Notification of issue of CIP securities

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

Email: company.secretary@chorus.co.nz





STOCK EXCHANGE ANNOUNCEMENT

15 April 2019


Notification of issue of CIP securities

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





ENDS


For further information:

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

---

Capital Change Notice
Updated as at 28 January 2019
Page 1 of 5

Section 1: issuer information
Name of issuer Chorus Limited
NZX ticker code CNU
Class of Financial Product CIP1 Equity Securities (unquoted)
CIP1 Warrants (unquoted)
CIP2 Equity Securities (unquoted)
ISIN N/a
Section 2: capital change details
Number issued/acquired/redeemed/ 3,058,289 CIP1 Equity Securities (unquoted).
90,178 CIP1 Warrants (unquoted).
5,218,966 CIP2 Equity Securities (unquoted)
Nominal value (if any) N/a.
Issue/acquisition/redemption/ price
NZ
$1.000000 per CIP1 Equity Security.
Nil per CIP1 Warrant.
NZ$1.000000 per CIP2 Equity Security.
Nature of the payment (for example,
cash or other consideration)
Cash for CIP1 Equity Securities.
Cash for CIP2 Equity Securities.
Amount paid up (if not in full) N/a.
Percentage of total class of Financial
Products issued/acquired/redeemed/
(calculated on the number of Financial
Products of the Class, excluding any
Treasury Stock, in existence)
0.76% CIP1 Equity Securities.
0.77% CIP1 Warrants.
13.67% CIP2 Equity Securities.
For an issue of Convertible Financial
Products or Options, the principal terms
of Conversion (for example the
Conversion price and Conversion date
and the ranking of the Financial Product
in relation to other Classes of Financial
Product) or the Option (for example, the
exercise price and exercise date)
CIP1 Equity Securities are redeemable preference
shares carrying no right to vote at meetings of
holders of ordinary Chorus shares, but entitle the
holder to a right to a repayment preference on
liquidation. Dividends will become payable on a
portion of the CIP1 Equity Securities from 2025
onwards, with the portion of CIP1 Equity Securities
that attract dividends increasing over time.
Chorus may redeem CIP1 Equity Securities at any
time:

 by cash payment of the total issue price of
CIP1 Equity Securities to be redeemed; or
 by the issue of ordinary Chorus shares of a
value equal to the total issue price of the CIP1
Equity Securities to be redeemed (with those
ordinary Chorus shares valued at a 5%

Page 2 of 5
discount to the 20-day VWAP for Chorus
shares traded in ordinary trading on NZX).

In the event that the Network Infrastructure Project
Agreement dated 24 May 2011 (NIPA1) between
Chorus and Crown Infrastructure Partners Limited
(CIP) is terminated, either for a material breach by
Chorus or for a challenge by Chorus to the
enforceability of liquidated damages, service default
payments or material breach liquidated damages
under NIPA1, or in the event that the Chorus Board
resolves to pay a dividend on the CIP1 Equity
Securities but that dividend is not paid, a holder of
CIP1 Equity Securities can elect to:

 continue to hold the CIP1 Equity Securities;
 exchange the CIP1 Equity Securities for
voting preference shares; or
 exchange the CIP1 Equity Securities for
ordinary Chorus shares of a value equal to
the lesser of the "fair value" and the issue
price of the CIP1 Equity Securities (with those
ordinary Chorus shares valued at a 5%
discount to the 20-day VWAP for ordinary
Chorus shares traded in ordinary trading on
NZX).

CIP1 Warrants are an option to acquire ordinary
Chorus shares on a specified exercise date at a set
strike price.

CIP1 Warrants are issued for no consideration with
each tranche of CIP1 Equity Securities.

Each CIP1 Warrant gives the holder the right, on a
specified exercise date, to purchase an ordinary
Chorus share at a set strike price. The strike price is
based on a total shareholder return of 16% per
annum on ordinary Chorus shares over the relevant
period. Therefore, a holder of a CIP1 Warrant is only
likely to exercise the CIP1 Warrant if total
shareholder return on ordinary Chorus shares has
exceeded 16% per annum over that period.

The exercise dates correspond to the repayment
dates for the CIP1 Debt Securities and the dates on
which dividends become payable on an increased
proportion of CIP1 Equity Securities, and will
therefore be between 2025 and 2036.

CIP2 Equity Securities are redeemable preference
shares carrying no right to vote at meetings of
holders of ordinary Chorus shares, but entitle the
holder to a right to a repayment preference on

Page 3 of 5
liquidation. Dividends will become payable on a
portion of the CIP2 Equity Securities from 2030
onwards, with the portion of CIP2 Equity Securities
that attract dividends increasing over time.

Chorus may redeem CIP2 Equity Securities at any
time:

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

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

 continue to hold the CIP2 Equity Securities;
 exchange the CIP2 Equity Securities for
voting preference shares; or
 exchange the CIP2 Equity Securities for
ordinary Chorus shares of a value equal to
the lesser of the “fair value” and the issue
price of the CIP2 Equity Securities (with those
ordinary Chorus shares valued at a 5%
discount to the 20-day VWAP for ordinary
Chorus shares traded in ordinary trading on
NZX).

CIP or a Crown Entity (who has executed the
applicable accession documentation) can also elect
one of the options above in relation to the CIP2
Equity Securities it holds if a prescribed insolvency
event occurs in relation to Chorus.

Further information regarding the terms of the CIP1
Equity Securities and the CIP1 Warrants is set out in
the summary of CIP1 Securities which is available at
https://company.chorus.co.nz/reports.

Page 4 of 5
Further information regarding the terms of the CIP2
Equity Securities is set out in the Summary of CIP2
Securities which is available at
https://company.chorus.co.nz/reports.
Reason for issue/acquisition/redemption
and specific authority for
issue/acquisition/redemption/ (the
reason for change must be identified
here)
The funds are to be used by Chorus in the
construction of the Ultra-Fast Broadband network in
New Zealand.

The CIP1 Equity Securities and CIP1 Warrants have
been issued pursuant to:

 the terms of the subscription agreement
between Chorus and CIP dated 9 November
2011, as amended by agreements between
Chorus and CIP dated 18 September 2016
and 26 January 2017 (UFB1 Subscription
Agreement);
 a call notice issued by Chorus to CIP on
10 April 2019 pursuant to the terms of the
UFB1 Subscription Agreement; and
 a Chorus Board resolution passed on
3 April 2012.

The CIP2 Equity Securities have been issued
pursuant to:

 the terms of the subscription agreement
between Chorus and CIP dated 26 January
2017 and amended 30 August 2017 (UFB2
Subscription Agreement);
 a call notice issued by Chorus to CIP on
10 April 2019 pursuant to the terms of the
UFB2 Subscription Agreement; and
 a Chorus Board resolution passed on
24 August 2018.
Total number of Financial Products of
the Class after the issue/ acquisition/
redemption/ Conversion (excluding
Treasury Stock) and the total number of
Financial Products of the Class held as
Treasury Stock after the
issue/acquisition/redemption.
407,320,381 CIP1 Equity Securities (unquoted)
11,807,112 CIP1 Warrants (unquoted)
43,385,038 CIP2 Equity Securities (unquoted).

No CIP1 Equity Securities, CIP1 Warrants or CIP2
Equity Securities are held as treasury stock.
In the case of an acquisition of shares,
whether those shares are to be held as
treasury stock
N/a.
Specific authority for the issue,
acquisition, or redemption, including a
reference to the rule pursuant to which
the issue, acquisition, or redemption is
made
For the CIP1 Equity Securities and CIP1 Warrants,
Board resolution passed on 3 April 2012.

For the CIP2 Equity Securities, Board resolution
passed on 24 August 2018.

Page 5 of 5

The CIP1 Equity Securities and CIP1 Warrants have
been issued under listing rule 4.2 pursuant to a
waiver dated 30 November 2011.

The CIP2 Equity Securities have been issued under
listing rule 4.5.
Terms or details of the issue,
acquisition, or redemption (for example:
restrictions, escrow arrangements)
The terms of issue of the CIP1 Equity Securities and
CIP1 Warrants are as set out in the UFB1
Subscription Agreement. Further information
regarding the terms of the CIP1 Equity Securities is
set out in the summary of CIP1 Securities which is
available at https://company.chorus.co.nz/reports.

The terms of issue of the CIP2 Equity Securities are
as set out in the UFB2 Subscription Agreement.
Further information regarding the terms of the CIP2
Equity Securities is set out in the summary of CIP2
Securities which is available at
https://company.chorus.co.nz/reports.
Date of issue/acquisition/redemption 12 April 2019
Section 3: authority for this announcement
Name of person authorised to make this
announcement
Elaine Campbell
General Counsel & Company Secretary
Contact phone number +64 9 975 2983
Contact email address Elaine.Campbell@chorus.co.nz
Date of release via MAP 15 April 2019

---

Rule 2.7, 3.10.3, 3.10.4, 3.10.5
Appendix 3B

New issue announcement,
application for quotation of additional securities
and agreement

Information or documents not available now must be given to ASX as soon as available. Information and
documents given to ASX become ASX’s property and may be made public.
Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12,
04/03/13


Name of entity
Chorus Limited (“Chorus”)

ABN
152 485 848

We (the entity) give ASX the following information.


Part 1 - All issues
You must complete the relevant sections (attach sheets if there is not enough space).

1
+
Class of
+
securities issued or to
be issued

CIP1 Equity Securities (unquoted), CIP1 Debt Securities
(unquoted), CIP1 Warrants (unquoted) & CIP2 Equity
Securities (unquoted)



2
Number of
+
securities issued or
to be issued (if known) or
maximum number which may
be issued

3,058,289 CIP1 Equity Securities (unquoted)
3,058,289 CIP1 Debt Securities (unquoted)
90,178 CIP1 Warrants (unquoted)
5,218,966 CIP2 Equity Securities (unquoted)

3
Principal terms of the
+
securities
(e.g. if options, exercise price
and expiry date; if partly paid
+
securities, the amount
outstanding and due dates for
payment; if
+
convertible
securities, the conversion price
and dates for conversion)

The CIP1 Equity Securities are redeemable preference
shares carrying no right to vote at meetings of holders of
ordinary Chorus shares, but entitle the holder to a right
to a repayment preference on liquidation.

The CIP1 Debt Securities are unsecured, non interest
bearing and carry no voting rights at meetings of holders
of ordinary Chorus shares.

The CIP1 Warrants are an option to acquire ordinary
shares in Chorus on a specified exercise date at a set strike
price.

The CIP2 Equity Securities are redeemable preference
shares carrying no right to vote at meetings of holders of
ordinary Chorus shares, but entitle the holder to a right
to a repayment preference on liquidation.

The terms of the issue for the CIP1 Equity Securities, CIP1
Debt Securities and the CIP1 Warrants are as set out in
the subscription agreement between Chorus and Crown
Infrastructure Partners Limited (CIP) dated 9 November
2011 as amended by agreements between Chorus and CIP
dated 18 September 2016 and 26 January 2017 (UFB1
Subscription Agreement). Further details are set out in
the summary of CIP1 Securities which is available at
https://company.chorus.co.nz/reports.

The terms of the issue for the CIP2 Equity Securities are
as set out in the subscription agreement between Chorus
and CIP dated 26 January 2017 and amended 30 August
2017 (UFB2 Subscription Agreement). Further details
are set out in the summary of CIP2 Securities which is
available at https://company.chorus.co.nz/reports.

4
Do the
+
securities rank equally
in all respects from the
+
issue
date with an existing
+
class of
quoted
+
securities?

If the additional
+
securities do
not rank equally, please state:
 the date from which they do
 the extent to which they
participate for the next
dividend, (in the case of a
trust, distribution) or
interest payment
 the extent to which they do
not rank equally, other than
in relation to the next
dividend, distribution or
interest payment
CIP1 Equity Securities
No.
On a liquidation or winding up of Chorus, holders of CIP1
Equity Securities will have the right to repayment of the
issue price ranking behind creditors of Chorus but ahead
of the ordinary Chorus shares. The CIP1 Equity Securities
will otherwise carry no right to share in the surplus assets
of Chorus on winding up or liquidation.

CIP1 Debt Securities
No.
The principal amount of each CIP1 Debt Security will
consist of a senior portion, equal to the present value of
the sum repayable on the CIP1 Debt Security, and a
subordinated portion equal to the remainder of the face
value. The senior portion will rank equally with all other
unsecured, unsubordinated creditors of Chorus. The
subordinated portion will rank below all other
indebtedness of Chorus. On winding up, dissolution or
liquidation of Chorus, no payment shall be made to
holders of CIP1 Debt Securities in respect of the
subordinated portion until all other indebtedness of
Chorus is repaid in full.

CIP1 Warrants
N/a

CIP2 Equity Securities
No.
On a liquidation or winding up of Chorus, holders of CIP2
Equity Securities will have the right to repayment of the
issue price ranking behind creditors of Chorus but ahead
of ordinary Chorus shares. The CIP2 Equity Securities
will otherwise carry no right to share in the surplus assets
of Chorus on winding up or liquidation


5 Issue price or consideration

$NZ1.00 per CIP1 Equity Security
$NZ1.00 per CIP1 Debt Security
Nil per CIP1 Warrant
$NZ1.00 per CIP2 Equity Security


6 Purpose of the issue
(If issued as consideration for
the acquisition of assets, clearly
identify those assets)
Call notices issued by Chorus to CIP on 10 April 2019
pursuant to the terms of the UFB1 Subscription
Agreement and UFB2 Subscription Agreement.

The funds are to be used by Chorus in the construction of
the Ultra-Fast Broadband network in New Zealand.

6a
Is the entity an
+
eligible entity
that has obtained security
holder approval under rule 7.1A?

If Yes, complete sections 6b – 6h
in relation to the
+
securities the
subject of this Appendix 3B, and
comply with section 6i
N/a


6b The date the security holder
resolution under rule 7.1A was
passed
N/a


6c
Number of
+
securities issued
without security holder approval
under rule 7.1
N/a


6d
Number of
+
securities issued
with security holder approval
under rule 7.1A
N/a


6e
Number of
+
securities issued
with security holder approval
under rule 7.3, or another
specific security holder approval
(specify date of meeting)

N/a


6f
Number of
+
securities issued
under an exception in rule 7.2
N/a


6g
If
+
securities issued under rule
7.1A, was issue price at least 75%
of 15 day VWAP as calculated
under rule 7.1A.3? Include the
+
issue date and both values.
Include the source of the VWAP
calculation.
N/a


6h
If
+
securities were issued under
rule 7.1A for non-cash
consideration, state date on
which valuation of
consideration was released to
ASX Market Announcements
N/a


6i Calculate the entity’s remaining
issue capacity under rule 7.1 and
rule 7.1A – complete Annexure 1
and release to ASX Market
Announcements
N/a

7
+
Issue dates
Note: The issue date may be prescribed by ASX
(refer to the definition of issue date in rule
19.12). For example, the issue date for a pro
rata entitlement issue must comply with the
applicable timetable in Appendix 7A.
Cross reference: item 33 of Appendix 3B.

12 April 2019 for each of the CIP1 Equity
Securities, CIP1 Debt Securities, CIP1
Warrants and CIP2 Equity Securities






Number
+
Class
8
Number and
+
class of all
+
securities quoted on ASX
(including the
+
securities in
section 2 if applicable)
436,075,010 Fully paid ordinary shares
500,000,000 Euro Medium Term Notes


Number:
+
Class
9
Number and
+
class of all
+
securities not quoted on ASX
(including the
+
securities in
section 2 if applicable)



407,320,381 CIP1 Equity Securities
(unquoted)
407,320,381 CIP1 Debt Securities
(unquoted)
11,807,112 CIP1 Warrants (unquoted)
43,385,038 CIP2 Equity Securities
(unquoted)

10 Dividend policy (in the case of a
trust, distribution policy) on the
increased capital (interests)
CIP1 Equity Securities
To the extent they have not been redeemed,
dividends will become payable on an increasing
proportion of the CIP1 Equity Securities from 2025
onwards. The dividend rate on the CIP1 Equity
Securities will be equal to a reference rate plus a
margin of 6% per annum.
Chorus is not obliged to declare any dividend on
CIP1 Equity Securities in respect of any period, but
if it does not make a scheduled dividend on the
CIP1 Equity Securities it may not make any
distribution on ordinary shares until a subsequent
dividend on the CIP1 Equity Securities is paid in
full. The dividends payable on the CIP1 Equity
Securities are non-cumulative.
If at any time Chorus' credit rating is three notches
or more below its initial rating, no dividends will
be scheduled or payable on the CIP1 Equity
Securities.
Further details of the dividends for the CIP1 Equity
Securities are set out in the summary of CIP1
Securities which is available at
https://company.chorus.co.nz/reports.
CIP1 Debt Securities
N/a

CIP1 Warrants
N/a
CIP2 Equity Securities
To the extent they have not been redeemed,
dividends will become payable on an increasing
proportion of the CIP2 Equity Securities from 2030
onwards. The dividend rate on the CIP2 Equity
Securities will be equal to a reference rate plus a
margin of 6% per annum.
Chorus is not obliged to declare any dividend on
CIP2 Equity Securities in respect of any period, but
if it does not make a scheduled dividend on the
CIP2 Equity Securities it may not make any
distribution on ordinary shares until a subsequent
dividend on the CIP2 Equity Securities is paid in
full. The dividends payable on the CIP2 Equity
Securities are non-cumulative.

If at any time Chorus' credit rating is three notches
or more below its initial rating, no dividends will
be scheduled or payable on the CIP2 Equity
Securities.
Further details of the dividends for the CIP2 Equity
Securities are set out in the summary of CIP2
Securities which is available at
https://company.chorus.co.nz/reports.



Part 2 - Pro rata issue

11 Is security holder approval
required?

N/a


12 Is the issue renounceable or non-
renounceable?
N/a


13
Ratio in which the
+
securities will
be offered
N/a


14
+
Class of
+
securities to which the
offer relates
N/a


15
+
Record date to determine
entitlements
N/a


16 Will holdings on different
registers (or subregisters) be
aggregated for calculating
entitlements?
N/a


17 Policy for deciding entitlements
in relation to fractions

N/a


18 Names of countries in which the
entity has security holders who
will not be sent new offer
documents
Note: Security holders must be told how their
entitlements are to be dealt with.
Cross reference: rule 7.7.
N/a


19 Closing date for receipt of
acceptances or renunciations
N/a

20 Names of any underwriters

N/a

21 Amount of any underwriting fee
or commission
N/a


22 Names of any brokers to the issue
N/a


23 Fee or commission payable to the
broker to the issue
N/a


24 Amount of any handling fee
payable to brokers who lodge
acceptances or renunciations on
behalf of security holders
N/a


25 If the issue is contingent on
security holders’ approval, the
date of the meeting
N/a


26 Date entitlement and acceptance
form and offer documents will be
sent to persons entitled
N/a


27 If the entity has issued options,
and the terms entitle option
holders to participate on exercise,
the date on which notices will be
sent to option holders
N/a


28 Date rights trading will begin (if
applicable)
N/a


29 Date rights trading will end (if
applicable)


N/a


30 How do security holders sell their
entitlements in full through a
broker?
N/a


31 How do security holders sell part
of their entitlements through a
broker and accept for the
balance?
N/a



32 How do security holders dispose
of their entitlements (except by
sale through a broker)?
N/a


33
+
Issue date


N/a

Part 3 - Quotation of securities
You need only complete this section if you are applying for quotation of securities

34
Type of
+
securities
(tick one)

(a)

+
Securities described in Part 1


(b)

All other
+
securities
Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid,
employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible
securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities


Tick to indicate you are providing the information or
documents


35

If the
+
securities are
+
equity securities, the names of the 20 largest holders of the
additional
+
securities, and the number and percentage of additional
+
securities
held by those holders


36

If the
+
securities are
+
equity securities, a distribution schedule of the additional
+
securities setting out the number of holders in the categories
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over


37

A copy of any trust deed for the additional
+
securities


Entities that have ticked box 34(b)

38
Number of
+
securities for which
+
quotation is sought





39
+
Class of
+
securities for which
quotation is sought

40
Do the
+
securities rank equally in
all respects from the
+
issue date
with an existing
+
class of quoted
+
securities?

If the additional
+
securities do not
rank equally, please state:
 the date from which they do
 the extent to which they
participate for the next
dividend, (in the case of a trust,
distribution) or interest
payment
 the extent to which they do not
rank equally, other than in
relation to the next dividend,
distribution or interest
payment



41 Reason for request for quotation
now
Example: In the case of restricted securities, end
of restriction period

(if issued upon conversion of
another
+
security, clearly identify
that other
+
security)





Number
+
Class
42
Number and
+
class of all
+
securities quoted on ASX
(including the
+
securities in clause
38)

+ See chapter 19 for defined terms.

04/03/2013 Appendix 3B Page 11
Quotation agreement

1
+
Quotation of our additional
+
securities is in ASX’s absolute discretion. ASX may quote
the
+
securities on any conditions it decides.

2 We warrant the following to ASX.

 The issue of the
+
securities to be quoted complies with the law and is not for an
illegal purpose.

 There is no reason why those
+
securities should not be granted
+
quotation.

 An offer of the
+
securities for sale within 12 months after their issue will not
require disclosure under section 707(3) or section 1012C(6) of the Corporations
Act.
Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this
warranty

 Section 724 or section 1016E of the Corporations Act does not apply to any
applications received by us in relation to any
+
securities to be quoted and that
no-one has any right to return any
+
securities to be quoted under sections 737,
738 or 1016F of the Corporations Act at the time that we request that the
+
securities be quoted.

 If we are a trust, we warrant that no person has the right to return the
+
securities
to be quoted under section 1019B of the Corporations Act at the time that we
request that the
+
securities be quoted.

3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim,
action or expense arising from or connected with any breach of the warranties in this
agreement.

4 We give ASX the information and documents required by this form. If any information
or document is not available now, we will give it to ASX before
+
quotation of the
+
securities begins. We acknowledge that ASX is relying on the information and
documents. We warrant that they are (will be) true and complete.



Sign here: ......................................................... Date: 12 April 2019
(Director/Company Secretary)

Print name: Elaine Campbell

== == == == ==