writing of such election to Bondholders.
6.9 If the Company elects that it will compulsorily redeem, or that it will purchase, for cash some or all of the Senior Bonds, the Company must promptly notify Bondholders that such redemption or purchase of the Senior Bonds for cash will occur on the Maturity Date, and such redemption or purchase for cash will be at the price calculated in accordance with Condition 6.11.
6.10 If the Company elects to exercise its rights under Condition 6.8 to redeem or purchase some but not all of those Senior Bonds, then any such redemption or purchase for cash must be on a pro-rata basis across all relevant Senior Bonds.
6.11 The redemption or purchase price shall be an amount equal to the aggregate of the Issue Price of, and any Unpaid Interest in respect of, such Senior Bond or part thereof as at the date of payment

of the Issue Price. Payment for such Senior Bonds shall be made without deduction (other than any deductions or withholdings on account of taxes which are required by law to be made from such payments), in accordance with Condition 4.2.

6.12 Each such payment, when cleared, shall (notwithstanding Conditions 8.1 to 8.4) operate as a transfer of the Senior Bond, or the relevant part thereof, to the Company (or its nominee) (and the Registrar shall amend, or be deemed to have amended, the Register accordingly) and shall be a complete satisfaction and discharge of any obligation of the Company, TFSG and TOWER to the relevant Bondholder in relation to payment of principal, interest and any other sums payable under the relevant part of such Senior Bond, including any obligation to issue Ordinary Shares in conversion of the relevant Senior Bonds or the relevant part thereof, and the Company, TFSG and TOWER shall have no further obligations or liabilities to the relevant Bondholder in respect of such Senior Bond or part thereof.

Takeover Provision

6.13 If a Takeover occurs which results in TOWER being delisted from ASX and NZX, (not being connected to a capital restructuring arranged by the Company or TOWER which results in a new listed holding company where, following the restructuring, at least 80% of the consolidated assets of the new holding company is comprised of assets which were consolidated assets of the Company or TOWER prior to the restructuring) but no offer is made to Bondholders to redeem or purchase all of the Senior Bonds, the Company must give notice prior to the next Interest Payment Date to all Bondholders, offering to redeem or purchase all Senior Bonds on that next Interest Payment Date.
6.14 The offer to redeem or purchase shall be in addition to, and not in replacement of, the Company’s obligations to issue Election Notices.
6.15 If a Bondholder elects that the Company redeems or purchases their Senior Bonds, such redemption or purchase must occur on that Interest Payment Date at a price equal to the aggregate of the Issue Price of, and any Unpaid Interest in respect of, such Senior Bonds.

Redemption on Liquidation

6.16 Notwithstanding any other Condition or any provision of the Trust Deed, on Commencement of Liquidation of either the Company, TFSG or TOWER, the Senior Bonds will immediately become redeemable by payment of the Liquidation Amount which will only be payable in accordance with the Trust Deed and Conditions.

7 Rights attaching to Senior Bonds

Issues of securities

7.1 The Senior Bonds carry no right to participate in any offering of securities by the Company or TOWER, and each of the Company and TOWER reserves the right at all times to issue securities to any person in any manner.

Voting rights

7.2 Except as required by the Securities Act or the Companies Act, Bondholders will not have any right to vote at general meetings of the Company or TOWER respectively.

8 Transfers of Senior Bonds

Transfers

8.1 Subject to the provisions of this Condition 8, the Senior Bonds may be transferred in minimum amounts of $1,000, subject to the Bondholder retaining the Minimum Holding in accordance with Condition 8.12, or such lesser amount as the Company may from time to time permit.

Form of transfer

8.2 Subject to these Conditions and the Trust Deed, a Bondholder may transfer any Senior Bond held by him or her by:
8.2.1 a written instrument or transfer in the usual or common form signed by the transferor and the transferee; or
8.2.2 means of the FASTER system operated by NZX; or
8.2.3 any other method of transfer of marketable securities which is not contrary to any law and which may be operated in accordance with any Listing Rules, and which is approved by the Company.

Registration process

8.3 The following provisions apply to instruments of transfer other than any transfer via FASTER:
8.3.1 the instrument of transfer must be

left at the registry accompanied by the Certificate (if any) in respect of the Senior Bonds to be transferred or such other evidence as the Registrar or the Trustee requires to prove the transferor’s title to, or right to transfer, the Senior Bonds; and

8.3.2 on registration of a transfer of a Senior Bond, the Certificate (if any) evidencing that Senior Bond will be cancelled and replaced.
8.4 The Company will direct the Registrar not to charge a fee to any Bondholder for:
8.4.1 registering transfers of Senior Bonds; or
8.4.2 splitting Certificates in relation to Senior Bonds; or
8.4.3 issuing Certificates (where bound to do so) and transmission receipts in relation to Senior Bonds; or
8.4.4 using holder or FASTER identification numbers in relation to Bondholders; or
8.4.5 effecting conversions between subregisters (if any) of the Register; or
8.4.6 noting transfer forms in relation to Senior Bonds,

except in the case where Certificates, or any information necessary to effect a transfer of Senior Bonds are issued to replace lost or destroyed Certificates.

Transfers must be registered

8.5 Subject to this Condition 8, the Company must direct the Registrar not to refuse to register or fail to register or give effect to, a transfer of Senior Bonds.

Refusal to register transfers

8.6 The Company may direct the Registrar to refuse to register any transfer of Senior Bonds where:
8.6.1 these Conditions, the Trust Deed, any Listing Rules or any applicable legislation permits, or requires the Company to do so;
8.6.2 the Company elects to redeem or purchase Senior Bonds under Conditions 5.1 or 6.7.

Notice of refusal to register

8.7 Where registration of a transfer of Senior Bonds is refused under Condition 8.6, the Company must direct the Registrar to give written notice of the refusal and the precise reasons for the refusal to the party lodging the transfer, if any, within

five business days after the date on which the transfer was lodged. The failure to give such a notice will not invalidate the decision not to register.

Retention of transfers

8.8 The Company is to direct the Registrar to retain all instruments of transfer of Senior Bonds which are registered, but any instrument of transfer of Senior Bonds the registration of which was declined or refused (except on the ground of suspected fraud) is to be returned to the party lodging the transfer.

Powers of attorney

8.9 Any power of attorney granted by a Bondholder empowering the donee to deal with, or transfer Senior Bonds, which is lodged, produced or exhibited to the Registrar will be deemed to continue and remain in full force and effect as between the Company, the Trustee, the Registrar and the grantor of that power, and may be acted on, until express notice in writing that it has been revoked or notice of the death of the grantor has been received at the registry.

Transmission by operation of law

8.10 Any person becoming entitled to any Senior Bond by operation of law (including the death or bankruptcy of any Bondholder) may, upon producing evidence of such entitlement as shall be acceptable to the Company, obtain registration as the Bondholder of such Senior Bond or may execute a transfer of such Senior Bond. This provision includes any case where a person becomes entitled as a survivor of persons registered as a joint Bondholder.

Replacement of Certificates

8.11 Should any valid Certificate be lost, stolen, mutilated, defaced or destroyed, it may be replaced at the office of the Registrar upon payment by the claimant of the fees and expenses incurred in connection with such replacement and on such terms as to evidence and indemnity as the Company and the Registrar may require. Mutilated or defaced Certificates must be surrendered before replacements will be issued. Where there is a valid Certificate on issue for a Senior Bond, the Registrar may decline to register any transfer of that Senior Bond unless the relevant valid Certificate is produced, but may at its discretion dispense with production of the Certificate subject to production

instead of such indemnity or declaration of loss as it may require.

Sale of less than Minimum Holding

8.12 Except as approved by the Company (at its absolute discretion), which approval may be recorded in any prospectus or other offer document in relation to the Senior Bonds, no transfer shall be permissible or be accepted for registration where any proposed transfer would result in the transferee holding Senior Bonds with the same Maturity Date having an aggregate Issue Price of less than the Minimum Holding.
8.13 The Company may at any time give notice to any Bondholder holding Senior Bonds of an aggregate Issue Price of less than the Minimum Holding that if at the expiration of three months after the date the notice is given the Bondholder still holds Senior Bonds of an aggregate Issue Price of less than the Minimum Holding then the Company may exercise the power of sale of those Senior Bonds as set out in this Condition 8.13. If that power of sale becomes exercisable:

of several joint Bondholders) is the only person recognised by the Company as having any title to Senior Bonds registered in the name of the deceased Bondholder. Subject to compliance by the transferee with the Terms of Issue, the Board may register any transfer signed by a Bondholder prior to the Bondholder’s death, despite the Company having notice of the Bondholder’s death.

Transmission by operation of law

9.2 A person (a transmittee) who establishes to the satisfaction of the Board that the right to any Senior Bonds has devolved on the transmittee by will or by operation of law may be registered as a holder in respect of the Senior Bonds or may (subject to the provisions of the Terms of Issue relating to transfers) transfer the Senior Bonds. The Board has the same right to refuse to register the transmittee as if the transmittee was the transferee named in a transfer presented for registration.
8.13.1 the Company may arrange for the sale of those Senior Bonds through the Stock Exchange or in some other manner approved by the Stock Exchange;
8.13.2 the Bondholder shall be deemed to have authorised the Company to act on the Bondholder’s behalf and to execute all necessary documents for the purposes of that sale;
8.13.3 the Company shall account to the Bondholder for the net proceeds of sale of the Senior Bonds (after deduction of reasonable sale expenses), which shall be held on trust for the Bondholder by the Company and paid to the Bondholder on surrender of any Certificates for the Senior Bonds sold; and
8.13.4 the title of a purchaser of any Senior Bonds sold under this Condition 8.13 shall not be affected by any irregularity or invalidity in the exercise of the power of sale or the sale itself.

9 Transmission on death or by law

Transmission on death

9.1 The personal representative of a deceased Bondholder (who is not one

10 Indemnity to the Company, TFSG and TOWER

Liability of the Company, TFSG and TOWER

10.1 Condition 10.2 applies if any law imposes or purports to impose any immediate or future or possible liability on the Company, TFSG or TOWER to make any payment, or empowers any Governmental Agency to require the Company, TFSG or TOWER to make any payment, in respect of any Senior Bonds held either jointly or solely by any Bondholder or in respect of any transfer of those Senior Bonds or in respect of any interest or other money due or payable or accruing due or which may become due or payable to the Bondholder by the Company, TFSG or TOWER on or in respect of any Senior Bonds or for or on account or in respect of any Bondholder, whether because of:

10.1.1 the death of the Bondholder;

10.1.2 the non-payment of any income tax or other tax by the Bondholder; 10.1.3 the non-payment of any estate, probate, succession, death, stamp or other duty by the Bondholder or a personal representative of that Bondholder or by or out of the Bondholder’s estate; 10.1.4 any assessment of income tax against the Company, TFSG or TOWER in respect of interest paid or payable to the Bondholder; or

10.1.5 any other act or thing in relation to a Senior Bond or the Bondholder.

Indemnity

10.2 In each case referred to in Condition 10.1:

10.2.1 the Company, TFSG and TOWER are to be fully indemnified, as a continuing indemnity, against all liability by the Bondholder or the Bondholder’s personal representative and by any person who becomes registered as the holder of the Senior Bonds on the distribution of the deceased Bondholder’s estate;

10.2.2 the Company, TFSG and TOWER have a lien or charge on

the Senior Bonds for all money paid by the Company, TFSG or TOWER in respect of the Senior Bonds under or because of any law;

10.2.3 the Company, TFSG and TOWER have a lien on all interest and other money payable in respect of the Senior Bonds registered in the Register as held either jointly or solely by the Bondholder for all money paid or payable by the Company, TFSG or TOWER in respect of the Senior Bonds under or in consequence of any law, together with interest at a rate the Board of the Company may determine from the date of payment to the date of repayment, and may deduct or set off against any interest or other money payable any money paid or payable by the Company, TFSG or TOWER together with interest; 10.2.4 the Company, TFSG and TOWER may recover as a debt due from the Bondholder or the Bondholder’s personal representative, or any person who becomes registered as the holder of the Senior Bonds on the distribution of the deceased Bondholder’s estate, any money paid by the Company, TFSG or TOWER under or in consequence of any law which exceeds any interest or other money then due or payable by the Company, TFSG or TOWER to the Bondholder together with interest at a rate the Board of the Company may determine from the date of payment to the date of repayment; and

10.2.5 the Company may, if any money is paid or payable by the Company, TFSG or TOWER under any law, refuse to register a transfer of any Senior Bonds by the Bondholder or the Bondholder’s personal representative until the money and interest is set off or deducted or, in case the money and interest exceeds the amount of any interest or other money then due or payable by

the Company, TFSG or TOWER to the Bondholder, until the excess is paid to the Company, TFSG or TOWER.

Remedies cumulative

10.3 Nothing in Conditions 10.1 and 10.2 affects any right or remedy which any law confers on the Company, TFSG or TOWER and any right or remedy is enforceable by the Company, TFSG or TOWER whether against the Bondholder or the Bondholder’s personal representative.

11 Definitions and interpretations

Definitions
11.1 The following definitions from the Trust Deed and the Conditions are set out to assist interpretation of the Conditions.

Accrued Interest means all interest on the Senior Bonds which has accrued but which at the relevant time is unpaid and has not become payable in accordance with the Conditions.

Board means the Board of Directors of TOWER, TFSG or the Company (as the case may be) from time to time.

Bondholder means, in relation to any Senior Bonds, a person (including future persons) registered in the Register as the holder of those Senior Bonds from time to time and shall include the legal personal representative or successor of such Bondholder.

Certificate means a certificate issued by the Company in, or substantially in, the form set out in Schedule 1 of the Trust Deed or such other form of confirmation as the Trustee approves, and includes any new certificate, in each case relating to the applicable Conditions and evidencing the entitlement of the Bondholder of the Senior Bonds specified therein.

Commencement of Liquidation of the Company, TFSG or TOWER (as the case may be) means the earliest of:

(a) the date of the passing by that company of an effective resolution for Liquidation of the Company, TFSG or TOWER; or
(b) the date of the order of a court of competent jurisdiction for the Liquidation of the Company, TFSG or TOWER; or
(c) the date of the appointment of a receiver, receiver and manager, administrative receiver or statutory manager of the Company, TFSG or TOWER.

Companies Act means the Companies Act 1993 of New Zealand.

Company means TOWER Capital Limited and includes any permitted successor or assignee or transferee.

Conditions means the terms and conditions (including, where appropriate, New Conditions) applicable to the Senior Bonds which, as provided in this deed, are applicable to (and which will be endorsed on) the Certificates or sent to Bondholders, and shall be in, or substantially in the form set out in Schedule 2 (as modified from time to time in accordance with this deed or the Conditions) and any reference in this deed to a particular numbered Condition or clause in the Conditions shall be construed accordingly and shall also include the terms and conditions specified to be applicable to such Senior Bonds in any deed, agreement, offer documentation or other document issued or executed by the Company, TFSG and TOWER in relation to the issue, allotment or offering of such Senior Bonds and which the Bondholder has accepted (either expressly or otherwise).

Default Rate means the rate which is 2% per annum above the Interest Rate applicable to the Senior Bonds.

Distribution has the same meaning as in section 2 of the Companies Act.

Election Notice has the meaning given to it in Condition 6.1.

First Interest Payment Date means 15 April 2009.

Governmental Agency means any government or semi-governmental, administrative, fiscal or judicial entity or authority of New Zealand.

Interest Payment Date means the 15th day of January, April, July and October in each year.

Interest Period means:

(a) the period from (and including) the Issue Date relevant to each Senior Bond to (but excluding) the First Interest Payment Date; and
(b) each subsequent period from (and including) an Interest Payment Date to (but excluding) the next Interest Payment Date.

Interest Rate means the relevant interest rate specified in the Certificate in respect of the Senior Bonds.

Issue Date means, in relation to a Senior Bond, the issue date specified in the Register.

Issue Price means, in relation to a Senior Bond, the principal amount specified in the Conditions applicable to their issue.

Liquidation in relation to the Company, or, where the context so requires, TFSG or TOWER, means the winding up, dissolution or liquidation of the Company, TFSG or TOWER (as the case may be) in New Zealand and any other analogous proceedings whereby the Company, TFSG or TOWER (as the case may be) may, at the conclusion of such proceedings, cease to be duly incorporated or validly existing in New Zealand and includes the appointment of a receiver, receiver and manager, administrator or statutory manager of the Company, TFSG or TOWER but does not include any Arrangement, liquidation or appointment to effect a solvent reconstruction or amalgamation. For the avoidance of doubt, Liquidation does not include a capital restructuring arranged by TFSG or TOWER which results in a new listed holding company where, following the restructuring, at least 80% of the assets (and if being determined by value, are valued on a consistent basis) of the new holding company is comprised of assets which were assets of TFSG or TOWER or any of its subsidiaries prior to the restructuring provided that, prior to such restructuring, the new holding company is approved by the Trustee including, if reasonably required by the Trustee in any instance where such restructure could be materially prejudicial to the general interests of the Bondholders, by an Extraordinary Resolution and such new holding company enters into a deed supplemental to the Trust Deed in a form reasonably approved by the Trustee under which the obligations of TFSG or TOWER under the Trust Deed are assumed by such new holding company, with appropriate adjustments having been made, subject only to any consequential or other modifications thereto as the Trustee, TFSG, TOWER and the Company may agree.

Liquidation Amount means the Issue Price of the Senior Bonds plus Accrued Interest and Unpaid Interest (if any) in respect of those Senior Bonds as at the date of the Commencement of Liquidation of the Company, TFSG or TOWER (whichever occurs first) and (to the extent recoverable at law) interest on such amount at the rate prescribed in the Conditions, from the date of such Commencement of Liquidation until payment.

Major Restructuring Event means a restructuring of the TOWER Group which in the reasonable opinion of TOWER is material to the Company, TFSG or TOWER.

Maturity Date in respect of a Senior Bond, means 15 April 2014, being the date on which the Company may:

(a) redeem the Senior Bonds; or
(b) reset the Interest Rate and the New Maturity Date.

Maturity Record Date means a date not less than 30, and not greater than 60 business days before the Maturity Date.

Minimum Holding means $5,000.

New Maturity Date means the next Maturity Date that will apply to the Senior Bonds, following the initial Maturity Date, as specified in the New Conditions.

New Conditions means the new conditions as to Interest Rate, Interest Dates, Maturity Date, early repayment options, and any other condition otherwise varying the Conditions to apply to the Senior Bonds after the Maturity Date.

Notification Date means 15 business days after an Election Notice is sent to Bondholders after a Maturity Record Date.

Offer Documents means the investment statement and prospectus documents issued by the Company in respect of any particular issue of Senior Bonds.

Record Date means, in relation to an Interest Period, 5pm on that date:

(a) which is 10 calendar days prior to the relevant Interest Payment Date or, if that date is not a business day, then the preceding business day; or
(b) such other date as the Company (with the approval of the Trustee and NZX) may determine,

before the Interest Payment Date for that Interest Period.

Register means the register in respect of the Senior Bonds established and maintained in accordance with the Trust Deed.

Registrar means the registrar or (where there is more than one Register) each registrar from time to time appointed by the Company to maintain the Register.

Securities Act means the Securities Act 1978.

Senior Bonds means the unsubordinated, unsecured debt securities issued by the Company which are on issue and have not been redeemed or purchased by TOWER or its subsidiaries.

Senior Creditors means the persons from time to time entitled to Senior Debt.

Senior Debt means all obligations of the Company, TFSG or TOWER (whether in their

capacity as a guarantor of the Company or of any other person or otherwise) as the case may be, in respect of indebtedness whether existing now or established after and whether actual or contingent and notwithstanding that such obligations may arise in respect of credit facilities or other arrangements in favour of the Company, TFSG or TOWER (as aforesaid) either in place now or made available later (regardless of the extent to which such credit facilities or such other arrangements may now or at any time later be utilised, drawn or repaid and re-utilised or redrawn by the Company, TOWER or TFSG (as aforesaid)) including obligations of the Company, TOWER or TFSG (as the case may be) under or in respect of the Senior Bonds, except obligations which rank, or are intended or expressed to rank, pari passu with, or subordinate to, the obligations of the Company, TFSG or TOWER (as the case may be) to Subordinated Creditors.

Unpaid Interest means, on any date and in respect of any Senior Bond, all interest which was not paid on its due date.

Stock Exchange means:

(a) in respect of the Senior Bonds, the NZDX on which the Senior Bonds are quoted or any alternative or substitute market in New Zealand for Senior Bonds or other arrangement on or through which Senior Bonds may be freely traded and which is generally regarded as the principal such market or arrangement for the trading of Senior Bonds; and
(b) in respect of TOWER Shares, the NZSX on which the TOWER Shares are quoted or any alternative or substitute market for TOWER Shares or other arrangement on or through which TOWER Shares are freely traded and which is generally regarded as the principal such market or arrangement for the trading of TOWER Shares and if at any time any doubt exists as to the principal exchange for TOWER Shares, such exchange as is determined as such at the relevant time by the Board of TOWER.

Takeover means where any person whether acting alone or in concert with other persons:

(a) becomes, or is entitled to become, the holder (absolutely or beneficially and whether directly or indirectly) of more than 90% of all Ordinary Shares; or
(b) has or will have the right to cast more than 90% of all votes on a poll at a general meeting of the Company on a matter on which holders of Ordinary Shares are entitled to vote, and

as a consequence TOWER ceases to be listed on NZX and ASX.

Trustee’s Statement

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13 February 2009

To: Investors under this Offer Document

Dear Investors,

Clause 13(3) of the Second Schedule to the Securities Regulations 1983 requires us to confirm that the offer of securities ( Senior Bonds ) set out in this Offer Document complies with any relevant provisions of the Trust Deed between TOWER Capital Limited, TOWER Financial Services Group Limited, TOWER Limited and the Trustee dated 12 February 2009 ( Trust Deed ). The relevant provisions of the Trust Deed are those which:

(a) entitle the Company to constitute and issue under the Trust Deed the Senior Bonds offered under this Offer Document;

(b) impose restrictions on the right of the Company to offer the Senior Bonds; and

are described in the Summary of the Trust Deed set out on pages 44–47 of this Offer Document.

Our statement does not refer to any financial information, or to any other material in this Offer Document which does not relate to the Trust Deed.

We confirm that the offer of the Senior Bonds set out in this Offer Document complies with any relevant provisions of the Trust Deed. We have given the above confirmation on the basis:

(a) set out above; and

(b) that the Trustee relies on the information supplied to it by the Company and TOWER Limited pursuant to the Trust Deed and does not carry out an 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 ‘Limitation on Rights’ and ‘Trustee’s Duties’ on page 46 of this Offer Document.

The Trustee does not guarantee the repayment or purchase of the Senior Bonds offered or the payment of Interest thereon.

Signed for and on behalf of the Trustee

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JB Sewell
Manager Corporate Trusts
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Prospectus Statutory Information

The following information is provided in accordance with the Second Schedule to the Securities Regulations 1983:

Main Terms of Offer

The issuer of the Senior Bonds is TOWER Capital Limited (‘the Company’), whose registered office is at:

Level 11 TOWER Centre 22 Fanshawe Street Auckland 1142 Telephone 09 369 2000 Facsimile 09 369 2160

A description of Senior Bonds, including the maximum amount being offered and the price to be paid for Senior Bonds is set out in the sections ‘Main Terms of Offer’ on page 10, and ‘What sort of investment is this?’ on page 30.

Guarantors

There are no guaranteeing subsidiaries of the Company.

TOWER and TFSG have guaranteed on an unsubordinated, unsecured basis payment of Interest on Senior Bonds on an Interest Payment Date, and the principal amount of Senior Bonds including Accrued and Unpaid Interest payable to Bondholders when payable and on a Liquidation of the Company, TFSG or TOWER.

The amount of the net tangible assets of the Guarantors as shown in their most recent audited balance sheet as at 30 September 2008 and excluding any assets that are also assets of the Company (that has no guaranteeing subsidiaries) are: TOWER Limited ($141,987,000), TOWER Financial Services Group Limited $373,124,000.

The above balances are the stand alone positions for each Guarantor and in the case of TOWER Limited do not include the net tangible assets of the wider TOWER consolidated Group. The consolidated net tangible assets of the TOWER Group as at 30 September 2008 were $260,929,000.

No person or company (other than the Guarantors), has guaranteed any of the obligations of TOWER or the Company in relation to the Senior Bonds.

Details of incorporation of Issuer

The Company was incorporated on 18 December 2008 under the Companies Act 1993. Its registered number is 2198245.

The public file relating to the incorporation and registration of the Company is kept at the office of the Registrar of Companies, Ministry of Economic Development. These documents may be inspected on the Companies Office website at www.companies.govt.nz.

Directorate and advisers

The name, address and technical or professional qualifications (if any) of every director of the Company, are set out in the section ‘Directors and Management’ on page 18. The names and addresses of the Company’s auditors, securities registrar, Joint Lead Managers and legal advisors to the Company and the Trustee who have each been involved in the preparation of this Offer Document, are set out in the Directory inside the back cover of this Offer Document.

Restrictions on directors’ powers

There are no specific modifications, exceptions or limitations on the powers of the Company’s Board imposed under the Companies Act 1993 or the Company’s constitution other than as set out below.

The Companies Act contains a number of provisions that could have the effect, in certain circumstances, of imposing modifications, exceptions or limitations on the powers of the Company (including the requirement that ‘major transactions’, as defined in that legislation, be approved by a special resolution of shareholders). These provisions apply to any company registered under the Companies Act.

The Company has applied for the Senior Bonds to be quoted on the NZDX market. The NZSX Listing Rules contain a number of provisions that could have the effect, in certain circumstances, of imposing modifications, exceptions or limitations on the powers of TOWER’s Board. These provisions apply to any issuer listed on NZX.

Description of activities of borrowing group

The Company constitutes the borrowing group for the purposes of the Securities Regulations 1983.

The Company is a subsidiary of TOWER and has not yet commenced business. Its intended activities will be to issue the Senior Bonds described in this Offer Document.

It is intended that the proceeds of the Offer will be used to retire existing bank debt and to supplement the working capital requirements of the TOWER Group. A description of the activities of TOWER Group are set out in the section ‘TOWER’s Business Overview’ on pages 14–17.

Summary of financial statements

Financial statements in summary form in respect of the Company are not required as the company has not yet commenced business.

Financial statements for TOWER Group in summary form in respect of the five consecutive financial years to 30 September 2008 are set out in the section ‘Summary of Financial Information’ on pages 21–27 as additional information for investors.

Acquisition of business or subsidiary

The Company is a newly incorporated company and has not acquired any business during the two years preceding the date of this Offer Document.

Material contracts

The following material contract (not being a contract entered into in the ordinary course of business) has been entered into by the Company during the two years preceding the date of registration of this Offer Document:

On 12 February 2009 the Company, TOWER, TFSG and the Trustee entered into a trust deed (‘Trust Deed’) pursuant to which the Trustee agrees to act as trustee for Bondholders in connection with the Senior Bonds on the terms and conditions set out in the Trust Deed.

Pending proceedings

There are no legal proceedings or arbitrations pending at the date of this Offer Document that may have a material adverse effect on the Company or TOWER.

Issue expenses

Estimated issue costs of $2.1 million (excluding goods and services tax where applicable) comprising legal and advisory fees, accounting and audit fees, Lead Manager and Organising Participant’s fees, advertising costs, printing and postage, registry fees and other offer costs will be paid by the Company. In addition, the Company will pay fees to the Trustee in accordance with the Trust Deed.

This estimate includes brokerage payable by the

Company (on the basis of an Offer amount of $80 million), and the fee payable to Goldman Sachs JBWere (NZ) Limited as Arranger, Joint Lead Manager and Organising Participant.

From its fee, the Arranger, Joint Lead Manager and Organising Participant will pay brokerage and firm allocation participation incentives to Primary Market Participants in respect of allotments made under a firm allocation. With regard to all other allotments made in respect of application forms bearing the stamp of a Primary Market Participant or an approved financial intermediary, brokerage will be paid by the Arranger, Joint Lead Manager and Organising Participant at a rate of 1.25%, subject to receipt of such fees from the Company.

Ranking of securities

The Senior Bonds constitute unsubordinated, unsecured fixed interest debt securities of the Company. For more information on the status of the Senior Bonds see the section ‘Conditions of Senior Bonds’ on page 48. No security has been given over the assets of the Company. No securities are therefore secured by a mortgage or charge over any of the assets of the Company that rank in point of security equally with, or ahead of the Senior Bonds.

On the Liquidation of the Company or either of the Guarantors the Senior Bonds will be redeemable by the Company in cash and will rank for payment ahead of subordinated creditors and shareholders of the Company and (in relation to their respective guarantee obligations) the Guarantors, and pari passu with other Bondholders and Senior Creditors, but rank behind the claims of Secured Creditors of the Company or the Guarantors in point of security and indebtedness having priority by operation of law. For more details on the limitations on payment and enforcement rights see the section ‘Conditions of Senior Bonds’ on pages 48–59.

Provisions of Trust Deed and other restrictions on Issuer

The Trust Deed, the parties to which are the Company, TOWER, TFSG and the Trustee, is dated 12 February 2009. The Senior Bonds are all subject to the detailed provisions of the Trust Deed.

The duties of the Trustee under the Trust Deed are summarised under ‘Trustee’s Duties’ in the section ‘Summary of the Trust Deed’ on pages 46–47 and the Trustee’s statement is set out on page 60 of this Offer Document.

The Financial Covenants given by the Company and the Guarantors under the Trust Deed are summarised on page 46 in the section

‘Summary of the Trust Deed’. The Trust Deed contains no other restriction on the ability of the Company or the Guarantors to borrow. No other undertaking given or contract or deed entered into by the Company in respect of the Senior Bonds contains any restriction on the ability of the Company to borrow.

Subject to compliance with the Financial Covenants, the Trust Deed contains no limitations on the Company or the Guarantors relating to the creation of new mortgages or charges ranking in point of security ahead of or equally with the Senior Bonds or the incurring of further indebtedness ranking equally with, or subordinated to the Senior Bonds.

See page 60 for the Trustee’s statement required by clause 13(3) of the Second Schedule to the Securities Regulations 1983.

Other terms of Offer

There are no other terms of the Senior Bonds or the Offer which are not set out elsewhere in this Offer Document, other than those implied by law, or set out in a document which is registered with a public official, and available for public inspection, and referred to in this Offer Document.

Requirements in respect of financial statements

There are no historical financial statements for the Company as the company has not yet commenced business.

Certain financial information for the TOWER Group is set out in the section ‘Summary Financial Information’ on pages 21–27 as additional information for investors.

Places of inspection of documents

During the currency of this Offer Document, copies of the constitution of the Company and TOWER and the material contracts referred to in this Offer Document may be inspected by any person without payment of a fee at:

agreement ( Facility ) entered into by TOWER Finance Limited as borrower with ANZ National Bank Limited ( Bank ), various financiers, TOWER and TFSG. Funds advanced to TOWER Finance under the Facility are used in the ongoing capital requirements of the TOWER Group. It is intended that the proceeds of the Offer will be utilised to repay (or partly repay) the Facility. To the extent not repaid, moneys owed to the Bank will rank equally with the Senior Bonds. In the event that moneys remain owing to the Bank after the Offer, the Company will become a guarantor under the terms of the Facility.

The Company intends to use proceeds from the Offer to repay (or partly repay) the existing bank debt advanced to TOWER Finance Limited and to supplement the working capital requirements of the TOWER Group. This may trigger the conduit issuer provisions under the Financial Reporting Act 1993, resulting in TOWER Finance (and potentially other related companies of the Company who receive proceeds from the Offer) qualifying as a ‘recipient of money from a conduit issuer’, with an obligation to prepare and file audited financial statements in accordance with the Act. There are no other material matters relating to the Senior Bonds offered under this Offer Document other than the matters set out elsewhere in this Offer Document.

Directors’ statement

The Company has not commenced business or produced any financial statements so the requirements of clause 35 of the Second Schedule to the Securities Regulations 1983 are not applicable.

Auditors’ report

There are no historical financial statements for the Company as the company has not commenced business. Accordingly, no auditor’s report is required to be included.

TOWER Limited Level 11 TOWER Centre 22 Fanshawe Street Auckland 1142

Copies of these documents can also be obtained on payment of the relevant fee (if any) from the Companies Office website at www.companies.govt.nz under the Company’s file reference, or by calling the Companies Office Contact Centre on 0508 266 726.

Other material matters

The TOWER Group has been advanced $85 million dollars under its existing facility

This Offer Document has been signed by:

each director of TOWER Capital Limited (or by their agent authorised in writing); and
TOWER Capital Limited and TOWER Limited by their Directors.

Anthony Ian Gibbs

William John Falconer

Robin Albert Flannagan

Michael Leslie Jefferies

John Lewis Spencer

Susannah Adair Staley

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Denis Michael Wood

Statutory Index

For the purposes of Regulation 5(6) of the Securities Regulations 1983, the matters required to be stated or contained in this Offer Document by virtue of the Second Schedule to the Regulations are:

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Matter Second Schedule Page
Main terms of offer Clause 1 10, 61
Name and address of offeror Clause 2 31, 61
Details of incorporation of issuer Clause 3 30, 31, 61
Guarantors Clause 4 32, 61
Directorate and advisers Clause 5 18, 31, 61
Restrictions on directors’ powers Clause 5A 61
Description of activities of borrowing group Clause 6 14, 31, 61
Summary of financial statements Clause 7 62
Acquisition of business or subsidiary Clause 8 62
Material contracts Clause 9 62
Pending proceedings Clause 10 62
Issue expenses Clause 11 62
Ranking of securities Clause 12 48, 62
Provisions of trust deed and other restrictions on Clause 13 44, 60, 62
borrowing group
Other terms of offer and securities Clause 14 63
Financial statements Clause 15 to 32 63
Places of inspection of documents Clause 33 41, 63
Other material matters Clause 34 63
Directors’ statement Clause 35 63
Auditors’ report Clause 36 63
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Glossary

Accrued Interest

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 57.

Allotment Date

24 March 2009 or if the Company determines, within three business days of the Closing Date.

Application Form

the application form contained in or accompanying this Offer Document.

Arranger and Organising Participant Goldman Sachs JBWere (NZ) Limited.

ASX, and ASX Listing Rules

Australian Securities Exchange Limited (ABN 98 008 624 691), and the listing rules of the Australian Stock Exchange.

Board

means the board of directors of the Company.

Bondholder

holder of Senior Bonds.

business day

means a day other than a Saturday, Sunday or public holiday when registered banks are open for business in both Auckland and Wellington.

Closing Date

20 March 2009 or such other date as the Company determines.

Companies Act

Companies Act 1993.

Company

TOWER Capital Limited.

Conditions of Senior Bonds, or Conditions

the conditions relating to the Senior Bonds set out on pages 48 to 59 of this Offer Document, and including any New Conditions.

Default Rate

the rate which is 2% per annum above the Interest Rate payable on Senior Bonds.

Early Repayment

means the redemption or purchase by the Company of all or part of the Senior Bonds on issue together with any Accrued Interest and Unpaid Interest prior to the Maturity Date.

Event of Default

if the Company or either TOWER or TFSG:

(a) becomes insolvent, is placed in Liquidation or any analogous procedure occurs in respect of it; or
(b) defaults on Senior Debt (other than in respect of Senior Bonds) and Senior Creditors are entitled to, and demand accelerated repayment of Senior Debt in excess of (in aggregate) $10,000,000. If entitlement

of a Senior Creditor to require payment is disputed, it shall be determined by application to the courts in New Zealand and will not constitute an Event of Default pending such determination; or

(c) if the Company fails to make any payment of Interest on the Senior Bonds within 10 business days of an Interest Payment Date; or
(d) if the Company fails to make any payment of principal on the Senior Bonds within 10 business days of the Maturity Date or other due date for payment.

Financial Covenants

the financial covenants of the Company and TOWER described under ‘Financial Covenants’ in the section ‘Summary of the Trust Deed’ on page 46.

Guarantors

TOWER Limited and TOWER Financial Services Group Limited.

IFRS

International Financial Reporting Standards

Interest

interest payable on Senior Bonds, under the Trust Deed.

Interest Payment

the amount of Interest payable on an Interest Payment Date.

Interest Payment Dates

15 January, 15 April, 15 July and 15 October in each year, until the Maturity Date of 15 April 2014 and thereafter as specified by the Company.

Interest Period

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 57.

Interest Rate

the relevant Interest rate applying to Senior Bonds.

Issue Price

$1.00 per Senior Bond.

Joint Lead Managers

Goldman Sachs JBWere (NZ) Limited and Forsyth Barr Limited.

Liquidation

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 58.

Major Restructuring Event

a restructuring of the TOWER Group which in the reasonable opinion of TOWER is material to the Company, TFSG or TOWER.

Market Participant

a participant in the markets provided by NZX who has been accredited and approved by NZX and

includes an NZX Trading and Advising Firm in accordance with the NZX Market Participant Rules.

Maturity Date

15 April 2014, being the date on which the Company may

(a) redeem the Senior Bonds; or
(b) reset the Interest Rate and the New Maturity Date.

Net Assets

total assets less total liabilities, as stated in TOWER Group’s most recent consolidated statement of financial position.

Net Debt

is determined on the basis of TOWER Group’s most recent consolidated statement of financial position, in accordance with New Zealand generally accepted accounting practice (as defined in the Financial Reporting Act 1993) as the aggregate of all interest bearing liabilities ranking equally with, or senior to, the Senior Bonds, net of cash and cash equivalents.

New Conditions

new conditions as to Interest Rate, Interest Payment Dates, New Maturity Date, early repayment options, and any other condition otherwise varying the Conditions applying from the Maturity Date.

NZ IFRS

the New Zealand equivalents to International Financial Reporting Standards (IFRS).

NZDX

the New Zealand debt market operated by NZX.

NZSX

the main board equity security market operated by NZX.

NZX, and NZSX Listing Rules

NZX Limited and the rules of NZX Limited.

NZX Participant Rules the NZX Participant Rules 2004 as amended from time to time.

Offer

the offer of Senior Bonds made in this Offer Document.

Offer Document

this combined Investment Statement and Prospectus for the Offer of Senior Bonds.

Opening Date 16 February 2009.

Ordinary Resolution

a resolution approved by a simple majority of votes of Bondholders entitled to vote and voting at a meeting.

Previous NZ GAAP

Generally Accepted Accounting Practice in New Zealand complied with prior to adoption of NZ IFRS.

Primary Market Participant

a Market Participant approved by NZX to bring new offers of securities to a market provided by NZX.

Registrar

Computershare Investor Services Limited.

Secured Creditors

persons from time to time entitled to Secured Debt.

Secured Debt

all obligations of the Company, TFSG or TOWER (whether in their capacity as a guarantor of the Company or of any other person or otherwise) or of the TOWER Group (as the case may be) secured by an interest or power:

(a) reserved in or over an interest in any asset, including any retention of title; or
(b) created or otherwise arising in or over any interest in any asset under a bill of sale, mortgage, charge, lien, trust or power, by way of security for payment of debt, any other monetary obligation or the performance of any obligation, and includes a security interest under the Personal Property Securities Act 1999 and claims having preference to Senior Debt by law.

Senior Bonds or Bonds

the unsubordinated, unsecured, fixed rated debt securities offered for subscription under this Offer Document.

Senior Creditors

persons from time to time entitled to Senior Debt.

Senior Debt

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 59.

Stock Exchange

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 59.

Subordinated Creditors

the holders of any class of securities issued by the Company, TFSG or TOWER (as the case may be), the terms of issue of which provide that they are subordinated so as to rank behind the Senior Bonds and any other person to whom the Company, TFSG or TOWER (as the case may be) owes obligations which are subordinated in such manner.

Takeover

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 59.

TFSG

TOWER Financial Services Group Limited

TOWER

TOWER Limited.

TOWER Group TOWER and its subsidiaries.

TOWER Shares ordinary shares of TOWER.

Trust Deed

the trust deed dated 12 February 2009 entered into between the Company, TOWER and the Trustee in relation to the Senior Bonds.

Trustee

The New Zealand Guardian Trust Company Limited.

Unpaid Interest

has the meaning given to it in the section ‘Conditions of Senior Bonds’ on page 59.

$

New Zealand dollars.

Notes

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Notes

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BROKER’S STAMP:

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TOWER Capital Limited Fixed Rate Senior Unsecured Bonds Application Form

ADVISER CODE:

If you have a Common Shareholder Number (CSN) or

Computershare Shareholder Number please enter it here:

Completing this Application Form constitutes an offer to acquire Senior Bonds as described in the Investment Statement and Prospectus dated 13 February 2009 (the Offer Document).

Completed Application Forms, together with payment of the application money payable in respect of the principal amount of Senior Bonds applied for must be received by the Registrar, Computershare Investor Services, before 5.00pm on 20 March 2009 (Closing Date). If you have received a firm allocation from a Primary Market Participant, this should be returned to the Primary Market Participant in time for it to be forwarded to the Registrar before 5.00pm on the Closing Date.

This Application Form must not be issued, circulated or distributed unless accompanied by the Offer Document.

Please refer to the ‘Main Terms of Offer’ section of the Offer Document and to the reverse of this Application Form for additional instructions regarding its completion.

Investor Details Please print in block letters

esto	r Details Please print in block letters
Title	First Name(s)	Surname
Title	First Name(s)	Surname
Title	First Name(s)	Surname
Corporate Name
Postal	Address
Telephone Home ( )		Work ( )

Email (optional)

Application Amount

Principal Amount of Senior Bonds Applied for: NZ$

(Minimum of $5,000, and thereafter in multiples of $1,000)

CHEQUES MUST BE PAYABLE TO ‘TOWER BOND OFFER’ AND CROSSED ‘NOT TRANSFERABLE’ AND SHOULD BE FOR IMMEDIATE VALUE. PAYMENT MUST BE MADE IN NEW ZEALAND DOLLARS AND DRAWN ON A REGISTERED NEW ZEALAND BANK. CHEQUES MUST NOT BE POST DATED.

IRD Number

Please enter your IRD Number

Resident Withholding Tax Rate (Tick One) (19.5% Only Applicable If IRD Number Is Supplied)

19.5% 33% 39%

If you hold a current Resident Withholding Tax Exemption Certificate please tick this box and attach a copy of the Certificate

Interest Payments

IF YOU CURRENTLY RECEIVE INTEREST OR DIVIDEND PAYMENTS FROM COMPUTERSHARE BY DIRECT CREDIT, AND WISH THE INTEREST FROM THE SENIOR BONDS TO BE DIRECT CREDITED TO THE SAME ACCOUNT, PLEASE DO NOT COMPLETE THE SECTION BELOW.

OPTION 1

My New Zealand Bank Account Details Account Name My Bank Account Details BANK BRANCH ACCOUNT NUMBER SUFFIX OPTION 2

My Bank Account Details

My Cash Management Account Details Name of NZX Firm where Cash Management Account held:

Cash Management Client Account Number

Annual And Half-Yearly Reports

Tick this box if you wish to have copies of TOWER Capital Limited’s annual and half-yearly reports sent to you each year. You may also obtain copies of TOWER’s most recent annual and half-yearly reports on TOWER’s website at any time: www.towerlimited.com

Privacy Act 1993

Personal information provided by you will be held by TOWER Capital Limited, the Registrar or the Trustee at the addresses shown in the directory on the inside back cover of this Offer Document or such other place as is notified upon request. This information will be used for the purpose of managing your investment in Senior Bonds and to provide you with information regarding other products or investments offered by members of the TOWER Group. Under the Privacy Act 1993, you have the right to access and correct any personal information held about you.

Agreement On Terms

I/We, irrevocably apply for the principal amount of Senior Bonds shown above (or such lesser number as TOWER Capital Limited may allocate) on the terms and conditions set out in the Offer Document, the Trust Deed and this Application Form. I/We agree to be bound by the Trust Deed (as amended from time to time). I/We confirm the information I/We have given on this Application Form is true and correct.

Signature: Signature: Signature:

Date: Date: Date:

If this Application Form is signed under Power of Attorney, a copy must be lodged with the Application Form for noting by the Registrar.

Application Instructions

Read the Offer Document and in particular the section ‘Answers to Important Questions’ carefully before applying for Senior Bonds and lodging the Application Form.

COMPLETING THE APPLICATION FORM

If you have been allocated a Common Shareholder Number (‘CSN’) or have a Computershare Shareholder Number please enter it on the Application Form.
Set out your full name(s), address and telephone number.
Applications must be in the name(s) of natural persons, companies or incorporated bodies. At least one full first name and surname is required for each natural person.
Applications in the name of a minor, trust, fund or estate, business, firm or partnership, club or other unincorporated body cannot be accepted unless they are made in the individual name(s) of the person(s) who is (are) legal guardian(s), trustee(s), proprietor(s), partner(s) or office bearer(s) as appropriate.
A maximum of three applicants can apply jointly.
Complete the amount of Senior Bonds applied for. Please note the minimum application amount of $5,000 and the minimum multiples thereafter of $1,000.
Please provide your bank account or cash management account details if interest payments are to be made by direct credit to your bank account. If you currently receive any interest or dividend payments from Computershare by direct credit please do not complete this section.

SIGNING

The Application Form must be signed by each applicant. Companies must sign by authorised signatories of the company.
An Attorney or Agent can sign for any applicant. If the Application Form is signed by an Attorney or Agent, the Attorney or Agent must complete the Certificate of Non-Revocation of Power of Attorney/Agency (as applicable).

TERMS OF APPLICATION

By signing the Application Form, an applicant offers to subscribe for Senior Bonds on the terms set out in the Offer Document, the Trust Deed and the Application Form.
An application cannot be withdrawn or revoked by the applicant.
Full payment for the Senior Bonds must accompany the Application Form. Payment must be in New Zealand dollars for immediate value and not post dated. Cheques must be drawn on a registered New Zealand bank and made in favour of ‘TOWER Bond Offer’ and crossed ‘Not Transferable’. If an applicant’s cheque does not subsequently clear, TOWER Capital Limited reserves the right to

cancel that applicant’s allotment of Senior Bonds. Cheques will be banked immediately on receipt. The banking of application monies will not constitute an allotment of Senior Bonds nor acceptance of an offer to purchase Senior Bonds.

Senior Bonds issued will be allotted on the Allotment Date (with Interest payable from the date that a valid application is received and processed, until the day prior to the Maturity Date). TOWER Capital Limited will advise successful investors of the allotment of Senior Bonds to them as soon as possible after the allotment.
TOWER Capital Limited reserves the right to reject any application in whole or in part without giving any reason.
A joint application must be signed by all applicants. Only the address of the first named of the joint applicants will be recorded by the Registrar and all distributions and interest payments, notices etc will be sent to that address.
The Offer, unless closed earlier by TOWER Capital Limited, will close on the earlier of the Closing Date (20 March 2009), or the date on which applications for the maximum amount of the Senior Bonds offered have been received and accepted. TOWER Capital Limited reserves the right to vary the Closing Date without notification.
FASTER Statements for the Senior Bonds will be dispatched as soon as practicable after allotment, but in any event, no later than 5 business days after allotment.
Expressions defined in the Offer Document have the same meaning in the Application Form.
The Application Form is governed by New Zealand law.
When completed, this Application Form together with the appropriate payment, should be forwarded to:
TOWER Capital Limited
C/- Computershare Investor Services Limited Level 2, 159 Hurstmere Road Takapuna North Shore City 0622 Private Bag 92119 Auckland 1142
Applications may also be forwarded to TOWER Capital Limited, any Primary Market Participant or the Joint Lead Managers referred to in the Offer Document, in time to enable forwarding to the Registrar before 5.00pm on the Closing Date.
If you have received a firm allocation from a Primary Market Participant, this should be returned to the Primary Market Participant in time for it to be forwarded to the Registrar before 5.00pm on the Closing Date.
Applications which are received after the Closing Date will not be accepted unless TOWER Capital Limited determines otherwise.

Certificate Of Non-Revocation Of Power Of Attorney/Agent

PLEASE COMPLETE THE FOLLOWING IF YOU ARE ACTING ON BEHALF OF SOMEONE FOR WHOM YOU HOLD POWER OF ATTORNEY/AGENT.

Select representation: Power of Attorney Agent

(Name of Attorney/Agent)

of,

(Address and Occupation of Attorney/Agent)

HEREBY CERTIFY THAT:

As Attorney/Agent of

under a deed/agreement dated

(dd/mm/yy) given to me by him/her/them.
I have executed the application for Senior Bonds on the printed on this Application Form as Attorney/Agent pursuant to the powers conferred on me by that Power of Attorney/agreement.
At the date of this certificate I have not received any notice or information of the revocation of that appointment, whether by the death or dissolution of the donor or otherwise.

Signed at

this

day of

2009

Signature of Attorney/Agent

BROKER’S STAMP:

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TOWER Capital Limited Fixed Rate Senior Unsecured Bonds Application Form

ADVISER CODE:

If you have a Common Shareholder Number (CSN) or

Computershare Shareholder Number please enter it here:

Completing this Application Form constitutes an offer to acquire Senior Bonds as described in the Investment Statement and Prospectus dated 13 February 2009 (the Offer Document).

This Application Form must not be issued, circulated or distributed unless accompanied by the Offer Document.

Please refer to the ‘Main Terms of Offer’ section of the Offer Document and to the reverse of this Application Form for additional instructions regarding its completion.

Investor Details Please print in block letters

esto	r Details Please print in block letters
Title	First Name(s)	Surname
Title	First Name(s)	Surname
Title	First Name(s)	Surname
Corporate Name
Postal	Address
Telephone Home ( )		Work ( )

Email (optional)

Application Amount

Principal Amount of Senior Bonds Applied for: NZ$

(Minimum of $5,000, and thereafter in multiples of $1,000)

IRD Number

Please enter your IRD Number

Resident Withholding Tax Rate (Tick One) (19.5% Only Applicable If IRD Number Is Supplied)

19.5% 33% 39%

If you hold a current Resident Withholding Tax Exemption Certificate please tick this box and attach a copy of the Certificate

Interest Payments

OPTION 1

My New Zealand Bank Account Details Account Name My Bank Account Details BANK BRANCH ACCOUNT NUMBER SUFFIX OPTION 2

My Bank Account Details

My Cash Management Account Details Name of NZX Firm where Cash Management Account held:

Cash Management Client Account Number

Annual And Half-Yearly Reports

Privacy Act 1993

Agreement On Terms

Signature: Signature: Signature:

Date: Date: Date:

If this Application Form is signed under Power of Attorney, a copy must be lodged with the Application Form for noting by the Registrar.

Application Instructions

Read the Offer Document and in particular the section ‘Answers to Important Questions’ carefully before applying for Senior Bonds and lodging the Application Form.

COMPLETING THE APPLICATION FORM

If you have been allocated a Common Shareholder Number (‘CSN’) or have a Computershare Shareholder Number please enter it on the Application Form.
Set out your full name(s), address and telephone number.
Applications must be in the name(s) of natural persons, companies or incorporated bodies. At least one full first name and surname is required for each natural person.
Applications in the name of a minor, trust, fund or estate, business, firm or partnership, club or other unincorporated body cannot be accepted unless they are made in the individual name(s) of the person(s) who is (are) legal guardian(s), trustee(s), proprietor(s), partner(s) or office bearer(s) as appropriate.
A maximum of three applicants can apply jointly.
Complete the amount of Senior Bonds applied for. Please note the minimum application amount of $5,000 and the minimum multiples thereafter of $1,000.
Please provide your bank account or cash management account details if interest payments are to be made by direct credit to your bank account. If you currently receive any interest or dividend payments from Computershare by direct credit please do not complete this section.

SIGNING

The Application Form must be signed by each applicant. Companies must sign by authorised signatories of the company.
An Attorney or Agent can sign for any applicant. If the Application Form is signed by an Attorney or Agent, the Attorney or Agent must complete the Certificate of Non-Revocation of Power of Attorney/Agency (as applicable).

TERMS OF APPLICATION

By signing the Application Form, an applicant offers to subscribe for Senior Bonds on the terms set out in the Offer Document, the Trust Deed and the Application Form.
An application cannot be withdrawn or revoked by the applicant.
Full payment for the Senior Bonds must accompany the Application Form. Payment must be in New Zealand dollars for immediate value and not post dated. Cheques must be drawn on a registered New Zealand bank and made in favour of ‘TOWER Bond Offer’ and crossed ‘Not Transferable’. If an applicant’s cheque does not subsequently clear, TOWER Capital Limited reserves the right to

Senior Bonds issued will be allotted on the Allotment Date (with Interest payable from the date that a valid application is received and processed, until the day prior to the Maturity Date). TOWER Capital Limited will advise successful investors of the allotment of Senior Bonds to them as soon as possible after the allotment.
TOWER Capital Limited reserves the right to reject any application in whole or in part without giving any reason.
A joint application must be signed by all applicants. Only the address of the first named of the joint applicants will be recorded by the Registrar and all distributions and interest payments, notices etc will be sent to that address.
The Offer, unless closed earlier by TOWER Capital Limited, will close on the earlier of the Closing Date (20 March 2009), or the date on which applications for the maximum amount of the Senior Bonds offered have been received and accepted. TOWER Capital Limited reserves the right to vary the Closing Date without notification.
FASTER Statements for the Senior Bonds will be dispatched as soon as practicable after allotment, but in any event, no later than 5 business days after allotment.
Expressions defined in the Offer Document have the same meaning in the Application Form.
The Application Form is governed by New Zealand law.
When completed, this Application Form together with the appropriate payment, should be forwarded to:
TOWER Capital Limited
C/- Computershare Investor Services Limited Level 2, 159 Hurstmere Road Takapuna North Shore City 0622 Private Bag 92119 Auckland 1142
Applications may also be forwarded to TOWER Capital Limited, any Primary Market Participant or the Joint Lead Managers referred to in the Offer Document, in time to enable forwarding to the Registrar before 5.00pm on the Closing Date.
If you have received a firm allocation from a Primary Market Participant, this should be returned to the Primary Market Participant in time for it to be forwarded to the Registrar before 5.00pm on the Closing Date.
Applications which are received after the Closing Date will not be accepted unless TOWER Capital Limited determines otherwise.

Certificate Of Non-Revocation Of Power Of Attorney/Agent

PLEASE COMPLETE THE FOLLOWING IF YOU ARE ACTING ON BEHALF OF SOMEONE FOR WHOM YOU HOLD POWER OF ATTORNEY/AGENT.

Select representation: Power of Attorney Agent

(Name of Attorney/Agent)

of,

(Address and Occupation of Attorney/Agent)

HEREBY CERTIFY THAT:

As Attorney/Agent of

under a deed/agreement dated

(dd/mm/yy) given to me by him/her/them.
I have executed the application for Senior Bonds on the printed on this Application Form as Attorney/Agent pursuant to the powers conferred on me by that Power of Attorney/agreement.
At the date of this certificate I have not received any notice or information of the revocation of that appointment, whether by the death or dissolution of the donor or otherwise.

Signed at

this

day of

2009

Signature of Attorney/Agent

Registered office

TOWER Capital Limited

Level 11 TOWER Centre 22 Fanshawe Street PO Box 90347 Auckland 1142

TOWER Group Acting Company Secretary and Investor Relations Manager

Eric O’Sullivan

TOWER Limited PO Box 90347 Auckland 1142 Telephone 09 369 2000 Facsimile 09 369 2160

Arranger, Joint Lead Manager and Organising Participant

Goldman Sachs JBWere (NZ) Limited

Level 38, Vero Centre 48 Shortland Street, PO Box 887 Auckland 1010

Freephone 0800 555 555 Telephone 09 357 3200 Facsimile 09 357 3248

Level 8, The State Insurance Tower 1 Willis Street Wellington 6011

Freephone 0800 555 554 Telephone 04 471 6260 Facsimile 04 471 6261

Level 1, HSBC House 141 Cambridge Terrace Christchurch 8013

Freephone 0800 555 553 Telephone 03 364 5610 Facsimile 03 364 5611

Website www.gsjbw.co.nz Email [email protected]

Joint Lead Manager

Forsyth Barr Limited

The Octagon Private Bag 1999 Dunedin Telephone 0800 367 227 Facsimile 03 477 4928

Website www.forsythbarr.co.nz

Trustee

The New Zealand Guardian Trust Company Limited

Guardian Trust House 15 Willeston Street PO Box 913 Wellington 6140

Registrar

Computershare Investor Services Limited

Level 2 159 Hurstmere Road Takapuna North Shore City 0622 Private Bag 92119 Auckland 1142 Freephone 0800 222 065

Auditors

PricewaterhouseCoopers

PricewaterhouseCoopers Tower 188 Quay Street Auckland 1010

Tax advisors

Deloitte

Deloitte House 8 Nelson Street Auckland 1010

Legal Advisors to TOWER Capital Limited

DLA Phillips Fox

Level 5, TOWER Centre 50-64 Customhouse Quay Wellington 6011

Legal Advisors to the Trustee

Buddle Findlay

1 Willis Street Wellington 6011

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AI assistant

TOWER LIMITED — Capital/Financing Update 2009

65971_rns_2009-03-10_124b6368-e9c0-4132-bc3d-fff190088b4a.pdf

Important Information

Choosing an investment

Engaging an investment adviser

Contents

Letter from TOWER’s Chairman

13 February 2009

Summary of the Offer

Size of Offer

Type of Investment

Use of Proceeds

Interest Rate

NZDX Listing and Quotation

Maturity of Senior Bonds

Financial Covenants

Further Issues of Debt

Credit Rating

Offer in New Zealand

Closing Date

Minimum Applications

How to Apply

Definitions

Important dates

Main Terms of Offer

THE FOLLOWING INFORMATION

Size of Offer

Issuer

Guarantee

Type of security and transferability

Interest Rate

Payment of Interest

Options on Maturity

Financial Covenants

Early Repayment

TOWER and subsidiaries may purchase Senior Bonds

Takeover provision

Events of Default

Other Breaches

Liquidation and Ranking

Cross-acceleration rights

Trustee

Applications

Allotments

Underwriting

Refunds

Offer only in New Zealand

Non-reliance

Taxation

TOWER’s Business Overview

Summary of Group Results

TOWER Group operating structure

History

Health & Life

Health & Life

General Insurance

General Insurance

Investments

Investments

Group Financial Position

TOWER Group Financial Position

Rating

Current Rating (effective 5 December 2008)

TOWER Health & Life Limited:

TOWER Insurance Limited:

TOWER Life (NZ) Limited:

TOWER Limited:

Financial Strength Ratings

Issuer Credit Ratings

Directors and Management

The Board of TOWER and TOWER Capital Limited

A I (Tony) Gibbs

Bill Falconer

Non-Executive Director

Rob Flannagan

Michael Jefferies

Non–Executive Director

John Spencer

BCom, FCA

TOWER LIMITED Capital/Financing Update 2009