Fletchers commences debt repayment programme

Fletcher Challenge commences debt repayment programme

AUCKLAND, 5 July 2000 – Fletcher Challenge has started its debt repayment programme with an offer to purchase up to $US1.1 billion worth of notes held by institutional investors in the United States.

The offer is part of the separation process and is conditional on completion of the sale of Fletcher Challenge Paper to Norske Skog at the end of the month. The offer is being made now so that the overall process will be able to be completed as quickly as possible.

The attached statement is also being released in the United States today.

Fletcher Challenge Commences Tender Offer and Consent Solicitation for
Outstanding 6.75% Notes due 24 March 2005, 7.75% Notes due 20 June 2006,
7.5% Notes due 24 March 2007, 6.875% Notes due 24 March 2008,
8.25% Notes due 20 June 2016 and 7.875% Notes due 24 March 2017.

Vancouver, Canada, July 5, 2000 -- Fletcher Challenge Limited, through its wholly owned subsidiary Fletcher Challenge Capital Canada Inc. (the “Company”), announced today that it has commenced separate offers to purchase for cash all of its outstanding 6.75% Notes due 24 March 2005 (the “2005 Notes”), 7.75% Notes due 20 June 2006 (the “2006 Notes”), 7.5% Notes due 24 March 2007 (the “2007 Notes”), 6.875% Notes due 24 March 2008 (the “2008 Notes”), 8.25% Notes due 20 June 2016 (the “2016 Notes”), and 7.875% Notes due 24 March 2017 (the “2017 Notes”)(together, the “Notes”).
Under the terms of the offers, the Company will purchase the outstanding Notes at an amount, per $1,000 principal amount at maturity of Notes tendered pursuant to the offers, equal to the present value on the payment date of all remaining payments of principal thereof and premium and interest thereon to be made through to maturity discounted at a rate equal to the sum of (i) the yield on the applicable reference Treasury securities set forth in the table below plus (ii) the applicable fixed spread set forth in the table below, as more fully described in the Offer to Purchase and Consent Solicitation Statement dated July 5, 2000. In each case the purchase price includes an amount equal to 2% of the principal amount that will be paid only for Notes tendered at or prior to the applicable "consent payment deadline" which is expected to be 5:00 p.m., New York City time, on July 18, 2000, unless extended, and purchased pursuant to the offer.

Title of Notes
CUSIP Number Outstanding
Principal Amount Fixed Spread
(basis points)
UST Reference Security

2005 Notes
338922AE7
$150,000,000
75 bps US Treasury 7.5% Note
due 15 February 2005

2006 Notes
338922AA5
$300,000,000
80 bps US Treasury 6.875% Note
due 15 May 2006

2007 Notes
338922AC1
$200,000,000
85 bps US Treasury 6.25% Note
due 15 February 2007

2008 Notes
338922AF4
$140,000,000
90 bps US Treasury 5.5% Note
due 15 February 2008

2016 Notes
338922AB3
$137,300,000
120 bps US Treasury 6.125% Note
due 15 August 2029

2017 Notes
338922AD9
$123,250,000
120 bps US Treasury 6.125% Note
due 15 August 2029

In connection with the offers, the Company is also seeking consents to certain proposed amendments to the Indenture under which the Notes were issued. The purpose of the proposed amendments is to eliminate certain restrictive covenants contained in the Indenture in order to, among other things, facilitate Fletcher Challenge Limited’s plan to dismantle its current operational and capital structure.
The offers are conditioned upon, among other things, the receipt of the requisite consents to adopt the proposed amendments and the completion of Fletcher Challenge Limited’s sale of its Paper Division to Norske Skogindustrier ASA. The completion of this sale is not conditioned upon the successful completion of any of the offers.
The offers will expire at 5:00 p.m., New York City time, on August 2, 2000 (the “Expiration Time”), unless extended or earlier terminated. Payment for Notes tendered and not withdrawn will be made in same day funds on the first business day following expiration of the offers, or as soon thereafter as practicable.
Credit Suisse First Boston will act as Dealer Manager for the offers. The Information Agent is MacKenzie Partners, Inc., and the Depositary is The Chase Manhattan Bank.
Additional information concerning the terms of the offers and consent solicitation may be obtained from Credit Suisse First Boston at 1-212-325-2547 or 1-800-820-1653. Copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be obtained from MacKenzie Partners, Inc. at 1-212-929-5900 or 1-800-322-2885.
This press release does not constitute an offer to purchase the Notes or a solicitation of consents to amend the related Indenture. The offers and consent solicitation are made solely by the Offer to Purchase and Consent Solicitation Statement by the Company dated July 5, 2000.

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