New Zealand Refining : Product Disclosure Statement (PDS)

Arranger: First NZ Capital Securities Limited

Issued by: The New Zealand Refining Company Limited, 20 November 2018.

Joint Lead Managers: First NZ Capital Securities Limited, ANZ Bank New Zealand Limited, Bank of New Zealand, Forsyth Barr LimitedThis document gives you important information about this investment to help you decide whether you want to invest. There is other useful information about this offer onwww.business.govt.nz/disclose.

The New Zealand Refining Company Limited has prepared this document in accordance with the Financial Markets Conduct Act 2013.You can also seek advice from a financial adviser to help you to make an investment decision.

KEY INFORMATION SUMMARY

1.1 WHAT IS THIS?

This is an offer (Offer) of unsecured and subordinated notes (Subordinated Notes). The Subordinated Notes are debt securities issued by The New Zealand Refining Company Limited (Refining NZ). You give Refining NZ money, and in return Refining NZ promises to pay you interest and repay the money at the end of the term. If Refining NZ runs into financial trouble, you might lose some or all of the money you invested.

1.2 ABOUT THE REFINING NZ GROUP

Refining NZ operates New Zealand's only oil refinery processing a wide range of imported crude oil on behalf of its customers, to produce high quality transport fuels, petrol, diesel, jet fuel as well as bitumen for roading and other products.

Refining NZ supplies around 70% of New Zealand's fuel demand and also operates a multi-product pipeline, to transport refined product from the Refinery to Auckland, New Zealand's largest market.

Refining NZ is listed on the NZX Main Board and, as at the date of this product disclosure statement (PDS), is a NZX top 50 listed company with a market capitalisation as at 19 November 2018 of $735 million.

1.4 KEY TERMS OF THE OFFER

The Refining NZ Group consists of Refining NZ and the following two wholly-owned subsidiaries:

• • The New Zealand Refining Nominees Limited which is a custodian trustee company that manages the investments and moneys belonging to the New Zealand Refining Company Pension Fund (a registered Superannuation Scheme); and

• • Independent Petroleum Laboratory Limited which operates New Zealand's largest fuel testing laboratory and provides testing services to the refinery, local and international customers and government agencies.

1.3 PURPOSE OF THIS OFFER

The proceeds of this Offer are expected to be applied towards repaying a portion of Refining NZ's existing bank debt and paying any associated costs of the Offer. See section 4 of this PDS (Purpose of the Offer) for further detail.

Issuer

The New Zealand Refining Company LimitedDescription of the Subordinated Notes

Unsecured, subordinated notes.

See section 5 of this PDS (Key features of the Subordinated Notes) for more information.

Offer amount

Up to $75,000,000.

Term

Approximately 15 years maturing on the Maturity Date (1 March 2034) if not Redeemed prior to that date.

Election Date

5 years (1 March 2024) and 10 years (1 March 2029) after the First Interest Payment Date.

Anniversary Date

Each anniversary of the First Interest Payment Date falling after the first Election Date (1 March 2024) other than the second Election Date (1 March 2029).

Interest Rate

The Subordinated Notes will pay a fixed rate of interest until the first Election Date.

The Initial Interest Rate will be no lower than a minimum interest rate announced by Refining NZ via NZX prior to the Rate Set Date.

The Initial Interest Rate will be set at the sum of the Swap Rate plus the Issue Margin, subject to a minimum interest rate.

The Issue Margin will be determined by Refining NZ in conjunction with the Joint Lead Managers following a Bookbuild process where certain parties will lodge bids for the Subordinated Notes. The minimum interest rate and indicative Issue Margin will be announced on or about 26 November 2018. The Initial Interest Rate will be announced by Refining NZ via NZX on or about the Rate Set Date.

The Interest Rate may change following an Election Date to a new rate as notified in an Election Process Notice. See section 5 of this PDS (Key features of the Subordinated Notes) for more information.

Interest Payment Dates

Subject to the paragraph below, interest will be paid semi-annually in arrear on 1 March and 1 September each year (or if that day is not a Business Day, the next Business Day) until and including the Maturity Date, with the First Interest Payment Date being 1 March 2019. The first (short) interest payment will be made to the initial subscriber.

Early bird interest will also be paid on application money received in respect of accepted applications. It will not be paid if application monies are returned to you for any reason. It will be paid as soon as practicable, and, in any event, within five Business Days of the

Issue Date. More information on how early bird interest is calculated can be found in section 3 of this PDS (Terms of the Offer).

REFINING NZ

Interest deferral

Refining NZ may defer the payment of interest at any time at its discretion. For the avoidance of doubt, payment of interest is likely to be deferred if:

• (1) Refining NZ's operating revenue from processing fees for that interest period is at the pro rata fee floor level set under the Processing Agreements; or

• (2) a Refining NZ customer has terminated or given notice of termination of its Processing Agreement with Refining NZ (and no replacement customer has been found); and payment of interest will be deferred if:

• (1) an event of default (however defined in any agreement for borrowed money indebtedness) is continuing with respect to any borrowed money indebtedness of Refining NZ; or

• (2) Refining NZ is insolvent.

Any deferred interest (Deferred Interest) will accrue interest on it at the Interest Rate (compounding on each Interest Payment Date) until all unpaid Deferred Interest is paid. Refining NZ will not be able to pay any dividend or make any other payments on or with respect to Shares, other securities or indebtedness ranking equally with or subordinate to the Subordinated Notes until all unpaid Deferred Interest is paid, without obtaining an Extraordinary Resolution of the Subordinated Noteholders.

Any Deferred Interest (including any interest thereon) will be added to the Principal Amount on Redemption (other than where outlined below).

See section 5 of this PDS (Key features of the Subordinated Notes) for more information.

For further information on processing fee arrangements refer to section 5 (Key features of the Subordinated Notes) and section 6 (Risks of investing) of this PDS.

Election Process

No less than 30 Business Days prior to an Election Date, Refining NZ will provide notice of its election to either:

• • Redeem your Subordinated Notes on the Election Date; or

• • run an Election Process and offer New Conditions.

If Refining NZ runs an Election Process, you will be able to choose to hold your Subordinated Notes subject to the New Conditions or elect for Refining NZ to Redeem your Subordinated Notes by paying you an amount equal to the Principal Amount of the Subordinated Notes plus Deferred Interest plus accrued but unpaid interest (Redemption Amount).

The New Conditions may modify the conditions applying to the Subordinated Notes (including for example the Interest Rate) but may not change the Maturity Date or Election Dates.

Early Redemption

The Subordinated Notes will be Redeemed by Refining NZ prior to the Maturity Date:

• • at Refining NZ's election on an Election Date or on an Anniversary Date;

• • at Refining NZ's election if a Tax Event occurs;

• • following an Event of Default, at the option of the Supervisor who must exercise that option if directed to by an Extraordinary Resolution of Subordinated Noteholders;

• • at the option of an individual Subordinated Noteholder after a Change of Control Event; or

• • at the option of an individual Subordinated Noteholder, after an Election Process offering New Conditions.

See section 5 of this PDS (Key features of the Subordinated Notes) for more information.

Further payments, fees or charges

Refining NZ will pay brokerage to market participants in respect of the Offer.

You are not required to pay any additional brokerage or any other fee or charges to Refining NZ to purchase the Subordinated Notes. However, you may have to pay brokerage to the firm from whom you receive an allocation of Subordinated Notes or for the transfer of Subordinated Notes. Additionally, taxes may be deducted from interest payments on the Subordinated Notes. See section 7 of this PDS (Tax) for further details.

Opening Date

30 November 2018

Closing Date

12 December 2018

Minimum application amount $5,000 and multiples of $1,000 thereafter.

1.5 NO GUARANTEE

The Subordinated Notes are not guaranteed by any member of the Refining NZ Group or any other person. Refining NZ is solely responsible for repayment of the securities.

1.6 HOW YOU CAN GET YOUR

MONEY OUT EARLY

You may require that Refining NZ Redeems your Subordinated Notes following an Election Process offering New Conditions or following a Change of Control Event. There are also certain triggers that will allow Refining NZ to Redeem your Subordinated Notes early. See section 5 of this PDS (Key features of the Subordinated Notes) for further details.

Refining NZ intends to quote these Subordinated Notes on the NZX Debt Market. This means you may be able to sell them on the NZX Debt Market before the end of their term if there are interested buyers. If you sell your Subordinated Notes, the price you get will vary depending on factors such as the financial condition of the Refining NZ Group and movements in market interest rates. You may receive less than the full amount that you paid for them.

1.7 HOW THE SUBORDINATED NOTES

RANK FOR REPAYMENT

On a liquidation of Refining NZ, each Subordinated Note will be a subordinated obligation of Refining NZ, ranking:

• • ahead of Shareholders and holders of other subordinated securities that, by their terms, rank after the Subordinated Notes;

• • equally with other Subordinated Notes, and any other subordinated securities that, by their terms, rank equally with the Subordinated Notes; and

• • behind all other claims on Refining NZ (including bank borrowing, trade creditors and other unsubordinated debt) except as described above.

More information on how the Subordinated Notes rank is in section 5 of this PDS (Key features of the Subordinated Notes).

1.8 NO SECURITY

The Subordinated Notes are not secured against any of Refining NZ's assets.

1.9 KEY RISKS AFFECTING THIS INVESTMENT

Investments in debt securities have risks. A key risk is that Refining NZ does not meet its commitments to repay you or pay you interest (credit risk). Section 6 of this PDS (Risks of investing) discusses the main factors that give rise to the risk. You should consider if the credit risk of these debt securities is suitable for you.

The interest rate for these Subordinated Notes 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 is fair.

Refining NZ considers that the most significant risk factors are:

SINGLE REFINERY SITE / CONCENTRATION OF OPERATIONS Refining NZ operates a single refinery at Marsden Point. The single site, creates a risk in that Refining NZ would not be able to redirect operations to another location in the case of disruption at the site for any reason, which could have a negative impact on Refining NZ's financial position and potentially its creditworthiness.

CUSTOMER CONCENTRATION

Over 93% of Refining NZ's total operating revenue comes from three customers and 92% comes from four individual Processing Agreements with those three customers. If any of these Processing Agreements were terminated, and no new customers were found, then this would have a significant impact on Refining NZ's financial position and potentially its creditworthiness.

EMISSIONS TRADING SCHEME

Following the expiry of the Negotiated Greenhouse Agreement on 31 December 2022, Refining NZ will face the prospect of full exposure to the New Zealand Emissions Trading Scheme (NZ ETS) via a charge on Refining NZ's direct and indirect CO2 emissions. As Refining NZ's operations are energy intensive, full exposure to the NZ ETS could significantly reduce Refining NZ's competitiveness and ultimately it's financial viability.

This summary does not cover all of the risks of investing in the Subordinated Notes. You should also read section 6 (Risks of investing) and section 5 of this PDS (Key features of the Subordinated Notes).

1.10 NO CREDIT RATING

Refining NZ's creditworthiness has not been assessed by an approved rating agency. This means that Refining NZ has not received an independent opinion of its capability and willingness to repay its debts from an approved source.

1.11 WHERE YOU CAN FIND OTHER MARKET

INFORMATION ABOUT REFINING NZ

This is a short-form offer document that Refining NZ is permitted to make because these Subordinated Notes rank in priority to existing quoted financial products of Refining NZ. The existing quoted financial products are ordinary shares in Refining NZ which are traded on the NZX Main Board. Refining NZ is subject to a disclosure obligation that requires it to notify certain material information to the NZX for the purpose of that information being made available to participants in the market. Refining NZ's page on the NZX website, which includes information made available under the disclosure obligation referred to above, can be found atwww.nzx.com/companies/NZR.