MCK Shareholder Letter regarding Increased Offer

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28 April 2025

Dear Shareholder

CDLHH NZ TAKEOVER – INCREASED OFFER PRICE


The Offer price has been increased from $2.25 to $2.80 per Ordinary Share. Your Independent Directors
believe that the increased offer price is still too low and inadequate and therefore recommend that
holders of Ordinary Shares DO NOT ACCEPT the Increased Offer.
However, there are a number of potential consequences (discussed in this letter) which could affect
minority shareholders if under the Increased Offer CDLHH NZ does not reach the 90% compulsory
acquisition threshold necessary to acquire the remaining Ordinary Shares.
1
Holders of Ordinary Shares
will need to make their own assessment of these potential consequences and, having regard to their own
particular circumstances, may wish to consider accepting the Increased Offer.

Increase in Offer Price to $2.80 per Ordinary Share

On 22 April 2025, CDL Hotels Holdings New Zealand Limited (CDLHH NZ) gave notice under the Takeovers
Code that it had increased the offer price to acquire all of your ordinary shares (Ordinary Shares) in Millennium &
Copthorne Hotels New Zealand Limited (MCK or the Company) from $2.25 to $2.80 per Ordinary Share
(Increased Offer). The Increased Offer closes on 8 May 2025.

In that notice and accompanying letter, CDLHH NZ also stated that:
• it would not be further increasing the offer price under the Increased Offer;
• after receiving Overseas Investment Office consent, CDLHH NZ has waived all of the remaining
conditions of the Increased Offer, including the 90% minimum acceptance condition. This means that
the Increased Offer is now unconditional; and
• it will not make another takeover offer under the Takeovers Code for at least nine months from 22 April
2025.

CDLHH NZ also announced that it had signed lock-up agreements to acquire the shares of two institutional
shareholders, SG Hiscock & Company Limited and Salt Funds Management Limited, in respect of in aggregate
2.633% of the Ordinary Shares. These parties agreed to accept the Increased Offer in respect of all of the
Ordinary Shares that they hold or control. Along with other shareholders that have accepted the Offer or
Increased Offer, CDLHH NZ now owns or has received acceptances in respect of 78.678% of the Ordinary
Shares.

MCK’s largest institutional shareholder, Accident Compensation Corporation (ACC), which holds approximately
4.5% of the Ordinary Shares, has stated it will not be accepting the Increased Offer.
2
ACC is a large institutional
fund with a long-term investment horizon. Other holders of Ordinary Shares may not have the same investment
horizon.



1
If CDLHH NZ receives acceptances under the Increased Offer which would result in it holding or controlling 90% or more of the
Ordinary Shares, CDLHH will become entitled to compulsorily acquire the remaining Ordinary Shares in accordance with the
Takeovers Code. CDLHH NZ has stated that it intends to exercise its right to compulsorily acquire all of the Ordinary Shares it
does not acquire under the Increased Offer, if the 90% threshold is met.

2
Subject to there being no material new information or material change in market conditions.

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Independent Directors’ Recommendation

While the Independent Directors welcome the increase in the Offer, we believe it is still too low and inadequate.
Accordingly, we recommend that holders of Ordinary Shares DO NOT ACCEPT the Increased Offer.

However, there are a number of potential consequences (which we outline further below) which could affect
minority shareholders if under the Increased Offer CDLHH NZ does not reach the 90% compulsory acquisition
threshold necessary to acquire the remaining Ordinary Shares, so coming to this recommendation was not an
easy decision. We encourage shareholders to consider these factors in light of their own circumstances as they
decide whether or not to accept the Increased Offer.

Reasons to NOT accept the Increased Offer

The reasons for the Independent Directors’ recommendation are the same as set out in the Target Company
Statement, which was sent to MCK Ordinary Shareholders on 24 February 2025 and which can be
read here.
These are summarised below (as amended for the Increased Offer):

1. The Increased Offer price of $2.80 per Ordinary Share is still significantly below the Independent Adviser’s
assessment of value for the Ordinary Shares. The Independent Adviser has assessed a value range of $4.40
to $5.00 per Ordinary Share, with a midpoint of $4.70 per Ordinary Share.

2. The timing of the Increased Offer still significantly discounts the benefits to the Company that shareholders
can expect as the hotel and property markets recover.

3. The Increased Offer still undervalues recent capital expenditure on key hotels.

4. The Increased Offer is still at a material discount to the market value of MCK’s net assets and significantly
undervalues the $129.5 million of recent acquisitions made by MCK. These assets were acquired at market
values, with the acquisitions supported at the MCK Board by the two CDLHH NZ representative directors.

5. The Increased Offer still does not appropriately value the benefits that could be captured by CDLHH NZ.

Reasons shareholders may consider ACCEPTING the Increased Offer

While we recommend holders of Ordinary Shares do not accept the Increased Offer, there are a number of potential
consequences which could affect shareholders if under the Increased Offer CDLHH NZ does not reach the 90%
compulsory acquisition threshold necessary to acquire the remaining Ordinary Shares. Shareholders should make
their own assessment of these potential consequences, having regard to their own particular circumstances:

1. The trading price of MCK Ordinary Shares on NZX may reduce (potentially materially) below the Increased
Offer price.

2. Liquidity for MCK Ordinary Shares is likely to decrease further – which may also impact the trading price of
MCK Ordinary Shares on NZX.

3. There is no certainty that CDLHH NZ will make another takeover offer for MCK or, if it does, when that will
occur and the price of that offer.

4. The current global environment remains uncertain and this could impact MCK’s business and its share price.

5. In its 22 April 2025 letter, CDLHH NZ stated that:

“CDL already has control of MCK, which allows, among other things, the ability to change MCK’s constitution,
appoint new board members, and influence or change MCK’s strategy including decisions on operating
expenditure, capital expenditure, capital structure and dividend policy, recognising the rights of minority
shareholders.” In its Offer Document CDLHH NZ stated “CDLHH NZ views the investment in MCK as a long-
term, strategically important business to the CDLHH NZ group with no short to medium term intention to exit.

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As such, CDLHH NZ may evaluate business decisions using criteria that are oriented towards long-term
business sustainability.”

It is possible that CDLHH NZ could look to use its influence as MCK’s majority shareholder to change the
company’s strategy and distribution policy (which could, for example, potentially see distributions remain at
the current low levels or even reduce or stop entirely).

A number of similar potential consequences were discussed by the Independent Adviser on pages 6, 36 and 37 of
the Independent Adviser’s Report in the context of the Offer. The Independent Adviser’s Report is included in the
Target Company Statement.

Given these potential consequences, some holders of Ordinary Shares may see the Increased Offer as an
opportunity to exit their investment in MCK at a known price (without brokerage costs), despite this being lower
than the value of Ordinary Shares assessed by the Independent Adviser.

Preference Shares

MCK also has redeemable non-voting preference shares listed on the NZX Main Board under the ticker ‘MCKPA’
(Preference Shares). Independently of the Offer, CDLHH NZ has indicated that it is willing to acquire the
Preference Shares at $1.70 per share via its broker, Craigs Investment Partners Limited, through buying on the
NZX Main Board (the RPS Offer). Further information about the Preference Shares and the RPS Offer is set out
in the schedule to this letter.

Acceptances and timing

The Increased Offer period is open until 5.00pm on 8 May 2025. If you decide to accept the Increased Offer, you
will need to complete the acceptance form that accompanied the offer document you should have received from
CDLHH NZ. If you decide not to accept the Increased Offer, then you do not need to do anything.

If you accept the Increased Offer, your decision is irrevocable and cannot be withdrawn.

Conclusion
Your Independent Directors believe that the increased offer price of $2.80 per Ordinary Share is still too low and
inadequate, and therefore recommend that holders of Ordinary Shares DO NOT ACCEPT the Increased Offer.

However, ultimately the decision whether or not to accept the Increased Offer is an individual decision for
each holder of Ordinary Shares, having regard to the potential consequences outlined above and in the
Independent Adviser’s Report and their own particular circumstances (including personal investment
criteria, investment timeframe and risk appetite). We acknowledge that this is not an easy decision.

If you are in any doubt about how to respond to the Increased Offer, please seek financial advice from an
independent, qualified adviser in relation to your particular circumstances.

Yours sincerely


Leslie Preston
Chair of the Independent Directors Committee

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Schedule
(Preference Shares)

MCK also has redeemable non-voting preference shares listed on the NZX Main Board under the ticker ‘MCKPA’
(Preference Shares). CDLHH NZ owns 91.34% of the Preference Shares. Although the Preference Shares rank
equally with the Ordinary Shares with respect to all distributions made by MCK (subject to a liquidation
preference) they do not (and are not required under the Takeovers Code to) form part of the Increased Offer.

However, independently of the Offer, CDLHH NZ has indicated that it is willing to acquire the Preference Shares
that it does not own at $1.70 per share via its broker, Craigs Investment Partners Limited, through buying on the
NZX Main Board (the RPS Offer).

CDLHH NZ has stated that it may also elect to seek to have the Preference Shares issued by MCK redeemed, if
CDLHH NZ is successful in acquiring all of the outstanding Ordinary Shares. Preference Shares can be
redeemed by MCK at any time if the redemption is approved by holders of Preference Shares by way of special
resolution. CDLHH NZ has sufficient votes to pass such a special resolution. The redemption price for each
Preference Share would be the higher of their 20-day volume weighted average price or their issue price of $0.64.
Historically, the Preference Shares have traded broadly in line with the Ordinary Shares (reflecting essentially the
same economic rights). However, the Preference Shares recently traded at $1.80 per share.

To the extent the Preference Shares were redeemed for a price below the Increased Offer price for the Ordinary
Shares, it would increase the value of the Ordinary Shares. CDLHH NZ is suggesting this could happen in the
event its Increased Offer is successful. The Independent Directors make no recommendation in respect of the
RPS Offer. The Takeovers Code does not apply to the RPS Offer and the Target Company Statement does not
include information about the RPS Offer. Shareholders who are considering selling their Preference Shares as
part of the RPS Offer or otherwise are recommended to seek their own professional advice.

In assessing the Increased Offer for Ordinary Shares, MCK shareholders who also own Preference Shares may
wish to consider the implications for their Preference Shares (including their potential redemption) if the Increased
Offer is successful.

In addition, some holders of Preference Shares may value the ability to sell their Preference Shares under the
RPS Offer for a certain price of $1.70 per Preference Share.