Ann: GENERAL: CNU: Chorus agrees funding option with CFH

• Release Date: 18/07/14 08:30
• Summary: GENERAL: CNU: Chorus agrees funding option with CFH
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					CNU
18/07/2014 08:30
GENERAL

REL: 0830 HRS Chorus Limited (NS)

GENERAL: CNU: Chorus agrees funding option with CFH

STOCK EXCHANGE ANNOUNCEMENT

18 July 2014

Chorus agrees funding option with CFH

Chorus announced today that it has entered into a conditional agreement with
Crown Fibre Holdings (CFH), which gives Chorus the option to bring forward
part of CFH's existing investment funding earlier in the build of the
ultra-fast broadband (UFB) network.

In the event that Chorus elects to take up the option to bring forward the
funding, it would only be able to be drawn from October 2015, which is
expected to be after the conclusion of the Commerce Commission's final
pricing principle reviews.

Under the agreement, Chorus has the option of bringing forward CFH funding of
up to $178m that is budgeted to be spent on Chorus' UFB programme in FY18 and
FY19. At an effective finance rate of around 8.5% at today's rates, this
reflects a relatively expensive source of financing and would translate into
Chorus receiving between $141 and $149 million of advance funding if fully
drawn, depending on the timing of the draw down.

Chorus CFO Andrew Carroll said the agreement is a useful funding backstop
that does not change Chorus' build obligations for UFB.

"Chorus is already reshaping its business model and has a range of
initiatives that will commence in FY15 to address the economic impact of the
interim benchmarking pricing that is due to apply from 1 December.  This
facility provides useful additional financial flexibility and liquidity if
needed and does not have any ongoing financial cost unless drawn.  We have
been discussing this initiative for some time and appreciate CFH's ongoing
support as we work through the challenges presented by the Commerce
Commission's initial pricing principle decision," he said.  "The option to
bring forward funding is one of many initiatives Chorus has underway to
bridge the funding gap outlined in the independent Ernst and Young report
released on 14 December 2013."

Similar to many corporate financing arrangements, the advance CFH funding
will not be available in the event that there is a material deterioration in
Chorus' position, including the Commerce Commission's review resulting in
pricing materially lower than its initial benchmarking price of $34.44, or
payment of a dividend by Chorus prior to drawing on this facility. Access to
the funding is also contingent on Chorus meeting its UFB build milestones,
Chorus continuing to be able to operate under its lending agreements and
agreeing certain matters with Chorus' lending syndicate. Chorus is currently
in discussions with its banks on a range of potential amendments to its
existing facilities.

If Chorus chooses to use the facility, Chorus would be unable to pay a
dividend before December 2019 without CFH approval, unless Chorus normalises
the CFH funding profile.

The facility will automatically terminate if Chorus does not use it by 30
June 2016.

There are no changes to Chorus' underlying contractual obligations to pass
all premises in Chorus' coverage area before December 2019, or changes to the
network requirements.
ENDS

For further information:

Ian Bonnar
Corporate Affairs Manager
Mobile: +64 (27) 215 7564
Email: [email protected]

Brett Jackson
Investor Relations Manager
Mobile: +64 (27) 488 7808
Email: [email protected]
End CA:00252834 For:CNU    Type:GENERAL    Time:2014-07-18 08:30:05