Mercury Launches Capital Bond Offer

Mercury Launches Capital Bond Offer
12 June 2019 – Mercury NZ Limited (“Mercury”) confirmed today that it is offering up to NZ$300 million of subordinated capital
bonds ("Capital Bonds") to New Zealand retail and institutional investors.
The offer opens today and will be made pursuant to the Financial Markets Conduct Act 2013 as an offer of debt securities of the
same class as existing quoted debt securities.
Full details of the offer are contained in the indicative terms sheet which has been prepared for the offer and is also attached, as
is a presentation on the offer. The Capital Bonds are expected to be quoted on the NZX Debt Market and to be assigned an
issue credit rating of BB+ by S&P Global Ratings.
The offer will open with an indicative margin range for the Capital Bonds to the First Reset Date (11 July 2024) of 2.10% p.a. to
2.25% p.a. (subject to a minimum interest rate for that period of 3.60% p.a.). An announcement of the actual margin (which
may be above or below the indicative margin range mentioned above) and the interest rate will be made following the bookbuild
process, expected to be completed on 19 June 2019 ("Rate Set Date"). The terms sheet for the offer will be updated to include
the interest rate and will be released on or about the same day.
Subject to a successful bookbuild process for the offer, Mercury intends to redeem its existing subordinated capital bonds which
are quoted on the NZX Debt Market under the ticker code MCY010 (“MCY010 Bonds”) by giving a redemption notice to holders
of MCY010 Bonds on or shortly after the Rate Set Date.
Holders of the MCY010 Bonds who wish to participate in the offer should contact their usual financial adviser to obtain an
allocation of Capital Bonds. Holders of the MCY010 Bonds who receive an allocation of Capital Bonds from their financial
adviser can elect to have some or all of the proceeds from the redemption of their MCY010 Bonds applied to that allocation.
The offer will close on 4 July 2019, with the Capital Bonds expected to be issued on 11 July 2019.
There is no public pool for the Capital Bonds, which will be reserved for clients of the Joint Lead Managers, institutional
investors and other primary market participants invited to participate in the bookbuild.
Interested investors (including holders of MCY010 Bonds) should contact Bank of New Zealand, Deutsche Craigs Limited,
Forsyth Barr Limited (as Joint Lead Managers), or their usual financial adviser for more details.
For further information please contact:
BNZ Deutsche Craigs Forsyth Barr
0800 284 017 0800 226 263 0800 367 227
ENDS
For further information:
Media – Craig Dowling 0272 105 337
Investors – Tim Thompson 0275 173 470
ABOUT MERCURY NZ LIMITED
Mercury’s mission is energy freedom. Our purpose is to inspire New Zealanders to enjoy energy in more wonderful ways and
our goal is to be New Zealand’s leading energy brand. We focus on our customers, our people, our partners and our country;
maintain a long term view of sustainability; and promote wonderful choices. Mercury is energy made wonderful.
Visit us at: www.mercury.co.nz
STOCK EXCHANGE LISTINGS: NEW ZEALAND (MCY) / AUSTRALIA (MCY)

NEWS RELEASE

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SUBORDINATED
UNSECURED
CAPITAL BONDS.
INDICATIVE TERMS SHEET FOR
12 JUNE 2019
Joint Lead Managers

12 JUNE 2019
This indicative terms sheet (“Terms Sheet”) sets out the key terms of the
offer (“Offer”) by Mercury NZ Limited (“Mercury”) of up to NZ$300,000,000
unsecured, subordinated, interest bearing capital bonds maturing on 11 July
2049 (“Capital Bonds”) under its master trust deed dated 4 April 2003 (as
amended from time to time) (“Trust Deed”) as modified and supplemented by
the supplemental trust deed dated 12 June 2019 (together, “Trust Documents”)
entered into between Mercury and The New Zealand Guardian Trust Company
Limited as supervisor (“Supervisor”). Unless the context otherwise requires,
capitalised terms used in this Terms Sheet have the same meaning given
to them in the Trust Documents.
INDICATIVE
TERMS SHEET.
IMPORTANT NOTICE
The Offer of Capital Bonds by Mercury is
made in reliance upon the exclusion in
clause 19 of schedule 1 of the Financial
Markets Conduct Act 2013 (“FMCA”).
The Offer contained in this Terms Sheet
is an offer of debt securities that have
identical rights, privileges, limitations
and conditions (except for the interest
rate and maturity date) as Mercury’s
NZ$300,000,000 unsecured,
subordinated, interest bearing capital
bonds with an interest rate of 6.90%
per annum and a final maturity date of
11 July 2044, which are currently quoted
on the NZX Debt Market under the ticker
code MCY010 (“MCY010 Bonds”).
Accordingly, the Capital Bonds are the
same class as the MCY010 Bonds for the
purposes of the FMCA and the Financial
Markets Conduct Regulations 2014.
Mercury is subject to a disclosure
obligation that requires it to notify
certain material information to NZX
Limited (“NZX”) for the purpose of
that information being made available
to participants in the market and that
information can be found by visiting
www.nzx.com/companies/MCY.
The MCY010 Bonds are the only debt
securities of Mercury that are in the
same class as the Capital Bonds
and are currently quoted on the
NZX Debt Market.
Investors should look to the market
price of the MCY010 Bonds referred
to above to find out how the market
assesses the returns and risk premium
for those bonds.
REDEMPTION OF THE
MCY010 BONDS
The first reset date for the MCY010
Bonds is 11 July 2019 and Mercury has
the right to redeem the MCY010 Bonds
on that date. If the bookbuild process
for the Offer is successful, Mercury will
redeem the MCY010 Bonds by giving
a redemption notice to holders of
MCY010 Bonds (“MCY010 Bondholders”)
on or shortly after the Rate Set Date
(19 June 2019).
Investors should carefully consider
the features of the Capital Bonds which
differ from the features of a standard
senior bond. Those features include
the ability of Mercury to defer interest,
optional early redemption rights for
Mercury, a margin step-up and the
subordinated nature of the Capital
Bonds. Investors should read this
Terms Sheet carefully (including the
risks discussed on page 9) and seek
financial advice before deciding to
invest in the Capital Bonds.
1 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Issuer
Mercury NZ Limited
Description
The Capital Bonds are unsecured, subordinated, redeemable, cumulative, interest bearing debt securities.
Ranking
The Capital Bonds will rank equally among themselves and will be subordinated to all other
indebtedness of Mercury, other than indebtedness expressed to rank equally with, or subordinate
to, the Capital Bonds. The Capital Bonds rank equally with the MCY010 Bonds. See “Ranking on
liquidation” on page 6.
Purpose
The proceeds of the Offer will be used to fund the redemption of the MCY010 Bonds and for general
corporate purposes.
No guarantee
Mercury is the issuer and the sole obligor in respect of the Capital Bonds. None of the Crown, any
subsidiary of Mercury or any other person guarantees the Capital Bonds.
Further indebtedness
Mercury may incur finance debt without the consent of holders of Capital Bonds (“Bondholders”).
Equity content
S&P Global Ratings is expected to assign an “intermediate” equity content to the Capital Bonds.
Where such equity credit content is assigned, S&P Global Ratings will consider that the Capital Bonds
comprise 50% equity when calculating its financial ratios for Mercury.
The equity content is expected to fall to minimal (0%) on 11 July 2029.
Capital structure
Mercury believes that hybrid securities such as the Capital Bonds that are ascribed equity content are
an effective capital management tool and intends to maintain such instruments as a key feature of its
capital structure going forward.
Credit rating
Issuer Credit Rating Expected Issue Credit Rating
S&P Global Ratings
BBB+ (Stable)BB+
Mercury’s current Issuer Credit Rating includes a one-notch uplift from the company’s stand-alone
credit profile of ‘bbb’ reflecting the legislated majority ownership by the New Zealand government.
The New Zealand government does not guarantee the Capital Bonds and is under no obligation
to provide financial support to Mercury.
The expected Issue Credit Rating of the Capital Bonds is two notches below Mercury’s stand-alone
credit profile. One notch is deducted for the Capital Bonds being subordinated and a second notch
because of the potential for interest payments to be deferred.
A credit rating is an independent opinion of the capability and willingness of an entity to repay its
debts (in other words, its creditworthiness). It is not a guarantee that the financial product being
offered is a safe investment. A credit rating should be considered alongside all other relevant
information when making an investment decision.
A credit rating is not a recommendation by any rating organisation to buy, sell or hold Capital Bonds.
The above Issuer Credit Rating is current as at the date of this Terms Sheet and any credit rating may
be subject to suspension, revision or withdrawal at any time by the S&P Global Ratings.
Offer
Mercury is offering up to NZ$300,000,000 of Capital Bonds to New Zealand retail and
institutional investors.
The Offer will be conducted on a firm allocation basis as described in more detail below under
the headings “Who may apply for Capital Bonds” and “How to apply”. MCY010 Bondholders who
wish to participate in the Offer are encouraged to contact their financial adviser, one of the Joint
Lead Managers or another Market Participant.
2 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Redemption of
MCY010 Bonds
Subject to the bookbuild for the Offer being successful, a redemption notice to redeem the MCY010
Bonds will be sent to the MCY010 Bondholders on 19 June 2019 or shortly thereafter.
MCY010 Bondholders that receive an allocation of Capital Bonds through their financial adviser or
Market Participant may elect to have the redemption proceeds for their MCY010 Bonds applied and
set-off against the application moneys payable by them for the Capital Bonds.
To the extent that the redemption proceeds payable to an MCY010 Bondholder exceed the application
moneys payable by that holder for Capital Bonds, Mercury will pay the excess in cash to the applicable
MCY010 Bondholder on 11 July 2019. The application and set-off described above will be done on a
one-for-one basis (i.e. redemption proceeds for one MCY010 Bond will be applied and set-off against
the application money for one Capital Bond).
Issue Price and
Principal Amount
NZ$1.00 per Capital Bond.
Interest Rate from
the Issue Date to the
First Reset Date
The percentage per annum equal to the Benchmark Rate (determined on the Rate Set Date) plus the
Margin, but subject to a minimum Interest Rate of 3.60% per annum for this period.
Benchmark Rate
5-year NZD swap rate (adjusted to a quarterly basis as necessary), determined on the Rate Set Date
and each subsequent Reset Date.
Margin
The indicative Margin range is 2.10% to 2.25% per annum for the Capital Bonds.
The actual Margin for the Capital Bonds (which may be above or below the indicative Margin range
mentioned above) will be set by Mercury (in consultation with the Joint Lead Managers) on the Rate
Set Date following a bookbuild conducted by the Joint Lead Managers and will be announced by
Mercury via NZX on the Rate Set Date.
Payment of interest
Interest will be payable on an Interest Payment Date to the Bondholder as at the Record Date
immediately preceding the relevant Interest Payment Date.
Interest Payment
Dates
Interest shall be paid quarterly in arrears on 11 January, 11 April, 11 July and 11 October of each year.
Interest accrues on the Capital Bonds until (but excluding) the date on which they are redeemed.
The first interest payment date is 11 October 2019.
Interest may be deferred at Mercury’s discretion – see “Discretionary deferral of interest” on page 4.
Record Date
In relation to payments of interest, the date which is 10 calendar days before the due date for the
payment. In relation to an Election Process (as defined below), the date which is two Business Days
prior to the date on which the applicable Election Notice (as defined below) is given. In either case, if
that date is not a Business Day, the Record Date will be the preceding Business Day.
Early Bird Interest
Interest on application moneys received (“Early Bird Interest”) will be paid by Mercury to investors in
the Offer that receive an allocation of Capital Bonds, other than MCY010 Bondholders that elect to
have their redemption proceeds for the MCY010 Bonds applied and set-off against application moneys
payable for the Capital Bonds.
Mercury will pay Early Bird Interest on application moneys received in respect of such allocated Capital
Bonds, at the rate of 3% per annum. This interest will be paid for the period from (and including) the
date on which application money is banked, to (but excluding) the Issue Date, unless the application
money is returned for any reason. Early Bird Interest will be paid within five Business Days of the
Issue Date.
Reset Dates
The First Reset Date for the Capital Bonds is the date that is five years after the Issue Date (11 July 2024).
Thereafter there is a further Reset Date every five years. As part of a Successful Election Process,
a different Reset Date may be adopted.
3 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Interest Rate after
each Reset Date
The Interest Rate applying from each Reset Date up to but excluding the next Reset Date will be the
percentage per annum equal to the then Benchmark Rate on that Reset Date (adjusted to a quarterly
basis as necessary) plus the Step-up Margin. If a Successful Election Process has been completed, the
Interest Rate after each Reset Date will be as set out in the relevant Election Notice (as defined below).
Step-up Margin
Margin plus the Step-up Percentage of 0.25%.
Discretionary deferral
of interest
Mercury may defer payment of interest on the Capital Bonds at any time for up to five years at its sole
discretion by notifying Bondholders. Where an interest payment has not been paid on its due date,
notice of its deferral is deemed to be given.
If deferred, an interest payment amount will itself accrue interest (compounding on each Interest
Payment Date) at the prevailing Interest Rate on the Capital Bonds (in aggregate, the “Unpaid Interest”).
Unpaid Interest is cumulative.
See
Deferral of interest payments under the “Risks” section on page 9.
Distribution stopper
Whilst there is any Unpaid Interest outstanding Mercury shall not:
(i) make any dividends, distributions or payments of interest on any shares or securities ranking
pari passu with or after the Capital Bonds; or
(ii) acquire, redeem or repay any share or other security ranking pari passu with or after the
Capital Bonds (or provide financial assistance for the acquisition of such shares or securities),
(together, the “Restrictions on Deferral”).
Election Process
No earlier than six months and not later than 20 Business Days before any Reset Date, Mercury
may give to each Bondholder a notice (“Election Notice”) specifying new terms and conditions
(“New Conditions”) (including for example a new Margin) proposed to apply from the next Reset Date.
Bondholders can elect to accept or reject the New Conditions. Bondholders who do not respond will be
deemed to have accepted the New Conditions.
If Mercury declares a Successful Election Process then it is obliged to purchase any Capital Bonds
held by a Bondholder who has rejected the New Conditions. Mercury may choose to establish a resale
facility (“Resale Facility”) to seek buyers for those Capital Bonds.
If Mercury does not wish to purchase all Capital Bonds from those Bondholders that have rejected
the New Conditions then Mercury must declare that the Election Process has failed in which case
the existing terms and conditions will continue to apply, all Capital Bonds will remain outstanding
and any transfers arranged through the Resale Facility will be cancelled.
4 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Optional early
redemption by
Mercury
Mercury may redeem:
(i) all or some of the Capital Bonds on any Reset Date; or
(ii) all or some of the Capital Bonds on any Interest Payment Date after a Reset Date if a Successful
Election Process has not been undertaken in respect of that Reset Date; or
(iii) all (but not some only) of the Capital Bonds if there are less than 100,000,000 Capital Bonds
on issue; or
(iv) all or some of the Capital Bonds if a Tax Event (as defined below) occurs; or
(v) all or some of the Capital Bonds if a Rating Agency Event (as defined below) occurs.
The Redemption Price will be:
(a) the Issue Price of the Capital Bonds plus Unpaid Interest plus any Interest Payment scheduled
to be paid on the date of redemption; or
(b) if the redemption occurs pursuant to paragraph (ii) or (v) immediately above, the higher of:
(1) the amount calculated under paragraph (a) immediately above; and
(2) the market value of the Capital Bonds together with accrued interest.
If Mercury is redeeming Capital Bonds in part only then it can only do so to the extent that there
will be at least 100,000,000 Capital Bonds outstanding after the partial redemption. Any partial
redemption will be done on a proportionate basis and may include adjustments to take account
of the effect on marketable parcels and other logistical considerations.
Tax Event
Receipt by Mercury of an opinion from a reputable legal counsel or tax adviser that as a result of
an amendment, change or clarification of legislation, regulation, etc. the interest payments on the
Capital Bonds would no longer be fully deductible for tax purposes.
Rating Agency Event
Receipt by Mercury of notice from S&P Global Ratings that, as a result of a change of criteria or
Mercury ceasing to hold a credit rating, the Capital Bonds will no longer have the same equity
content classification from S&P Global Ratings as it had immediately prior to the change in criteria.
Events of Default
The following Events of Default will result in the Capital Bonds becoming immediately redeemable:
(i) failure to pay any Unpaid Interest by the fifth anniversary of its original deferral;
(ii) failure to comply with the Restrictions on Deferral;
(iii) failure to pay amounts required to be paid on the redemption of the Capital Bonds;
(iv) failure to pay amounts required to be paid in connection with a Successful Election Process; or
(v) an insolvency event of Mercury occurs.
5 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Ranking on
liquidation
On a liquidation of Mercury amounts owing to Bondholders rank equally with all other unsecured,
subordinated obligations of Mercury. The Capital Bonds rank behind Mercury’s bank debt, senior bonds,
US private placement notes and any amounts owing to unsubordinated general and trade creditors, as
well as indebtedness preferred by law and secured indebtedness. The ranking of the Capital Bonds on
a liquidation of Mercury is summarised in the diagram below.
Ranking on
liquidation
Type of liability/equityIndicative amount
1

Higher ranking /
earlier priority
>
>
Liabilities that rank
in priority to the
Capital Bonds
Liabilities preferred by law
(for example, Inland
Revenue for certain unpaid
taxes), unsubordinated
creditors (including banks
and financial institutions
that have lent money to
Mercury, holders of
Mercury’s senior bonds,
holders of Mercury’s US
private placement notes and
unsubordinated trade and
general creditors)
NZ$2,705m
2
Liabilities that rank
equally with the
Capital Bonds
The Capital Bonds and
other subordinated
obligations of Mercury
NZ$300m
3
Lower ranking /
later priority
EquityOrdinary shares, reserves
and retained earnings
NZ$3,216m
Notes:
1. Amounts shown above are indicative based on the liabilities and equity of the Mercury
consolidated group as at 31 December 2018, adjusted for expected issue proceeds (assuming
NZ$300m of Capital Bonds are issued). The actual amounts of liabilities and equity of Mercury at
the point of its liquidation will be different to the indicative amounts set out in the diagram above.
2. This represents the total liabilities of the Mercury consolidated group at 31 December 2018,
other than the MCY010 Bonds. It includes amounts corresponding to deferred tax of over
NZ$1,000m, not all of which would be crystallised on liquidation. Liabilities on liquidation may
be materially different.
3. This excludes the MCY010 Bonds which will be redeemed on the Issue Date.
Minimum application
amount and
minimum holding
Minimum of NZ$5,000 with multiples of NZ$1,000 thereafter.
Transfer restrictions
As a Bondholder, you may only transfer Capital Bonds if the transfer is in respect of Capital Bonds
having an aggregate Principal Amount that is an integral multiple of NZ$1,000. However, Mercury will
not register any transfer of Capital Bonds if the transfer would result in the transferor or the transferee
holding or continuing to hold Capital Bonds with an aggregate Principal Amount of less than
NZ$5,000, unless the transferor would then hold no Capital Bonds.
6 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

NZX Debt Market
quotation
It is a term of the Offer of the Capital Bonds that Mercury take any necessary steps to ensure that the
Capital Bonds are quoted immediately following the Issue Date. Application has been made to NZX
for permission to quote the Capital Bonds on the NZX Debt Market and all the requirements of NZX
relating thereto that can be complied with on or before the distribution of this Terms Sheet have been
duly complied with. However, NZX accepts no responsibility for any statement in this Terms Sheet.
NZX is a licensed market operator, and the NZX Debt Market is a licensed market under the FMCA.
Expected date of
initial quotation and
trading on the NZX
Debt Market
12 July 2019
NZX Debt Market
ticker code
MCY020
ISIN
NZMCYDG002C0
Business Days
A day (other than a Saturday or Sunday) on which banks are generally open for business in Auckland
and Wellington.
If an Interest Payment Date, redemption date or the Maturity Date falls on a day that is not a Business
Day, the due date for any payment to be made on that date will be the next following Business Day.
Voting rights
None.
Governing law
New Zealand.
Who may apply for
Capital Bonds
The Offer is open to New Zealand retail and certain institutional investors.
All of the Capital Bonds will be reserved for clients of the Joint Lead Managers, institutional investors
and other Market Participants invited to participate in the bookbuild (“Firm Allocations”). There will be
no public pool. MCY010 Bondholders who wish to participate in the Offer are encouraged to contact
their financial adviser, one of the Joint Lead Managers or another Market Participant.
How to apply
Applicants receiving a Firm Allocation from a financial adviser or Market Participant must return
a completed Application Form to the office of that financial adviser or Market Participant which
has provided the Firm Allocation in the time to enable it to be forwarded to the Registrar before
5.00pm on the Closing Date. Application Forms are not to be lodged directly with Mercury.
You can find a Market Participant by visiting www.nzx.com/services/market-participants/find-a-participant.
Any allotment of the Capital Bonds will be at Mercury’s discretion, in consultation with the Joint Lead
Managers. Mercury reserves the right to refuse all or any part of an application without giving any reason.
Each investor’s financial adviser will be able to advise them as to what arrangements will need to be
put in place for the investors to trade the Capital Bonds including obtaining a common shareholder
number (CSN), an authorisation code (FIN) and opening an account with a Market Participant as well
as the costs and timeframes for putting such arrangements in place.
Refunds
If Mercury does not accept your application or accepts your application in part, all or the relevant
balance of your application moneys received from you will be paid to you as soon as practicable and,
in any event, within five Business Days after such refusal or acceptance in part. No interest will be paid
on those refunds.
Registrar and
Paying Agent
Computershare Investor Services Limited
Supervisor
The New Zealand Guardian Trust Company Limited
7 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Arranger
Forsyth Barr Limited
Joint Lead Managers
Bank of New Zealand, Deutsche Craigs Limited and Forsyth Barr Limited
Fees
Applicants are not required to pay brokerage or any charges to Mercury in relation to applications
under the Offer.
Mercury will pay brokerage of 0.50% of the gross proceeds raised under the Offer and firm fees
of 0.50% of the aggregate amount of valid applications received pursuant to Firm Allocations
as appropriate to Market Participants and approved financial intermediaries.
Selling restrictions
The selling restrictions set out in Schedule 1 to this Terms Sheet apply to the Capital Bonds. The Capital
Bonds may not be offered or sold other than in strict compliance with those selling restrictions.
By subscribing for Capital Bonds, you indemnify Mercury, the Arranger, the Joint Lead Managers
and the Supervisor in respect of any loss incurred as a result of you breaching the selling restrictions
in Schedule 1.
Non-reliance
This Terms Sheet does not constitute a recommendation by the Arranger, the Joint Lead Managers,
the Supervisor or any of their respective directors, officers, employees, agents or advisers to subscribe
for, or purchase, any of the Capital Bonds. None of these parties or any of their respective directors,
officers, employees, agents or advisers accept any liability whatsoever for any loss arising from this
Terms Sheet or its contents or otherwise arising in connection with the Offer.
The Arranger, the Joint Lead Managers and the Supervisor have not independently verified the
information contained in this Terms Sheet. In accepting delivery of this Terms Sheet, you acknowledge
that none of the Arranger, the Joint Lead Managers, the Supervisor nor their respective directors,
officers, employees, agents or advisers gives any warranty or representation of accuracy or reliability
and they take no responsibility for it. They have no liability for any errors or omissions (including for
negligence) in this Terms Sheet, and you waive all claims in that regard.
KEY DATES
Opening Date
Wednesday, 12 June 2019
Rate Set Date
Wednesday, 19 June 2019. The initial Interest Rate for the Capital Bonds will be set and announced to
the market on this date.
Closing Date
Thursday, 4 July 2019 at 5.00pm
Issue Date/
Allotment Date
11 July 2019
First Reset Date
11 July 2024
Maturity Date
11 July 2049
The dates set out in this Terms Sheet are indicative only and Mercury, in conjunction with the Joint Lead Managers, may change
the dates set out in this Terms Sheet. Mercury has the right in its absolute discretion and without notice to close the Offer early,
to extend the Closing Date or to choose not to proceed with the Offer. If the Closing Date is extended, subsequent dates may be
extended accordingly.
8 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

An investment in the Capital Bonds
is subject to the risks that:
(i) Mercury becomes insolvent and
is unable to meet its obligations
under the Capital Bonds; and/or
(ii) if the investor wishes to sell the
Capital Bonds before maturity, the
investor is unable to find a buyer
or that the amount received is less
than the principal amount paid for
the Capital Bonds.
Investors should carefully consider the
features of the Capital Bonds which
differ from the features of a standard
senior bond. Those features include
the ability of Mercury to defer interest,
optional early redemption rights for
Mercury, a margin step-up, an election
process and the subordinated nature of
the Capital Bonds. Key risks concerning
those features are set out in detail below.
This summary does not cover all of the
risks of investing in the Capital Bonds.
For example, whilst certain risks in
relation to the Capital Bonds are set out
in more detail below, those risks relating
to Mercury, rather than the Capital Bonds
themselves, are not set out below on
the basis that information relating to
Mercury and its operations is already
disclosed to the market pursuant to
Mercury’s continuous disclosure
obligations under the NZX Listing Rules.
Also, the summary below sets out the
risks in relation to the Capital Bonds that
differ from risks in relation to standard
senior bonds. It does not cover the risks
that are common to both the Capital
Bonds and standard senior bonds (such
as risks around liquidity and your ability
to sell the Capital Bonds at a given price,
or at all).
Investors should carefully consider those
risk factors (together with the other
information in this Terms Sheet) before
deciding to invest in the Capital Bonds.
The statement of risks in this Terms
Sheet also does not take account of
the personal circumstances, financial
position or investment requirements of
any investor. It is important, therefore,
that before making any investment
decision, investors give consideration
to the suitability of an investment in
the Capital Bonds in light of his or her
individual risk profile for investments,
investment objectives and personal
circumstances (including financial
and taxation issues).
The interest rate for the Capital Bonds
should also reflect the degree of credit
risk. In general, higher returns are
demanded by investors from businesses
with higher risk of defaulting on their
commitments. You need to decide
whether the Offer of Capital Bonds is fair.
You should speak to your financial
adviser about the risks involved with
an investment in the Capital Bonds.
Deferral of interest payments
There is a risk that interest payments
on the Capital Bonds will be deferred by
Mercury for a period of up to five years,
as described in the paragraph headed
“Discretionary deferral of interest”
on page 4.
Mercury has a broad discretion to
defer the payment of interest on the
Capital Bonds, and holders will not
have an immediate redemption right
in those circumstances.
Redemption prior to the Maturity Date
Although the Capital Bonds have a
term of 30 years, Mercury may choose
to redeem the Capital Bonds early in
certain circumstances.
Mercury may elect to redeem the Capital
Bonds in the circumstances outlined in
the paragraph headed “Optional early
redemption by Mercury” on page 5.
While some of those redemption triggers
may appear to be unlikely to occur,
recent history suggests that such events
can occur, and Mercury will have the
right to redeem after five years and
on each subsequent Reset Date.
If Mercury is entitled to redeem any
of the Capital Bonds, the method and
date by which Mercury elects or is
required to do so may not accord with
the preference of individual Bondholders.
This may be disadvantageous in light
of market conditions or a Bondholder’s
individual circumstances.
Ranking
The Capital Bonds rank behind all of
Mercury’s unsubordinated obligations.
In a liquidation of Mercury, the holders
of the Capital Bonds would be paid only
after all amounts owing by Mercury to
its bankers, holders of senior bonds,
holders of US private placement notes,
and general and trade unsubordinated
creditors, have been paid. After payment
of those amounts, there may be
insufficient funds available to the
liquidator to repay all or any of the
amounts owing on the Capital Bonds.
Supervisor’s enforcement rights
Investors should be aware that even
if the right to seek repayment of the
Capital Bonds is exercised following
the occurrence of an Event of Default,
the Supervisor has very limited powers
to enforce these rights given the
subordinated nature of the Capital
Bonds. For example, the Supervisor
has no ability to appoint a receiver with
a view to recovering amounts owing to
Bondholders and is only entitled to file
a conditional claim in the event of the
liquidation of the Issuer requiring
repayment of the Capital Bonds after
all prior ranking indebtedness has been
repaid in full.
RISKS
9 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

OTHER INFORMATION
Copies of the Trust Documents are
available at Mercury’s website at
www.mercury.co.nz/capitalbonds.
Any internet site addresses provided
in this Terms Sheet are for reference
only and, except as expressly stated
otherwise, the content of any such
internet site is not incorporated by
reference into, and does not form
part of, this Terms Sheet.
Investors should seek qualified
independent financial and taxation
advice before deciding to invest.
In particular, you should consult your
tax adviser in relation to your specific
circumstances. Investors will also be
personally responsible for ensuring
compliance with relevant laws and
regulations applicable to them
(including any required registrations).
For further information regarding Mercury,
visit www.nzx.com/companies/MCY.
CONTACT DETAILS
Issuer
Mercury NZ Limited
33 Broadway
Newmarket
Auckland 1023
Arranger and Joint Lead Manager
Forsyth Barr Limited
Level 23, The Lumley Centre
88 Shortland Street
Auckland 1140
0800 367 227
Joint Lead Managers
Bank of New Zealand
Level 6, Deloitte Centre
80 Queen Street
Auckland 1010
0800 284 017
Deutsche Craigs Limited
Level 36, Vero Centre
48 Shortland Street
Auckland 1010
0800 226 263
Supervisor
The New Zealand Guardian Trust
Company Limited
Level 14, 191 Queen Street
Auckland 1010
Registrar
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road
Takapuna
Auckland 0622
Private Bag 92119
Auckland 1142
Legal advisers to Mercury
Chapman Tripp
Level 38, ANZ Centre
23 Albert Street
Auckland 1010
10 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

SCHEDULE 1.
SELLING RESTRICTIONS
GENERAL
The Capital Bonds may only be offered
or sold in conformity with all applicable
laws and regulations in New Zealand and
in any other jurisdiction in which the
Capital Bonds are offered, sold or
delivered. Specific selling restrictions as
of the date of this Terms Sheet are set
out below for the United States,
Australia, Hong Kong, Japan, Singapore
and the United Kingdom.
No action has been or will be taken by
Mercury which would permit an offer of
Capital Bonds, or possession or
distribution of any offering material, in
any country or jurisdiction where action
for that purpose is required (other than
New Zealand).
No person may purchase, offer, sell,
distribute or deliver Capital Bonds, or
have in their possession, publish, deliver
or distribute to any person, any offering
material or any documents in connection
with the Capital Bonds, in any jurisdiction
other than in compliance with all
applicable laws and regulations and the
specific selling restrictions set out below.
By subscribing for Capital Bonds, you
indemnify Mercury, the Arranger, the
Joint Lead Managers, the Registrar and
the Supervisor in respect of any loss
incurred as a result of you breaching
these selling restrictions.
UNITED STATES
The Capital Bonds have not been and
will not be registered under the
Securities Act of 1933, as amended
(“Securities Act”) and may not be
offered or sold within the United States
or to, or for the account or benefit of,
U.S. persons (as defined in Regulation S
under the Securities Act (“Regulation
S”)) except in accordance with
Regulation S or pursuant to an
exemption from, or in a transaction
not subject to, the registration
requirements of the Securities Act.
None of Mercury, the Joint Lead
Managers, nor any person acting on
its or their behalf has engaged or will
engage in any directed selling efforts
(as defined in Regulation S) in relation
to the Capital Bonds, and each of
Mercury and the Joint Lead Managers
have complied and will comply with the
offering restrictions in Regulation S.
The Capital Bonds will not be offered or
sold within the United States or to, or for
the account or benefit of, U.S. persons
(i) as part of their distribution at any
time, or (ii) otherwise until 40 days
after the completion of the distribution
of all Capital Bonds of the tranche of
which such Capital Bonds are part, as
determined and certified by the Joint
Lead Managers except in accordance
with Rule 903 of Regulation S. Any
Capital Bonds sold to any distributor,
dealer or person receiving a selling
concession, fee or other remuneration
during the distribution compliance
period require a confirmation or notice
to the purchaser at or prior to the
confirmation of the sale to substantially
the following effect:
“The Capital Bonds covered hereby
have not been registered under the
United States Securities Act of 1933,
as amended (the “Securities Act”)
or with any securities regulatory
authority of any state or other
jurisdiction of the United States and
may not be offered or sold within
the United States, or to or for the
account or benefit of, U.S. persons
(i) as part of their distribution at any
time or (ii) otherwise until 40 days
after the later of the
commencement of the offering of
the Capital Bonds and the closing
date except in either case pursuant
to a valid exemption from
registration in accordance with
Regulation S under the Securities
Act. Terms used above have the
meaning given to them by
Regulation S.”
Until 40 days after the completion of
the distribution of all Capital Bonds or
the tranche of which those Capital Bonds
are a part, an offer or sale of the Capital
Bonds within the United States by any
Joint Lead Manager or any dealer
or other distributor (whether or not
participating in the offering) may violate
the registration requirements of the
Securities Act if such offer or sale is
made otherwise than in accordance
with Regulation S.
11 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

AUSTRALIA
This Terms Sheet and the offer of
Capital Bonds are only made available
in Australia to persons to whom an
offer of securities can be made without
disclosure in accordance with applicable
exemptions in sections 708(8)
(sophisticated investors) or 708(11)
(professional investors) of the
Australian Corporations Act 2001
(the “Corporations Act”). This Terms
Sheet is not a prospectus, product
disclosure statement or any other formal
“disclosure document” for the purposes
of Australian law and is not required to,
and does not, contain all the information
which would be required in a “disclosure
document” under Australian law.
This Terms Sheet has not been and will
not be lodged or registered with the
Australian Securities & Investments
Commission or the Australian Securities
Exchange and the issuer is not subject
to the continuous disclosure
requirements that apply in Australia.
Prospective investors should not
construe anything in this Terms Sheet
as legal, business or tax advice nor as
financial product advice for the purposes
of Chapter 7 of the Corporations Act.
Investors in Australia should be aware
that the offer of Capital Bonds for resale
in Australia within 12 months of their
issue may, under section 707(3) of the
Corporations Act, require disclosure
to investors under Part 6D.2 if none of
the exemptions in section 708 of the
Corporations Act apply to the re-sale.
HONG KONG
WARNING: This Terms Sheet has not
been, and will not be, registered as
a prospectus under the Companies
(Winding Up and Miscellaneous
Provisions) Ordinance (Cap. 32) of Hong
Kong, nor has it been authorised by the
Securities and Futures Commission in
Hong Kong pursuant to the Securities
and Futures Ordinance (Cap. 571) of
the Laws of Hong Kong (the “SFO”).
No action has been taken in Hong Kong
to authorise or register this Terms Sheet
or to permit the distribution of this
Terms Sheet or any documents issued
in connection with it. Accordingly, the
Capital Bonds have not been and will
not be offered or sold in Hong Kong
other than to “professional investors”
(as defined in the SFO and any rules
made under that ordinance).
No advertisement, invitation or
document relating to the Capital Bonds
has been or will be issued, or has been
or will be in the possession of any person
for the purpose of issue, in Hong Kong
or elsewhere that is directed at, or the
contents of which are likely to be
accessed or read by, the public of Hong
Kong (except if permitted to do so under
the securities laws of Hong Kong) other
than with respect to Capital Bonds that
are or are intended to be disposed of
only to persons outside Hong Kong or
only to professional investors. No person
allotted Capital Bonds may sell, or offer
to sell, such securities in circumstances
that amount to an offer to the public in
Hong Kong within six months following
the date of issue of such securities.
The contents of this Terms Sheet have
not been reviewed by any Hong Kong
regulatory authority. You are advised to
exercise caution in relation to the Offer.
If you are in doubt about any contents
of this Terms Sheet, you should obtain
independent professional advice.
JAPAN
The Capital Bonds have not been and
will not be registered under Article 4,
paragraph 1 of the Financial Instruments
and Exchange Law of Japan (Law No. 25
of 1948), as amended (the “FIEL”)
pursuant to an exemption from the
registration requirements applicable
to a private placement of securities to
Qualified Institutional Investors (as
defined in and in accordance with Article
2, paragraph 3 of the FIEL and the
regulations promulgated thereunder).
Accordingly, the Capital Bonds may not
be offered or sold, directly or indirectly,
in Japan or to, or for the benefit of, any
resident of Japan other than Qualified
Institutional Investors. Any Qualified
Institutional Investor who acquires
Capital Bonds may not resell them
to any person in Japan that is not
a Qualified Institutional Investor,
and acquisition by any such person
of Capital Bonds is conditional upon
the execution of an agreement to
that effect.
SINGAPORE
SINGAPORE SECURITIES AND
FUTURES ACT PRODUCT
CLASSIFICATION: Solely for the
purposes of its obligations pursuant to
sections 309B(1)(a) and 309B(1)(c) of
the Securities and Futures Act (Chapter
289 of Singapore) (the “S FA”), Mercury
has determined, and hereby notifies
all relevant persons (as defined in
Section 309A of the SFA) that the
Capital Bonds are “prescribed capital
markets products” (as defined in the
Securities and Futures (Capital Markets
Products) Regulations 2018).
This Terms Sheet and any other
materials relating to the Capital Bonds
have not been, and will not be, lodged
or registered as a prospectus in
Singapore with the Monetary Authority
of Singapore. Accordingly, this Terms
Sheet and any other document or
materials in connection with the offer
or sale, or invitation for subscription or
purchase, of Capital Bonds, may not
be issued, circulated or distributed,
nor may the Capital Bonds be offered
or sold, or be made the subject of an
invitation for subscription or purchase,
whether directly or indirectly, to persons
in Singapore except pursuant to and
in accordance with exemptions in
Subdivision (4) Division 1, Part XIII of the
SFA, or as otherwise pursuant to, and in
accordance with the conditions of any
other applicable provisions of the SFA.
This Terms Sheet has been given to
you on the basis that you are (i) an
“institutional investor” (as defined in
the SFA) or (ii) an “accredited investor”
(as defined in the SFA). In the event that
you are not an investor falling within any
of the categories set out above, please
return this Terms Sheet immediately.
You may not forward or circulate this
12 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Terms Sheet to any other person
in Singapore.
Any offer is not made to you with
a view to the Capital Bonds being
subsequently offered for sale to any
other party. There are on-sale restrictions
in Singapore that may be applicable to
investors who acquire Capital Bonds.
As such, investors are advised to
acquaint themselves with the SFA
provisions relating to resale restrictions
in Singapore and comply accordingly.
UNITED KINGDOM
Neither this Terms Sheet nor any other
document relating to the Offer has been
delivered for approval to the Financial
Conduct Authority in the United
Kingdom and no prospectus (within the
meaning of section 85 of the Financial
Services and Markets Act 2000, as
amended (“FSMA”)) has been published
or is intended to be published in respect
of the Capital Bonds.
This Terms Sheet is issued on a
confidential basis to “qualified investors”
(within the meaning of section 86(7)
of the FSMA) in the United Kingdom,
and the Capital Bonds may not be
offered or sold in the United Kingdom
by means of this Terms Sheet, any
accompanying letter or any other
document, except in circumstances
which do not require the publication of a
prospectus pursuant to section 86(1) of
the FSMA. This Terms Sheet should not
be distributed, published or reproduced,
in whole or in part, nor may its contents
be disclosed by recipients to any other
person in the United Kingdom.
Any invitation or inducement to engage
in investment activity (within the
meaning of section 21 of the FSMA)
received in connection with the issue
or sale of the Capital Bonds has only
been communicated or caused to
be communicated and will only be
communicated or caused to be
communicated in the United Kingdom
in circumstances in which section 21(1)
of the FSMA does not apply to Mercury.
In the United Kingdom, this Terms Sheet
is being distributed only to, and is
directed at, persons (i) who have
professional experience in matters
relating to investments falling within
Article 19(5) (investment professionals)
of the Financial Services and Markets
Act 2000 (Financial Promotions) Order
2005 (“FPO”), (ii) who fall within the
categories of persons referred to in
Article 49(2)(a) to (d) (high net worth
companies, unincorporated associations,
etc.) of the FPO or (iii) to whom it may
otherwise be lawfully communicated
(together “relevant persons”). The
investments to which this Terms Sheet
relates are available only to, and any
offer or agreement to purchase will be
engaged in only with, relevant persons.
Any person who is not a relevant person
should not act or rely on this Terms
Sheet or any of its contents.
13 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

An application to subscribe for Capital Bonds must be made on the application form
following these application instructions (“Application Form”).
An Application Form will constitute an irrevocable offer by the applicant to subscribe for
and acquire the number of Capital Bonds specified on the Application Form (or such
lesser number which Mercury may determine) on the terms and conditions set out in
this Terms Sheet, the Trust Documents and the Application Form. Applications must
be for a minimum of 5,000 Capital Bonds (NZ$5,000) and thereafter in multiples of
1,000 (NZ$1,000). Applications for Capital Bonds may only be lodged from when the
offer is expected to open on Wednesday 12 June 2019 and close at 5.00pm on
Thursday 4 July 2019.
SCHEDULE 2.
APPLICATION INSTRUCTIONS
AND APPLICATION FORM
All of the Capital Bonds will be reserved
for clients of the Joint Lead Managers,
institutional investors and other Market
Participants invited to participate in the
bookbuild. There will be no public pool.
MCY010 Bondholders who wish to
participate in the Offer are encouraged
to contact their financial adviser, one of
the Joint Lead Managers or another
Market Participant.
Please complete all the relevant
sections of the Application Form
using CAPITAL BLOCK LETTERS.
1. APPLICATION DETAILS
AND INFORMATION
Insert your full name(s), address and
telephone numbers. Please ensure
you supply a mobile or daytime phone
number to enable Computershare
Investor Services Limited to get hold
of you regarding your application if
necessary. Only legal entities are allowed
to hold Capital Bonds. Applications
must be in the name(s) of natural
persons, companies or other legal
entities, up to a maximum of three
names per Application Form.
Applications must be in the name(s)
of natural persons, companies or other
legal entities acceptable to Mercury.
At least one full given name and
surname is required for each natural
person. The name of the beneficiary
or any other non-registrable name
may be included by way of an account
designation if completed exactly as
described in the examples of correct
forms of registrable names below.
Type of investor
Individual – use given name in full,
not initials.
Company – use company title,
not abbreviations.
Trusts – do not use the name of the
trust, use the personal name(s) of the
trustee(s). All trustees must apply as
joint applicants.
Deceased estates – do not use the
name(s) of deceased, use the personal
name(s) of the executor(s).
Clubs / Unincorporated bodies – do not
use the name(s) of clubs etc., use the
personal name(s) of the office bearer(s).
Superannuation Funds – do not use the
name of the fund, use the personal
name(s) of the trustee(s).
APPLICATION
INSTRUCTIONS
14 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

Use the table below to see how to write your name correctly.
Type of investorCorrect way to write nameIncorrect way to write name
Individual personJOHN SMITHJ SMITH
More than one personJOHN SMITH, MICHELLE SMITHJ & M SMITH
CompaniesABC LIMITEDABC
TrustsJOHN SMITH, MICHELLE SMITH
(JOHN SMITH FAMILY TRUST A/C)
SMITH FAMILY TRUST
PartnershipsJOHN SMITH, MICHAEL SMITH
(JOHN SMITH & SONS A/C)
JOHN SMITH & SONS
Clubs and unincorporated associationsJANE SMITH
(SMITH INVESTMENT CLUB A/C)
SMITH INVESTMENT CLUB
Superannuation fundsJOHN SMITH LIMITED
(SUPERANNUATION FUND A/C)
JOHN SMITH,
SUPERANNUATION FUND
2. COMMON
SHAREHOLDER
NUMBER (“CSN”)
If you have other investments registered
under a Common Shareholder Number
(CSN) you must supply your CSN in the
space provided. The name and address
details on your Application Form must
correspond with the registration details
under that CSN.
3. APPLICATION AMOUNT
AND PAYMENT
Complete the amount of Capital Bonds
applied for. Note the minimum amount
of Capital Bonds and minimum integral
multiples for Capital Bonds that are
stated in the Application Form.
The Capital Bonds are issued at par value
so the purchase price is an amount
equal to the aggregate amount of
the Capital Bonds for which you
apply. Payment must be made in
New Zealand dollars.
Applicants must pay for the Capital
Bonds applied for by a personal cheque,
by direct debit or, if the application is
for Capital Bonds of an aggregate
amount of NZ$500,000 or more,
by bank cheque or any other method
approved by the Joint Lead Managers.
MCY010 Bondholders that participate
in the Offer may elect to have the
redemption proceeds for their MCY010
Bonds applied and set-off against the
application moneys payable by them
for the Capital Bonds for which they
apply. That election may be made
by ticking the appropriate box in
the Application Form.
If you choose the direct debit option
you must tick the box authorising
the Registrar to direct debit the
bank account nominated on the
Application Form on the day the
Application Form is received by the
Registrar for the amount applied for
on the Application Form. You cannot
specify a direct debit date and you
must ensure that:
• the bank account details supplied
are correct;
• the application funds in the bank
account for direct debit are available
on the day the Registrar receives the
Application Form;
• the person(s) giving the direct debit
instruction has/have the authority to
operate the account solely/jointly; and
• the bank account you nominated
is a transactional account eligible
for direct debit transactions. If you
are uncertain you should contact
your bank.
Should your direct debit fail, your
application will be rejected. If requested
a direct debit authority form will be
provided to you by the Registrar.
Personal cheques must be in
New Zealand dollars and drawn on
a New Zealand branch of a financial
institution and submitted with the
completed Application Form.
Cheques must be made payable to
“Mercury Capital Bond Offer”, crossed
“Not Transferable” and must not be
post-dated. If an applicant’s cheque is
dishonoured, Mercury will cancel that
applicant’s allotment of Capital Bonds
and may pursue any other remedies
available to it at law.
Applicants who are members of NZClear,
or who are able to have payments made
on their behalf through NZClear, may
settle their applications for Capital Bonds
through NZClear by prior arrangement
with the Registrar up to and including
the Issue Date.
15 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

4. INTEREST AND
REDEMPTION PAYMENTS
If you currently receive interest or
dividend payments from the Registrar by
direct credit, and wish your payments in
respect of the Capital Bonds to be direct
credited to the same account, then you
do not need to complete section 4 of the
Application Form.
If you wish to be paid by direct credit
and the Registrar does not already hold
your bank account details or you wish
to have payments credited to another
bank account, please tick the box for
option 1 and enter the details of the
bank account.
If payment to your cash management
account with a Market Participant is
selected, complete option 2, insert the
name of the Market Participant where
your cash management account is held
and provide your cash management
client account number.
5. ELECTRONIC
CORRESPONDENCE
AND REPORTING
By supplying your email address,
Mercury will be able to deliver your
investor correspondence to you
electronically where possible. This is
a much more environmentally friendly,
cost effective and timely option than
paper-based investor mailing. If you do
not provide your email address you will
receive communications by mail.
6. IRD NUMBER AND
WITHHOLDING TAXES
Provide your IRD number. In the case
of a joint holding provide each
applicant’s IRD number. If you are
holding investments in a trustee
capacity, provide the trust’s IRD number
and not your personal IRD number.
Where applicable elect the rate at which
you wish resident withholding tax to be
deducted by ticking the relevant box.
Tick the relevant box if you hold
a resident withholding tax (RWT)
exemption certificate. If you hold a
valid exemption certificate, please attach
a photocopy of the exemption certificate
and supply the expiry date. Please do
not attach an original document.
Tick the relevant box(es) if you are
a non-resident for New Zealand tax
purposes, and if you are engaged in
business in New Zealand through a
fixed establishment in New Zealand
and either (1) will hold the Capital Bonds
for the purpose of that business or (2)
are a registered bank in New Zealand.
Complete your country of tax residence.
7. AGREEMENT OF TERMS
Read the Application Form carefully
and sign and date the form.
The Application Form must be signed
by the applicant(s) personally, or by
two directors of a company (or one
director if there is only one director,
whose signature must be witnessed),
or in either case by an attorney or duly
authorised agent. If the Application Form
is signed by an attorney, the power of
attorney document is not required to be
lodged, but the attorney must complete
the certificate of non-revocation of
power of attorney on the reverse of
the Application Form.
If the Application Form is signed by
an agent, the agent must complete the
certificate of agency on the reverse of
the Application Form. Joint applicants
must each sign the Application Form.
8. APPLICATION FORMS
MUST BE RECEIVED BY
THE REGISTRAR NO
LATER THAN 5.00PM ON
THURSDAY 4 JULY 2019
The Offer is expected to close at 5.00pm
on Thursday 4 July 2019. Applicants
should remember that the Closing Date
may be changed at Mercury’s sole
discretion. Changes will be advised by
announcement. Mercury reserves the
right to refuse to accept applications
received by the Registrar after 5.00pm
on the Closing Date.
Applications received cannot be revoked
or withdrawn.
Your Application Form should be
returned to, or lodged with, an
appropriate person as specified
under the heading “How to apply”
on page 7 of the Terms Sheet.
Personal information rights
Personal information provided by you
will be held by Mercury and the Registrar
at their respective addresses shown on
page 10 of the Terms Sheet or at such
other place as is notified upon request.
This information will be used for the
purpose of assessing and processing
your application and administering
your investment, and to help and enable
Mercury and the Registrar to comply
with (or determine what it needs to do
to comply with) any applicable laws,
rules or regulations in New Zealand or
any other country or the requirements
of any governmental, judicial or
regulatory entity or authority in any
jurisdiction. If you are an individual
under the Privacy Act 1993, you have
the right to access and correct any of
your personal information. You can
also access your information at
www.computershare.com/nz. You will be
required to enter your CSN and FIN.
16 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

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17 //
CAPITAL BONDSINDICATIVE
TERMS SHEET
JUNE 2019
MERCURY

MERCURY NZ LIMITED CAPITAL BOND OFFER
This application form (“Application Form”) is for an offer of capital bonds (“Capital Bonds”) by Mercury NZ Limited (“Mercury”)
to New Zealand retail and institutional investors and is issued with the indicative terms sheet dated 12 June 2019 (“Terms Sheet”),
issued by Mercury. Please complete this Application Form and return it to, or lodge it with, an appropriate person as specified under
the heading “How to apply” on page 7 of the Terms Sheet.
Capitalised words used but not defined in this Application Form have the same meaning given to them in the Terms Sheet.
Your Application Form must be lodged with your financial adviser or Market Participant in sufficient time to enable your
Application Form to be forwarded to and received by the Registrar no later than 5.00pm on Thursday 4 July 2019.
Please complete this Application Form using BLOCK LETTERS.
APPLICATION FORM.
BROKERS STAMP
1.Application details and information (please print in BLOCK LETTERS)
Applications must be made in the name(s) of natural persons, companies or other legal entities, up to a maximum of three names
per application.
Applicant #1:First Name(s):Last Name:
Applicant #2:First Name(s):Last Name:
Applicant #3:First Name(s):Last Name:
Company or Designated Account Name (if applicable):
Postal Address and Postal Code:
Phone Number:Mobile
–
Home
–
3.Application amount and payment
Applications must be accompanied by payment in full, in New Zealand currency based on NZ$1.00 per Capital Bond. Applications
must be for a minimum of NZ$5,000 and, thereafter, in multiples of NZ$1,000. Mercury may accept or reject all or part of this
application without giving reason.
Principal Amount of Capital Bonds applied for:
NZ$
If you are a holder of MCY010 Bonds and wish to apply and set-off the redemption proceeds from your MCY010 Bonds against the application moneys payable
by you for Capital Bonds, then enter the number of MCY010 Bonds which you hold and wish to be subject to that application and set-off in the box below.
That application and set-off will be done on a one-for-one basis (i.e. redemption proceeds for one MCY010 Bond will be applied and set-off against the application
money for one Capital Bond). To the extent that those redemption proceeds exceed the application moneys payable by you, Mercury will pay the excess in cash to
you on 11 July 2019.
Principal Amount of MCY010 Bonds I wish to be
used for my application:
NZ$
I hereby irrevocably and unconditionally instruct Mercury to apply and set-off the redemption proceeds payable to me in respect of the MCY010 Bonds which
I wish to be used (as indicated above) against the application moneys payable by me to Mercury for the Capital Bonds applied for above.
2.Common Shareholder Number (“CSN”)
Please note that the application must be in the same name as the CSN below, otherwise the application will be deemed to be made
without a CSN and a base registry number will be allocated.
If you currently have a CSN, please enter it here:
CAPITAL BONDSMERCURYAPPLICATION
FORM

5.Electronic correspondence and reporting
To enable Mercury to provide you with your investor correspondence in relation to your holding of Capital Bonds electronically (where
possible), please complete your email address below. If you do not provide an email address, investor correspondence will be mailed
to you at the postal address provided on this Application Form.
Email Address:
Tick this box (✓) if you agree to have confirmation information (relating to the issuance, transfer or redemption of Capital
Bonds) sent to you semi-annually, not later than 10 working days after the last day of each six month period in which there
are any transactions to report. If you do not tick this box, confirmation information will sent to you as required following each
relevant transaction.
If you are not a MCY010 Bondholder or are subscribing for more Capital Bonds than you hold of MCY010 Bonds you must choose
only ONE of the options below for payment of your application moneys. Please tick the box (✓) next to your selected option.
OPTION 1: Direct Debit Please direct debit my/our bank account stated below for the amount of Capital Bonds applied for above
(or any lesser amount as determined by Mercury). By ticking this box and signing this Application Form, I/we agree that Mercury
or the Registrar is authorised to direct debit my/our account for the full amount of Capital Bonds applied for (or any lesser
amount as determined by Mercury). Future interest payments will be direct credited to this account unless a different account
is specified in section 4 below.
NEW ZEALAND DOLLAR BANK ACCOUNT DETAILS FOR DIRECT DEBIT:
Name of bankName of account
Bank/BranchAccount NoSuffix
OPTION 2: Cheque Please find attached my/our cheque payable to “Mercury Capital Bond Offer” and crossed “Not Transferable”.
I/we have supplied my/our bank account details under section 4 below for the purpose of direct crediting any future interest paid
by Mercury.
OPTION 3: NZClear Payment will be made through NZClear as arranged with the Registrar (authorised institutional investors
only). I/we have supplied my/our account details under section 4 below for the purpose of direct crediting any future interest
paid by Mercury.
NZClear Mnemonic:
4.Interest and redemption payments
OPTION 1 – NEW ZEALAND DOLLAR BANK ACCOUNT DETAILS FOR FUTURE PAYMENTS:
Name of bankName of account
Bank/BranchAccount noSuffix
OPTION 2 – FOR THE PURPOSE OF INTEREST PAYMENTS ONLY, DIRECT CREDIT TO MY CASH MANAGEMENT ACCOUNT
Name of Market Participant where
Cash Management Account held:
Cash Management Account client account number:
If you wish to have your future interest payments direct credited to a different bank account you need to advise the Registrar in writing.
CAPITAL BONDSMERCURYAPPLICATION
FORM

7.Agreement of terms
I/We hereby confirm that I/we have received and read the Terms Sheet for the Capital Bonds, and apply for the Principal Amount of
Capital Bonds set out above and agree to accept such Capital Bonds (or such lesser number as may be allotted to me/us) on, and
subject to, the terms and conditions set out in the Terms Sheet, the Trust Documents and the Application Form.
Please read the terms and conditions below before signing as it sets out specific terms and conditions which are accepted by an
applicant upon signature of this Application Form.
All applicants on the Application Form must sign.
Applicant #1:Applicant #2:
Applicant #3Date:
Applications lodged by individuals must be signed personally or by their attorney or agent. If this Application Form is signed by an
attorney, the attorney must complete the certificate of non-revocation of power of attorney set out in the Application Form. If this
Application Form is signed by an agent, the agent must complete the certificate of agency set out in the Application Form.
Your Application Form must be delivered in accordance with the instructions specified under the heading “How to apply” on page 7
of the Terms Sheet.
8.This Application Form must be received by the Registrar no later than 5.00pm on Thursday 4 July 2019
You must deliver your Application Form to the relevant financial adviser or Market Participant in sufficient time to enable your
Application Form to be forwarded to and received by the Registrar no later than 5.00pm on Thursday 4 July 2019.
6.IRD number and withholding taxes
Provide the IRD number of each applicant. If you are holding investments in a trustee capacity, provide the trust’s IRD number and not
your personal IRD number.
Name of applicant/trust
Applicant #1:
––
Applicant #2:
––
Applicant #3:
––
Please select a resident withholding tax (RWT) rate by ticking the box (✓) next to your selected option (or confirm that you are
non-resident and indicate your country of tax residence below).
Please note that a New Zealand company (other than a company which is acting as a trustee or a company which is a Maori authority)
does not need to tick any box unless it holds an RWT exemption certificate. Tax will automatically be deducted at 28%.

10.5%

17.5%

30%

33%
Exempt (If you are exempt from RWT, attach a copy of your
RWT exemption certificate for noting).
Please tick the relevant box (✓) if any of the below apply to you or your application.
I am a non-resident for New Zealand tax purposes.
I am a non-resident for New Zealand tax purposes and I am engaged in business in New Zealand through a fixed establishment
in New Zealand and either (1) will hold the Capital Bonds for the purpose of that business or (2) am a registered bank in New Zealand.
(Please note that you should provide your IRD number and rate of RWT above.)
My country of tax residence is:
CAPITAL BONDSMERCURYAPPLICATION
FORM

10.Certificate of non-revocation of power of attorney/agency
(Complete this section if you are acting on behalf of the applicant on this Application Form for whom you have power of attorney or
are acting as agent)
I,

(full name)
of

(place and country of residence),

(occupation), CERTIFY:
THAT by deed/agreement dated(date of instrument creating the power of attorney/agency),

(name of person/body corporate which granted the power of attorney/agency)
of
(place and country of residence of person/body corporate which granted the power of attorney/agency*) appointed me his/her/its
attorney/agent;
THAT I have executed the application for the Capital Bonds printed on this Application Form under that appointment and
pursuant to the powers thereby conferred on me; and
THAT I have not received notice of any event revoking the power of attorney/agency.
Signed atthisday of

(month/year)
Signature of attorney/agent

* If donor is a body corporate, state place of registered office or principal place of business of donor and, if that is not in New Zealand,
state the country in which the principal place of business is situated.
9.Terms and conditions of application
By signing this Application Form (or
authorising an attorney or agent to sign),
I/we:
(a) acknowledge that this Application
Form was distributed with the
Terms Sheet, and acknowledge
that I/we have read and understood
the Terms Sheet;
(b) apply for the Principal Amount of
Capital Bonds on, and subject to,
the terms and conditions set out
in the Terms Sheet, the Trust
Documents and this Application
Form and I/we agree to be bound
by the provisions thereof;
(c) declare that all details and
statements made by me/us
in this Application Form are
complete and accurate;
(d) certify that, where information
is provided by me/us in this
Application Form about another
person, I/we are authorised by such
person to disclose the information
to you and to give authorisation;
(e) acknowledge that an application
cannot be withdrawn or revoked
by the applicant once it has
been submitted;
(f) acknowledge that Mercury reserves
the right to decline any application,
in whole or in part, without giving any
reason and may decide not to accept
any applications whatsoever; and
(g) by applying for the Capital Bonds,
I/we agree to indemnify, Mercury,
the Arranger, the Joint Lead
Managers and the Supervisor for
any loss suffered as a result of any
breach by me/us of the selling
restrictions applicable to the Offer.
The information in this Application Form
is provided to enable Mercury and the
Registrar to consider and process your
application, and to administer your
investment, and to help and enable
Mercury and the Registrar to comply
with (or determine what it needs to do
to comply with) any applicable laws,
rules or regulations in New Zealand or
any other country or the requirements
of any governmental, judicial or
regulatory entity or authority in any
jurisdiction. By signing this Application
Form you authorise Mercury and the
Registrar to disclose information in
situations where Mercury or the Registrar
consider it is required or permitted to
do so by any applicable laws, rules or
regulations or by any governmental,
judicial or regulatory entity or authority
in New Zealand or any other jurisdiction.
If you are an individual under the
Privacy Act 1993, you have the right
to access and correct any of your
personal information.
CAPITAL BONDSMERCURYAPPLICATION
FORM

This page is left blank intentionally

---

Mercury
Capital Bond Offer
WILLIAM MEEK
Chief Financial Officer
12 June 2019
TIM THOMPSON
Head of Treasury &
Investor Relations

DISCLAIMER
This presentation has been prepared by Mercury NZ Limited (“Company” or “Mercury”) for informational purposes. This disclaimer applies to this document and
the verbal or written comments of any person presenting it.
Information in this presentation has been prepared by the Company with due care and attention, however its accuracy, correctnessand completeness cannot be
guaranteed. None of Bank of New Zealand, Deutsche CraigsLimited or Forsyth Barr Limited (“Joint Lead Managers”), The New Zealand Guardian Trust Company
Limited (“Supervisor”) or any of their respective directors, officers, employees, affiliates or agents have independently verified the information contained in this
presentation. To the maximum extent permitted by law, none of the Company, the Joint Lead Managers, the Supervisor, their respective directors, officers,
employees, shareholders, affiliates, agents or any other person shall have any liability whatsoever to any person for any loss (including, without limitation, arising
from any fault or negligence) arising from this presentation or any information supplied in connection with it.
This presentation may contain projections or forward-looking statements regarding a variety of items. Such projections or forward-looking statements are based on
current expectations, estimates and assumptions and are subject to a number of risks, and uncertainties, including material adverse events, significant one-off
expenses and other unforeseeable circumstances, such as, without limitation, hydrological conditions. There is no assurance that results contemplated in any of
these projections and forward-looking statements will be realised, nor is there any assurance that the expectations, estimates and assumptions underpinning those
projections or forward-looking statements are reasonable. Actual results may differ materially from those projected in this presentation. No person is under any
obligation to update this presentation at any time after its release or to provide you with further information about the Company.
A number of non-GAAP financial measures are used in this presentation. You should not consider any of these in isolation from, or as a substitute for, the
information provided in the audited consolidated financial statements, which are available at www.mercury.co.nz. These measures are discussed in further detail in
the Appendix –slide 22.
The information in this presentation is of a general nature and does not constitute financial product advice, investment advice or any recommendation by any
person. Nothing in this presentation constitutes legal, financial, tax or other advice. The distribution of this presentation,and the offer or sale of the Capital Bonds,
may be restricted by law in certain jurisdictions. Persons who receive this presentation outside New Zealand must inform themselves and observe all such
restrictions. Nothing in this presentation is to be construed as authorisingits distribution, or the offer or sale of any securities, in any jurisdiction except in
accordance with applicable law. No securities referred to in this presentation may be offered or sold directly or indirectly, and neither this presentation nor any other
offering material may be distributed or published, in any jurisdiction except with the prior consent of the Company and in conformity with all applicable law.
DISCLAIMER
2

IMPORTANT INFORMATION
IMPORTANT INFORMATION
3
The offer (“Offer”) of fixed rate subordinated unsecured capital bonds (“Capital Bonds”) by Mercury described in this presentation is made in reliance upon the
exclusion in clause 19 of schedule 1 of the Financial Markets Conducts Act 2013 (“FMCA”).
The Offer is an offer of debt securities that have identical rights, privileges, limitations and conditions (except for the interest rate and maturity date) as Mercury’s
$300,000,000 unsecured, subordinated, interest bearing capital bonds with an interest rate of 6.90% per annum and a final maturity date of 11 July 2044, which are
currently quoted on the NZX Debt Market under the ticker code MCY010 (“MCY010 Bonds”).
Accordingly, the Capital Bonds are the same class as the MCY010 Bonds for the purposes of the FMCA and the Financial Markets Conduct Regulations 2014.
Mercury is subject to a disclosure obligation that requires it to notify certain material information to NZX Limited (“NZX”) for the purpose of that information being
made available to participants in the market and that information can be found by visiting www.nzx.com/companies/MCY.
The MCY010 Bonds are the only debt securities of Mercury that are in the same class as the Capital Bonds and are currently quoted on the NZX Debt Market.
Investors should look to the market price of the MCY010 Bonds referred to above to find out how the market assesses the returns and risk premium for those bonds.
The first reset date for the MCY010 Bonds is 11 July 2019 and Mercury has the right to redeem the MCY010 Bonds on that date. Ifthe bookbuild process for the
Offer is successful, Mercury will redeem the MCY010 Bonds by giving a redemption notice to holders of MCY010 Bonds on or shortlyafter the Rate Set Date (19
June 2019).
An indicative terms sheet dated 12 June 2019 (“Terms Sheet”) has been prepared in respect of the Offer. Investors should not purchase the Capital Bonds until
they have read the Terms Sheet. Investors should consider the risks that are associated with an investment in the Capital Bonds, particularly with regard to their
personal circumstances (including financial and tax issues).
An application has been made to NZX for permission to quote the Capital Bonds on the NZX Debt Market and all the requirementsofNZX relating thereto that can
be complied with on or before the distribution of the Terms Sheet have been duly complied with. However, NZX accepts no responsibility for any statement in this
presentation. NZX is a licensed market operator, and the NZX Debt Market is a licensed market under the FMCA.

OFFER SUMMARY
InstrumentUnsecured, subordinatedcapital bonds
Issue SizeUp to NZ$300m
Term30 years (maturing 11 July 2049)
Reset Dates11 July 2024 and every 5 years thereafter
PurposeThe proceeds will be used to fund the redemption of the MCY010 Bonds and for general corporate purposes
CreditRating (S&P)Expected Issue Credit Rating: BB+ (Mercury has an Issuer Credit Rating of BBB+)
Interest Rate
1
Benchmark Rate plus the Margin, subject to a minimum Interest Rate
Bookbuild / Interest Rate set19 June 2019
Offer closes4 July 2019
4
1
To the First Reset Date
OFFER SUMMARY

5
COMPANY OVERVIEW
WaipapaHydro Power Station

Stable regulatory framework
>Underpinned by strong industry performance
on Reliability, Renewability and Pricing (the
electricity ‘trifecta’)
>Electricity recognised as a key enabler for
New Zealand’s low-carbon economy
100% renewable generation
>Low variable cost generation delivering strong
and stable cash flows
>119MW Turitea wind farm under development,
due to start operating late CY2020
6
Focus on customer loyalty
>Focus on rewarding our customers resulting in
increased loyalty and below market average
churn
COUNTRY, INDUSTRY & COMPANY
COMPANY OVERVIEW
Integrated generator & retailer
>Complementary generation sources contribute
both flexibility and reliability with sales to
customers providing a natural hedge

~6,800GWh
ANNUAL
GENERATION
6
7
MERCURY AT A GLANCE
COMPANY OVERVIEW
~60%
HYDRO
~40%
GEOTHERMAL
Turitea Wind Farm
(Under Development)
Key Information
Market Capitalisation
1
: NZ$5.2 billion
Net Debt
1
: NZ$1.1 billion
Enterprise Value
1
: NZ$6.4 billion
2
100% renewable generation from 14 power stations
>Nine hydro stations on the Waikato River
>Five geothermal stations, two in partnership with
Maori land trusts
18%
3
market share of NZ homes and businesses
51% legislated minimum Crown shareholding
335K
NORTH ISLAND
CUSTOMERS
4
44K
SOUTH ISLAND
CUSTOMERS
4
19.99%
SHAREHOLDING
IN TILT
5
1
As at 31 May 2019
2
Rounded to the nearest NZ$0.1b
3
Based on aggregated residential and business installation control points (ICPs) as at
31 March 2019
4
As at 31 March 2019
5
Tilt Renewables is a publicly listed company and is traded under ticker codes
TLT.NZX and TLT.ASX
6
Based on hydro and equity-weighted geothermal generation from FY2014 to FY2018
Hydro stations
R & D Centre
Geothermal stations
* Not 100% owned by Mercury

FY2019 GUIDANCE
8
>FY2019 EBITDAF guidance is $495m. This is down $66m from FY2018 mostly due to:
>Hydro generation forecast to be ~1,000GWh lower in FY2019 versus FY2018
>The sale of the Metrix metering business to intelliHUBon 1 March 2019 resulting in ~$10m reduction in EBITDAF in FY2019
>FY2019 stay-in-business capital expenditure guidance is $95m including:
>Ongoing hydro refurbishment at Whakamaru and Aratiatia power stations with Karapiro refurbishment announced
>Auckland office consolidation to Newmarket bringing together 550+ employees
>FY2019 ordinary dividend guidance is 15.5cps (up 2.6% on FY2018)
>Represents total ordinary dividend of $211m
1
>Guidance remains subject to hydrological volatility, wholesale market conditions and any material adverse events,
significant one-off expenses or other unforeseeable circumstances
COMPANY OVERVIEW
1
Based on 1,362m shares

0
200
400
600
2009201020112012201320142015201620172018
$m
Financial Year (ending 30 June)
EBITDAF
-10,000
-5,000
0
5,000
10,000
2009201020112012201320142015201620172018
GWh
Financial Year (ending 30 June)
GENERATION VS SALES
Geo
Hydro
Thermal
0
100
200
300
400
500
600
2009201020112012201320142015201620172018
$m
Financial Year (ending 30 June)
DISTRIBUTIONS
Share buybackSpecial dividend
Final dividendInterim dividend
0
100
200
300
400
500
2009201020112012201320142015201620172018
$m
Financial Year (ending 30 June)
CAPEX
Stay-In-BusinessGrowth
0
200
400
600
2009201020112012201320142015201620172018
$m
Financial Year (ending 30 June)
OPEX
Operating expenditureOne-off Costs
1x
2x
3x
4x
2009201020112012201320142015201620172018
Financial Year (ending 30 June)
DEBT/EBITDAF
1
Debt/EBITDAF
COMPANY OVERVIEW
9
Flat from FY2014
CAGR: ~3%
MERCURY’S LONG-TERM TRACK RECORD
1
Adjusted for S&P treatment of MCY010 Bonds

0
5
10
15
20
20082009201020112012201320142015201620172018
Nominal c/kWh
Financial Year (ending 30 June)
RESIDENTIAL PRICE
LinesEnergyWholesale (12mth rolling)
COMPANY OVERVIEW
10
CAGR: 2.3%
CAGR: 4.4%
0%
5%
10%
15%
20%
25%
20082009201020112012201320142015201620172018
Annualised Churn (%)
Financial Year (ending 30 June)
ICP CHURN
Total ChurnTrader Churn
0
1
2
3
20082009201020112012201320142015201620172018
EBITDAF ($b)
Financial Year (ending 30 June)
SECTOR EARNINGS
CAGR: 3.3%
8.8
9.0
9.2
9.4
9.6
9.8
10.0
0
10
20
30
40
50
20082009201020112012201320142015201620172018
GW
TWh
Financial Year (ending 30 June)
DEMAND
DemandMax. Generation Capacity (RHS)
1
LONG-TERM INDUSTRY TRENDS
Source: Company reports, TPIX, MBIE, Pricing Manager (NZX), Electricity Authority
1
Includes premise churn –switches caused by customers moving house

0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
LongShort
GWh
FY2018 NET POSITION BREAKDOWN
Net Other CfDs
Network Losses
Commercial & Industrial
Mass Market
Additional Hydro
Average Hydro
Geothermal (Consolidated)
COMPANY OVERVIEW
11
>Mercury operates an integrated portfolio with electricity
sales to customers providing a natural price hedge to
generation
>Average net long position with movement year-on-year
due to hydrology, plant availability and values of sales
>Two complementary low-cost fuel sources
>Flexible hydro generation from the largest group of peaking
stations in the North Island
>Geothermal provides baseload generation not dependent
on weather
>Diversified sales portfolio including sales to Mass
Market, Commercial & Industrial customers and
derivatives
>Turitea wind farm under development, due to start
operating late CY2020
1
PORTFOLIO APPROACH TO RISK MANAGEMENT
1
Contract-For-Difference

COMPANY OVERVIEW
12
>Stay-in-business capital expenditure higher in recent
years due to:
>Ongoing hydro refurbishment programme delivering
significant life extension and capacity and efficiency gains
>SAP technology platform upgrades enabling increased
functionality and flexibility to meet customer needs
>Growth capex includes:
>Acquiring a 19.99% stake in Tilt Renewables as a strong
platform for gaining exposure to Australia’s accelerating
renewables transition ($144m in FY2018)
>Additional capital contributions to Tilt Renewables for
334MW Dundonnell wind farm in Victoria ($55m in FY2019)
>Financial commitment to Turitea Wind Farm, the first large-
scale generation development in New Zealand since 2014
($256m over FY2019-2021)
>Metrix divestment completed in March 2018 for $270m
>Estimated EBITDAF reduction of $10m in FY2019
(annualised impact of $28m)
CAPITAL EXPENDITURE
0
50
100
150
200
250
300
20142015201620172018
$m
Financial Year (ending 30 June)
CAPITAL EXPENDITURE
Stay-In-Business
Growth

STABLE CAPITAL STRUCTURE
13
>Mercury’s dividend policy is to make distributions with a pay-out ratio of 70-85% of Free Cash Flow on average
through time subject to:
>Consideration of the Company’s working capital requirements and medium-term asset investment programme;
>Maintaining a sustainable financial structure for the company, recognising the Company’s targeted long-term credit rating of
BBB+ assigned by S&P
1
; and
>The risks from predicted short and medium-term economic, market and hydrological conditions, and estimated financial
performance
>S&P re-affirmed Mercury’s credit rating of BBB+/stable in December 2018
>One-notch upgrade given legislated majority Crown ownership
>Debt / EBITDAF
2
2.0x at 30 June 2018 (2.3x after EBITDAF normalisation for above-average hydro generation)
31 December 201830 June 201830 June 201730 June 201630 June 201530 June 2014
Net debt ($m)
1,2681,264
3
1,0381,0681,0821,031
Gearing ratio (%)
28.327.8
3
23.924.424.524.3
Debt/EBITDAF(x)
2
N/A2.01.82.02.02.1
Issuer Credit Rating
BBB+/stableBBB+/stableBBB+/stableBBB+/stableBBB+/stableBBB+/stable
COMPANY OVERVIEW
1
Or equivalent from another recognised credit rating agency
2
Adjusted for S&P treatment of MCY010 Bonds
3
Restated to reflect changes in IFRS

0
50
100
150
200
250
300
350
400
450
500
2019202020212022202320242025202620272045
$m
Financial Year (ending 30 June)
DEBT MATURITIES AS AT 31 MAY 2019
Commercial PaperDomestic Wholesale BondsUS Private PlacementUndrawn Bank FacilitiesUndrawn Rolling Bank FacilitiesMCY010 Bonds
14
>The average debt maturity profile for committed facilities was 6.4 years
2
at 31 May 2019
>Subject to market conditions, Mercury intends to refinance its MCY010 Bonds as described in this presentation
COMPANY OVERVIEW
DIVERSIFIED FUNDING PROFILE
1
Requires 18 months notice of termination from lender
2
Includes Commercial Paper on issue, all bank facilities, wholesale
bonds, US private placement and MCY010 Bonds to maturity
1

15
CAPITAL BONDS
Kawerau Geothermal Power Station

Capital BondsUnsecured, subordinated, interest bearing debt securities
RankingThe Capital Bonds will rank equally among themselves and will be subordinated to all other indebtedness of Mercury, other than indebtedness
expressed to rank equally with, or subordinate to, the Capital Bonds
No guaranteeMercury is the issuer and the sole obligor in respect of the Capital Bonds. None of the Crown, any subsidiary of Mercury or anyother person
guarantees the Capital Bonds.
Issue amountUp to NZ$300m of Capital Bonds for New Zealand retail and institutional investors
Credit Rating (S&P)Expected Issue Credit Rating: BB+ / Issuer Credit Rating: BBB+
* A credit rating is not a recommendation by any rating organisation to buy, sell or hold Capital Bonds
Term30 years(maturing 11 July 2049)
Reset Dates11 July 2024 and every 5 years thereafter
Optional early
redemption by Mercury
Each Reset Date, any Interest Payment Date after a Reset Date if a Successful Election Process has not been undertaken, a TaxEvent, a Rating
Agency Event or if the outstanding amount is less than NZ$100m
InterestRateInterest Rate to the First Reset Date equal to the Benchmark Rate plus the Margin, subject to a minimum Interest Rate. The minimum Interest Rate
and indicative Margin range will be announced via the NZX on 12 June 2019. An announcement of the actual Interest Rate and Margin will be
made following the bookbuild, expected to be completed on 19 June 2019
Deferral ofInterestAn interest payment can be deferred at any time for up to five years at the sole discretion of Mercury but distribution stopper in place while any
Unpaid Interest remains outstanding
Redemption of MCY010
Bonds
Subject to the bookbuild for the Offer being successful, a redemption notice to redeem the MCY010 Bonds will be sent to the MCY010 Bondholders
on 19 June 2019 or shortly thereafter
KEY TERMS OF THE CAPITAL BONDS
16
CAPITAL BONDS

INTEREST PAYMENTS
Interest Rate
>Interest Rate until the First Reset Date will be the
higher of:
>Minimum Interest Rate; and
>Benchmark Rate (on the Rate Set Date) plus the Margin
>Actual Interest Rate and Margin set following the
Bookbuild and announced shortly thereafter
>Before each Reset Date, Mercury may propose, through
an Election Process, that new terms and conditions
(including new Interest Rate and Margin) apply to the
Capital Bonds from the Reset Date
>If no Successful Election Process occurs, Interest Rate
for the next five year period resets to the sum of the
Benchmark Rate on that Reset Date plus the Step-up
Margin (Margin plus the Step-up Percentage of 0.25%, if
not already added to the Margin)
Deferral of interest
>Mercury may at its sole discretion defer payment of
interest at any time for up to five years but would be
required to stop distributions while any Unpaid Interest
is outstanding
>Total dividends declared in FY2018 were $207m (versus
MCY010 interest of $20.7m)
>Unpaid Interest will itself accrue interest at prevailing
Interest Rate
17
CAPITAL BONDS

ISSUER REDEMPTION RIGHTS
Early redemption:
>All or some of the Capital Bonds on any Reset Date; or
>All (but not some only) of the Capital Bonds if there are less
than 100m Capital Bonds on issue; or
>All or some of the Capital Bonds if a Tax Event
1
occurs
>All or some of the Capital Bonds on any Interest Payment
Date after a Reset Date if a Successful Election Process has
not been undertaken in respect of that Reset Date; or
>All or some of the Capital Bonds if a Rating Agency Event
2
occurs
Mercury may redeem the Capital Bonds before the Maturity Date as per the conditions below:
Redemption price
>Par plus Unpaid Interest plus any Interest Payment
scheduled to be paid on the date of redemption; or
>The higher of:
>The amount calculated above; and
>The market value together with accrued interest
If Mercury is redeeming Capital Bonds in part only then it
can only do so to the extent that there will be at least 100m
Capital Bonds outstanding after the partial redemption
18
CAPITAL BONDS
1
A Tax Event is where a change of law or regulation occurs and interest
payable on the Capital Bonds no longer tax deductible
2
A Rating Agency Event occurs where S&P changes its criteria (or
Mercury ceases to hold a credit rating) and the Capital Bonds no longer
qualify for Intermediate equity content

KEY EARLY REDEMPTION DRIVERS
Year 5 (2024) –Reset Date
>Potential Election Process or Mercury can call the Capital Bonds
>Step–up in Margin (0.25%) if no Successful Election Process
>Potential refinancing risk at year ten if not called
>Call is at par (any subsequent issuer call between Reset Dates is at the higher of par and market, except if there are less than100m
Capital Bonds on issue or if a Tax Event occurs)
Year 10 (2029) –Reset Date
>S&P’s equity content expected to reduce to minimal (0%)
>Treated as 100% debt by S&P
>Likely to be high cost debt with limited benefits
>Outcomes not consistent with rationale for issue
If the bookbuild process for the Offer is successful, Mercury will redeem the MCY010 Bonds on 11 July 2019. However, as illustrated by
this Offer, Mercury considers that instruments with ascribed equity content such as the Capital Bonds are an effective capital management
tool and intends to maintain such instruments as a key feature of its capital structure going forward.
19
CAPITAL BONDS

OFFER STRUCTURE / KEY DATES
Offer structure
>Bookbuild process
>All Capital Bonds reserved for clients of NZX firms,
institutional investors, and certain other parties participating
in the bookbuild
>No public pool
>MCY010 Bondholders who receive an allocation from their
financial adviser will be able to exchange their MCY010
Bonds for new Capital Bonds on the Issue Date
>Minimum applications
>NZ$5,000 and multiples of NZ$1,000 thereafter
>Early Bird Interest of 3%
>Fees
>Brokerage of 0.50%
>Firm fee of 0.50% to those participating in the bookbuild
Key dates
Bookbuild / Interest Rateset19 June 2019
Offer closes4 July 2019
Issue Date11 July2019
Expected date of initial quotation andtrading12 July 2019
First Reset Date11 July 2024
Equity credit cliff11 July 2029
MaturityDate11 July 2049
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CAPITAL BONDS

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APPENDIX
Karapiro Hydro Power Station

NON-GAAP MEASURES: NET DEBT, EBITDAFAND FREE CASH FLOW
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>Net Debt is reported in the full year financial statements and is a measure commonly used by investors. Net debt is
calculated as total borrowings (both current and non-current) less cash and cash equivalents.
>EBITDAF is defined as earnings before net interest expense, income tax, depreciation and amortisation, change in
fair value of financial instruments, impairments, and equity accounted earnings of associates and joint ventures.
>Free Cash Flow is Net Cash Flow from Operating Activities less normalisedstay-in-business capital expenditure.
APPENDIX

FOR FURTHER INFORMATION > TIM THOMPSON | HEAD OF TREASURY & INVESTOR RELATIONS T. +64 275 173 470 E. INVESTOR@MERCURY.CO.NZ

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MERCURY.CO.NZ
MERCURY NZ LIMITED
12 June 2019
Dear bondholder
We are writing to you as a holder of existing Mercury NZ Limited (“Mercury”) capital bonds with the NZX
ticker code MCY010 (“MCY010 Bonds”).
Mercury has announced that it is offering up to NZ$300 million of subordinated capital bonds (“Capital Bonds”) to New Zealand
retail and institutional investors. If the new offer is successful, Mercury will redeem all of the MCY010 Bonds (including those held
by you).
The offer opens today, 12 June 2019, and will be made pursuant to the Financial Markets Conduct Act 2013 as an offer of debt
securities of the same class as existing quoted debt securities.
The Capital Bonds are expected to be quoted on the NZX Debt Market and to be assigned an issue credit rating of BB+ by
S&P Global Ratings.
The offer will open with an indicative margin range for the Capital Bonds to the First Reset Date (11 July 2024) of 2.10% p.a.
to 2.25% p.a. (subject to a minimum interest rate for that period of 3.60% p.a.). An announcement of the actual margin
(which may be above or below the indicative margin range mentioned above) and the interest rate will be made following
the bookbuild process, expected to be completed on 19 June 2019 (“Rate Set Date”).
If the bookbuild process for the offer is successful, Mercury will send a redemption notice to holders of the MCY010 Bonds on
or shortly after the Rate Set Date.
If you wish to participate in the new offer, you should contact your usual financial adviser to obtain a copy of the indicative terms
sheet and an allocation of Capital Bonds. The indicative terms sheet contains further details of the offer and you must receive
a copy before participating. If you receive an allocation of Capital Bonds from your financial adviser you can elect to have some
or all of the proceeds from the redemption of your MCY010 Bonds applied to that allocation.
If you would like more details please contact Bank of New Zealand, Deutsche Craigs Limited, Forsyth Barr Limited (as Joint Lead
Managers), or your usual financial adviser.
For further information please contact:
BNZ Deutsche Craigs Forsyth Barr
0800 284 017 0800 226 263 0800 367 227
Yours sincerely
William Meek | Chief Financial Officer
33 Broadway
Newmarket
Auckland 1023