Hanover Debt Restructuring Plan Media briefing 20 November 2008

1. The detailed terms of the Debt Restructure Proposal will be set out in notices of meeting and an explanatory memorandum to be sent to investors, and short form prospectuses which will be available from www.hanover.co.nz Hanover Debt Restructuring PlanMedia briefing20 November 2008

2. Agenda Greg Muir Overview Mark Hotchin The finance company sector Peter Fredricson Current position Debt Restructuring Plan Repayment schedule Debt Restructuring Plan vs receivership Independent appraisals – PwC and KordaMentha Greg Muir Governance and management Conclusion

3. Overview • Global credit issues building for some time – NZ finance sector had specific issues, subsequently worsened by the global crisis • Hanover recognised lack of funding diversification early and sought to change • Hanover Debt Restructuring Plan provides for • Additional Financial commitment of up to $96 million by shareholders • retention of board and management, with continued oversight by trustee and trustee appointed independent • progressive repayment of investors’ principal • To be put to investors for approval on 9 December 2008 • Recommended by the board and preferred over alternative by trustee’s independent advisors

4. The finance company sector • Provision of ‘mezzanine’ finance – between senior bank debt and shareholders’ equity – is historically entrenched and successful • Generally repaid as developments complete and new purchasers settle, or on refinancing by other lenders • Currently distressed, with… • Reduction in numbers of ready buyers for completed developments • Contracting senior lender activity • Significant slowing in borrowers’ ability to repay through realising assets or refinancing • Conditions will improve in time • Ongoing opportunity for specialist financiers to support property and infrastructure development

5. The current position • Hanover ceased accepting funds and making repayments on 23 July 2008 • Options for recovery of loans and repayment of investments - the Debt Restructuring Plan or receivership • Total 17,630 investors in the group, with $553m invested

6. The current position • Unable to repay all due amounts at present • … but confident that time will enable this to be accomplished • Asset quality is good enough, in our view, to fund principal repayment as assets are collected over five years • Borrowers need support over the period of the restructuring to maintain the quality of the asset book and provide the best opportunity to pay out all investors

7. Debt Restructuring Plan • Commitment of up to $96m by shareholders – if plan approved • $36 million of cash; being $10 million for principal payments as required, and $26 million for debt reduction in Axis Property Group • Personal guarantees available if required from 2010 – $20m • Equity in property assets in Axis Property Group – $40m • Shareholder cash and property commitments locked in over five-year term • Board and management operate the businesses as a going concern • Experienced team that understands the assets and the market • Separate company plans require approval – all conditional on HFL Secured Deposits Debt Restructure

8. Repayment schedule • Interest payment is possible at the end of the term, based on recovery formula • Accelerated repayment is possible, based on recovery timetables

9. Repayment schedule (1) First payment 15 March 2009, thereafter quarterly on last day of each quarter

10. Debt Restructuring Plan vs Receivership

11. Independent appraisals • Commissioned by the trustees on behalf of the investors • Detailed review of the proposal, repayment forecasts, assumptions, shareholder commitments • PricewaterhouseCoopers in respect of HFL Secured Depositors and UFL Secured Stockholders • KordaMentha in respect of HFL Subordinated Noteholders and HCL Bondholders • Support the view that the proposal is likely to provide a better outcome than receivership

12. PwC Sensitivity Scenario 1 PwC Sensitivity Scenario 2 PwC Sensitivity Scenario 3 18.1¢ per $1 17.1¢ per $1 16.2¢ per $1 PwC scenarios – HFL Secured Depositors

13. PwC Sensitivity Scenario 2 PwC Sensitivity Scenario 1 Undistributed excess of 18.9¢ per $1 9.3¢ per $1 14.8¢ per $1 PwC scenarios – UFL Secured Stockholders Excess of 3.8¢ per $1

14. KordaMentha – HFL and HCL Subordinated investors • KordaMentha has assessed the proposal on the same basis and reached a similar conclusion • Highly subordinated debt instruments (due to structure or ranking) • Nil value in the context of a receivership • Offer to promote ahead of deferred consideration (for the shareholder support) at 50c in the dollar

15. Governance and management • Trust deeds amended to give effect to the individual company restructures • Boards of HFL and UFL to comprise two shareholder representatives and two independent directors – at least one approved by trustee • New independent director to head Audit, Risk and Compliance Committee and Credit and Investments Committee • New lending subject to trustee-approved protocols and cash availability restrictions • Continued reporting to trustees under trust deeds & applicable legislation

16. Conclusion The Hanover board believes the proposal is in the best interests of all investors and recommends that investors vote in favour of it • Maximises recovery potential by • Retaining institutional and market knowledge • Facilitating the additional contribution of up to $96m from shareholders • Information pack mailed to investors from today and at www.hanover.co.nz • ‘Roadshow’ from 25 Nov to outline the proposal and discuss with investors • Investor vote in Auckland on 9 December The detailed terms of the Debt Restructure Proposal will be set out in notices of meeting and an explanatory memorandum to be sent to investors, and short form prospectuses which will be available from www.hanover.co.nz