Tranz Rail Holdings Limited

News Release

20 May 2005

Tranz Rail Holdings Limited

The Securities Commission has reached a settlement of the claims of insider trading which it brought against a former CFO of Tranz Rail, Mr Mark Bloomer.

In December 2000 Mr Bloomer bought shares in Tranz Rail pursuant to the Company’s Executive Share Plan. This Plan provided that he would be allocated one redeemable share for each ordinary share that he bought. He borrowed about $1.5m to buy a substantial parcel of shares in the Company, in anticipation that the loan would be serviced by the dividends which would be paid on the shares. In August 2001 Tranz Rail decided to suspend the payment of dividends. As a result of the financial pressure caused by the suspension of dividends Mr Bloomer was unable to service the interest which was payable on this and other loans.

Mr Bloomer applied to the Company, in accordance with its Securities Act approved procedure, to sell shares between February and March 2002. Those sales were all approved in advance by the Company, and completed within authorised trading windows. The proceeds of sale were used, as he had stated would be the case, to reduce his loans. When Mr Bloomer ceased selling in March, he retained 646,654 shares which represented more than half the shares that he was able to sell. The retained shares would have realised a profit of about $600,000 if they had been sold at that time. He also retained 800,000 other shares which had not at that time vested to him.

Shortly after he left the Company he sold a parcel of 23,937 shares which vested in him on the termination of his employment. As he was not an employee at the time of the sale he was not entitled to obtain formal approval from the Company pursuant to its approved procedure. He nevertheless sought advice from the Company as to the sale of the shares and he followed the advice which he was given.

In the months that have passed since the Commission made its allegations, Mr Bloomer has provided extensive information to support his reasons for needing to sell shares.

He acknowledged at the time of lodging his application to sell his shares, that he was or may have been in possession of inside information as a result of his position as an officer of Tranz Rail, but he contended that his decision to sell was not related to this. He now acknowledges that the Commission had a case against him in respect of the final sale, under the Securities Markets Act 1988 since that sale was not made under the protection of the Company’s approved procedure. Notwithstanding this, he considers that he has a defence to that case.

In light of the information provided to it by Mr Bloomer relating to his share trading made under the approved procedure, the Commission recognises the risk that Mr Bloomer’s defence to that part of its claim against him might be successful.

Mr Bloomer has agreed to pay the Commission the sum of $156,000. That sum represents the maximum sum recoverable by the Commission in terms of compensatory damages and pecuniary penalties, in relation to the share sale that was not approved under the approved procedure. It also includes a contribution to the Commission’s costs. The Commission has received a statutory declaration from Mr Bloomer in which he has disclosed his assets and liabilities.

Mr Bloomer has agreed to make this payment without any admission of liability.

Mr Bloomer has agreed that if he is requested to do so by the Commission, he will provide information to the Commission and make himself available as a witness in the litigation.

The settlement has been approved by the High Court. No judgment has been entered against Mr Bloomer.

ENDS

This media statement is part of the terms of settlement between the Securities Commission and Mr Bloomer approved by the High Court.

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