creditor and business update

For further information please contact
SHARE REGISTRY
Investor Relations: 131 637 Computershare Investor Services Pty Ltd
E-mail: [email protected] Level 3, 60 Carrington Street
Website: www.octaviar.com.au Sydney NSW 2000
Telephone: 1300 787 650
Octaviar Limited
ABN 90 107 863 436


ASX ANNOUNCEMENT

CREDITOR AND BUSINESS UPDATE

26 May 2008

As previously announced the Group needs to reach an accommodation with its larger unsecured
creditors such that the orderly realisation of the investment in the Stella Group can occur within
the same timeframe as the amounts owing to these creditors become due and payable.

There continues to be uncertainty as to whether such an accommodation can be achieved.

Notice by Public Trustee of Queensland
The Public Trustee of Queensland (PTQ) is the trustee for those investors who hold the listed
notes (ASX code: OCVG). These notes mature on 30 December 2011 and as previously
announced the interest due on 30 April 2008 was paid at that time. The next interest payment is
scheduled for 30 October 2008.

On Friday 23 May 2008 the relevant Group subsidiary was served with a notice from the PTQ
asserting that an event of default had occurred and declaring that the face value of the notes
($348,621,200) together with accrued interest to 4 June 2008 ($2,836,725.93) to be due and
payable on 5 June 2008.

The terms and effect of the PTQ notice are presently being considered and we hope to discuss
the position with the PTQ shortly.
Challenger Legal Action
As previously announced a Group subsidiary has issued bonds with a face value of $100 million
to funds managed by Challenger Managed Investments Limited (Challenger).

These bonds
mature in November 2011. Interest due to 23 May 2008 has been paid as scheduled and the next
interest payment is scheduled for November 2008.
As outlined in the interim financial statements for the six months ending 31 December 2007,
Challenger has asserted that a trigger event has occurred which, if Challenger is correct, would
result in Challenger being able to make the bonds due and payable. Challenger has commenced
legal action in this regard and a trial date of 21 July has been set.
Discussions continue with Challenger but no resolution has yet been reached.

Demand by NAB

As outlined in the interim financial statements for the six months ending 31 December 2007, the
Company provided a guarantee to the extent of $40 million to the National Australia Bank (NAB)
in support of the facility extended by NAB to the Living and Leisure Australia Group (ASX code:
LLA) and the NAB had requested payment under that guarantee.
For further information please contact


SHARE REGISTRY

Investor Relations: 131 637 Computershare Investor Services Pty Ltd
E-mail: [email protected] Level 3, 60 Carrington Street
Website: www.octaviar.com.au Sydney NSW 2000
Telephone: 1300 787 650
Subsequently the following events have occurred:
• on 7 May 2008 the NAB formalised their request with the service of a Creditor’s Statutory
Demand for the $40 million pursuant to the guarantee.
• LLA has announced a recapitalisation proposal which includes the refinancing or
repayment of the NAB facility to LLA. That proposal has a number of preconditions.
Discussions with the NAB regarding the guarantee and the LLA recapitalisation proposal
continue however currently the statutory demand remains unsatisfied.

OPI Pacific Finance Moratorium

The Company has a significant exposure to a New Zealand associate, OPI Pacific Finance
Limited, and an amount of $246 million was provided for in the interim financial statements for the
six months ending 31 December 2007.


On Monday 19 May 2008 the holders of debentures and unsecured notes issued by OPI Pacific
Finance voted overwhelmingly in favour of a moratorium proposal intended to allow OPI Pacific
Finance to work with the Company over the next three years in a managed work out of its loan
book. The moratorium proposal envisages the entering into a formal arrangement with other
large unsecured creditors of the Company if those creditors agree to do so.

Octaviar Premium Income Fund

Discussions with the Responsible Entity of the fund regarding an accommodation continue and
the Responsible Entity is keep informed of developments and discussions with other large
unsecured creditors.

OTHER BUSINESS MATTERS

Ongoing consolidation of operations
The review of ongoing operations continues and in recognition of the changed business
environment in which the Group now operates there has been a significant decrease in the
number of staff now employed. As a consequence the office space requirements have also
reduced substantially and there has been a significant reduction in other operating costs.

An agreement has been reached to sublet the complete Melbourne office premises at 101 Collins
Street and tenants are currently being sought for the Group’s Sydney office tenancy at Governor
Macquarie Tower. The Queensland operations have consolidated to a single level of the main
Southport office and the other Southport premises has been closed.

Trading of securities on ASX
The ASX suspension of trading in the securities in the Company (ASX codes: OCV and OCVG) is
expected to continue until the ASX considers there is sufficient certainty regarding the financial
condition of the Group as per listing rule 12.2.
For further information please contact:
David Anderson
Company Secretary
Telephone: (07) 5557 7700