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DEMI HOLDINGS LIMITED

201 Manukau Road, Epsom Auckland, New Zealand P.O. Box 9794 Newmarket Auckland 1149 Phone(09) 630-1613 Fax (09) 630-5345

TO WHOM IT MAY CONCERN 26 August 2011 THE STATUTORY MANAGEMENT of

AJ & MJ Hubbard and Associated Entities

1.

Executive Summary by Tur Borren who has been involved in advising Allan and Jean Hubbard since management in June 2010. Tur Borren has had many years' experience which avoid the need for the appointment of business situations

This report is written in the resolution

they were put into statutory receivers, liquidators

of complex

or statutory managers. of statutory managers in the private affairs of by the outcome

In this report Tur Borren argues that the appointment management

AJ & MJ Hubbard and associated entities was never requested by the investors who the statutory
was designed to protect, and that these investors are disadvantaged may be accountable for this loss of value. solution to the statutory management of AJ & MJ thereof. He suggests that the Government He recommends a commercially

negotiated

Hubbard, Aorangi Securities limited by investors, creditors these proposals is that

and Hubbard Management interests

Funds provided that this is approved are to be subordinated behind the

and co-venturers

involved in Allan Hubbard's private affairs. A key aspect to must receive payment in full over a three year period which is unlikely to be achieved

Allan and Jean Hubbard's so that investors

interests of the investors, before the Hubbard's under statutory

receive any residual value. This outcome, has the support of Allan Hubbard.

management,

Tur Borren believes that he will receive widespread with an independent statutory investors. management board of directors

support for the establishment to all parties involved.

of a new company of the entities in to

to take over the assets and liabilities

on terms which are favourable

He indicates that it is

likely that this proposal will attract significant

new funding which will speed up the distributions

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2. Preamble On 20 June 2010 Richard Simpson and Trevor Thornton were appointed statutory managers of Aorangi Securities Limited (ilAorangjll), a number of charitable trusts and Mr Allan and Mrs Margaret (Jean) Hubbard personally. Graeme McGlinn was appointed as an additional statutory manager on 13 September 2010. On 13 September 2010 the Barns Charitable Trust and the Temple Bar Family Trust were placed into statutory management. On 20 September 2010 Hubbard Churcher Trust Management Limited and Forresters Nominee Company Limited (ilHMF") were placed into statutory management. On 29 June 2011 the statutory managers provided their seventh report to inform investors in Aorangi and HMF with an update on the status of their investments. In the reports which have been issued the statutory managers state that they recognise the need to protect the interests of the investors in the respective statutory management regimes, resolve the difficulties which have been encountered and preserve, as far as possible, the business interests and investments of Aorangi, HMF and Mr & Mrs Hubbard. I am the Managing Director of private investment company, Demi Holdings Limited. Over the past 35 years, I have been actively involved in financial reconstructions and change management in the New Zealand business sector. I specialise in the negotiation of commercial solutions to difficult business situations which avoid the need for the appointment of receivers, liquidators or statutory managers. In the public sector, I am probably best known for the resolution of the financial difficulties experienced in the 1990's by Renouf Corporation limited, which was subsequently relisted on the New Zealand Stock Exchange as Hellaby Holdings Limited. I was Managing Director of Hellaby Holdings limited for the period 1993-1999. Thereafter I returned to Demi and have continued to be an active investor in the New Zealand business sector. I have known Allan Hubbard since 2001, although I have never had personal involvement in any Hubbard companies or investments, including South Canterbury Finance ("SCF"), Aorangi, HMF or Allan Hubbard personally. Nevertheless, I took an interest in the Hubbard affairs when the statutory managers were appointed to Hubbard's private affairs in June 2010, and I have been actively engaged with both Allan and Jean Hubbard and the statutory managers over the past 12 months. This report sets out my views on the statutory management of the Hubbard private affairs. It should be noted that I have signed a confidentiality agreement with the statutory managers in relation to information I have received from the statutory managers on matters which are not in the public domain. I have held discussions with many of the Aorangi and HMF investors and with the coventurers in the assets owned within Aorangi. The views expressed in this report are my personal opinions.

3.

Allan Hubbard

Allan Hubbard is 83 years old. During the bulk of his career he has been highly successful,initially as a partner in a Timaru based accountancy firm, Hubbard Churcher and subsequently as an investor in a wide variety of business interests in South Canterbury and further afield. When I first met Allan in 2001 (in respect of the future ownership of New Zealand Wool Services International limited), I

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asked him how he proposed to deal with the wealth he had personally accumulated. He told me then that the world is divided into spenders and savers, and that he and Jean had turned out to be savers. He stated that his intentions were to provide adequately for his dependents, and to utilise the balance of his wealth for the public good. Being actively involved with the Presbyterian Church, this was an obvious beneficiary. But equally, he talked about the pleasure he derived from resourcing and assisting the younger generation in their endeavours to make good, particularly in adding value to New Zealand's primary resources and equally in support of the South Island of New Zealand. It is a matter of public record that Allan Hubbard has spent the last 10 years implementing the intentions he expressed to me in 2001. This is hardly surprising because by the time I first met Allan Hubbard he had already been a benefactor in many private and public endeavours for many years. This is the source of the widespread public support he receives in his current predicament. Allan Hubbard also told me how in his private affairs he was constantly bombarded by personal requests from people in his extensive community who wished him to look after their personal wealth. He had created Aorangi and HMF to accommodate these requests, and he had been able to provide these investors with significantly above market returns for many years. This only increased the personal requests he had to deal with. In typical Hubbard style he minimised the administrative costs he incurred in managing this responsibility, for the benefit of these private investors. While he took pride in what he was able to achieve in Aorangi and HMF, he always made it clear to investors that the management of their money was time consuming and he was only prepared to do so if they were happy to let him take full responsibility. Any investors who wished to have an active personal involvement in the structure of their investment portfolios were told to go elsewhere, to any of the many investment fund companies who provided such service to investors. This was an unwritten contract between Allan Hubbard and the 500 plus investors who became involved in Aorangi and HMF, and it was understood and applauded by these investors over many years. When I first became involved with Allan Hubbard following the appointment of statutory management in June 2010, I wondered whether his generosity had inadvertently extended itself to the giving away of other people's money in his own name. The analysis of this issue is complicated by the demise of SCF(in Receivership) and by the extraordinary level of expenses being incurred by the statutory managers in unravelling the Hubbard private affairs. The reason why it is important is because it is clearly nonsense to suggest that Allan used investors' money for personal extravagance. His only possible motive could have been in his unsuccessful endeavours to save SCFor in the preservation of his reputation as a benefactor.

4.

SCF (in Receivership)

The difficulties being experienced by SCFhave been well documented and preceded the decision to appoint statutory managers to the Hubbard private affairs. Allan Hubbard was the major shareholder in SCFand the chairman of the board of directors. SCFprocured deposits through the issue of public prospectuses. The company was bound by all of the regulatory and financial reporting requirements which are in place in New Zealand to protect the interests of minority shareholders and investors. Following the global financial meltdown in 2008 SCFbecame one of a number of financial institutions which received the benefit of a New Zealand government guarantee which protected the interests of depositors. As the financial position of SCFdeteriorated, Allan Hubbard 3

invested an estimated $250 million into SCFvia Southbury Group limited (the parent company of SCF)in the period November 2009 - January 2010. These capital injections included interests in Helicopter NZ Ltd, Scales Corporation Ltd, a number of dairy companies, as well as cash. These transactions took place in an environment of distress. In retrospect, there is considerable uncertainty as to whether title was properly transferred in some of these attempts to shore up the affairs of SCF. In any event, the attempts to save SCFfailed and the company was placed into receivership by the New Zealand Government on 31 August 2010. As a consequence Allan Hubbard lost not only his original ownership in the company but also the estimated $ 250 million which he had injected into SCFover the previous year. Actually, Allan had been side lined as a director of SCF for the previous 12 months and was forced to resign on 28 May 2010. His personal affairs were placed in statutory management on 20 June 2010. The appointment of statutory managers resulted in a ratings downgrade for SCFand finally resolved the question in investors' minds whether Allan Hubbard would be able to save the company. It was therefore an important contributing factor in the subsequent decision to place SCFin receivership. The loss of old and new investment in the SCF receivership eliminated the bulk of Allan Hubbard's personal wealth. A fortune which had been patiently created was destroyed in a flash. Allan Hubbard's attempts to save SCFwere not, in my opinion, well considered nor well executed. These were the actions of a man who was past his prime and who would not accept that he was in the process of losing control of his major investment, an investment which was in the public perception inextricably linked to the Hubbard name. Pride may have been a factor. I cannot think of another occasion in New Zealand's corporate history where the principal shareholder has invested as heavily in a failed attempt to protect the best interests of public debenture holders.

5. Related Party Transactions At this point of my analysis I want to briefly focus on the issue of related party transactions. Much has been made by the statutory managers of related party transactions which have always been a feature of the way in which Allan Hubbard has managed his personal affairs. In the reports the statutory managers have issued to investors over the past 12 months these related party transactions have been presented as being a reason for the complexity of their task to unravel the Hubbard affairs. Objective reading of these reports leads to the inescapable impression that these related party transactions are sinister and in some way responsible for the loss of investor monies. They carry a heavy burden of suspicion. This criticism of related party transactions is not necessarily correct. It is not unusual to enter into related party transactions in a group of companies which are not in common ownership. In most cases these transactions are entered into for sound commercial reasons. Many public companies listed on the New Zealand Stock Exchangeenter into related party transactions. In the case of Allan Hubbard, he has often invested Aorangi and HMF investors' monies into companies in which he himself had an interest. It is a principal reason why the returns for Aorangi and HMF investors have exceeded average market returns. These actions were inherent in the contract between Allan Hubbard and his private investors. He offered them the service of placing their money into companies which he believed would prosper. And annually he advised his investors 4

that he had done so, and reported to them the outcome of this strategy. Obviously, there are risks in all investment strategies and superior returns are not guaranteed. In the final analysis anyone who entrusts their money into someone else's hands has to take the bad with the good. Even if Allan Hubbard invested a proportion of investors' monies into companies to whom he was related and which subsequently did not prosper, this is not suspicious behaviour unless he were to be a personal beneficiary of these monies so invested.

6. Charitable Trusts
It is odd that the charitable trusts under Allan Hubbard's management have also come under suspicion. A trust is merely a form of ownership, which designates certain individuals and/or organisations as the beneficiaries of the affairs of the trust. A charitable trust nominates beneficiaries which are not related to the trustees, and may in certain conditions be given tax relief to encourage the charitable activities it undertakes. It may be that the act of charity creates the suspicion. People are often confused by the act of doing good. If this is the problem, people should have been suspicious of Allan Hubbard for many years. When Allan Hubbard was in discussion with the Securities Commission prior to June 2010, he agreed to offer a prospectus to the investors in Aorangi and HMF respectively. At that time he introduced certain personal assets into Aorangi to ensure the solvency of this company. The introduction of these personal assets created a loan to Allan Hubbard. These loans were to be subordinated to the interests of investors so that they would receive the full benefits of the assets which were introduced. To eliminate the related party transactions inevitable in these loans, the newly introduced Hubbard assets were sold to certain charitable trusts, and mortgaged to Aorangi. The effect of these transactions was to give Aorangi the benefit of first ranking mortgages over assets it did not previously own. The purpose of these charitable trusts was misunderstood by the statutory managers in their early reports (and indeed by the Government prior to the decision to appoint statutory managers) where they created the impression that somehow value had passed from Aorangi to Allan Hubbard, the reverse of what actually took place. The statutory managers have never cleared up these incorrect observations, and the impact of this misunderstanding lingers on in the minds of investors and the media. The other charitable trust which has, in my view, been incorrectly reported is the Te Tua Charitable Trust. This trust was established by Allan Hubbard some 50 years ago, primarily to assist young farmers into an ownership position. Over the years, the Te Tua Charitable Trust assisteda number of different causes, often through the provision of interest free loans with repayment schedules which were not enforced. These long standing loans were to be recovered when the beneficiary was able to repay. The Te Tua Trust was also brought into Aorangi for the benefit of Aorangi investors. While there was no certainty in the timing of the collection of its many loans, there was nevertheless value in these loans to Aorangi. The statutory managers have made much of the nature of these loans and the difficulties they are having in the collection thereof. The implication is that this is typical of the way

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Allan Hubbard conducted his affairs, and a contributing factor to the demise of Aorangi. I regard this explanation as extremely misleading. Becauseof this inherent dislike of charitable trusts, and the way in which their purpose was initially misunderstood, the statutory managers decided to unwind the trusts which had been set up by Allan Hubbard to satisfy perceived Security Commission concerns. In the process of this unwinding the assets amounting to some $60 million were effectively returned to the original owners (being Allan Hubbard) and taken away from the intended recipients (being Aorangi investors). This is the principal reason why the statutory managers' June 2011 report to Aorangi investors is so much more pessimistic than the previous report dated March 2011. All of these conclusions are disclosed in the statutory managers June 2011 report in such a confusing manner that it is difficult to understand that this setback for Aorangi investors is of the statutory managers' making.

7.

Statutory Management

Performance

The statutory managers took control of Aorangi and AJ & MJ Hubbard's personal affairs in June 2010. HMF was placed in statutory management in September 2010. To date the financial information provided to the Aorangi and HMF investors has been minimal. No attempt has been made to provide investors with balance sheets supported by independent valuations and no attempt has been made to disclose income and expenditure statements. The estimates of prospective realisations have been confusing and contradictory. After a year of statutory management investors in Aorangi have recently received a payment of 4 cents in the dollar (the original 3 cents received by Aorangi investors was already in the bank when the statutory managers were appointed and would have been stopped if that had been possible). The HMF investors have received nothing. If the statutory management were bound by the financial reporting requirements placed on companies listed on the New Zealand Stock Exchangethey would have been delisted some time ago. Instead, the investors have received seven consecutive reports setting out in detail some of the difficulties which have been encountered under statutory management. These references are principally by way of emphasis on the type of issues being experienced, and cast an unnecessary complexity on the overall position of the entities in statutory management. I ask myself why this should be so. It is my opinion that the statutory managers have underperformed to date in fulfilling their responsibilities to investors. Trevor Thornton has been the most effective. However, Trevor Thornton's relationship with Allan Hubbard has deteriorated to the point where there is little meaningful contact between them. As a result, he has to ascertain the relationships which exist in respect of the assets under statutory management control by discussion with shareholder partners and creditors who are conflicted between their loyalty to Allan Hubbard and the potential opportunity to take advantage of the statutory managers' lack of historical knowledge. Graeme McGlinn has taken primary responsibility for the affairs of HMF. The assets of HMF are principally shares in public and private companies, and in the main could be realised quite readily. However, Graeme McGlinn's problem is that if he were to liquidate HMF, he would be unable to determine the 6

respective rights of individual investors who all held individual investment portfolios under Allan Hubbard's management. The last time these investors were given a statement of the value of their portfolio was as at 31 March 2010. Since then they have received estimates of the total value of HMF assets, but no indication where each of them stand individually. Graeme McGlinn is seeking court approval to pool the investor's individual portfolios, and thereby permit an equalisation in the returns to be received by HMF investors. Even if this was to be approved it will undoubtedly be challenged by investors who will be disadvantaged by such an approach. I anticipate lengthy legal battles in this respect which will further delay the statutory management. In the meantime, on the basisof consecutive statutory managers' reports very little appears to be happening in HMF. Richard Simpson is Wellington based. He appears to be primarily focussed on the interface with Allan Hubbard's solicitors and the relationship with the relevant Government departments who placed the Hubbard entities into statutory management in the first place. Again, this appears to be of little value to investors, or their future prospects for realisations. Nevertheless, the expenses which have been incurred by the statutory managers and their advisors have been in excess of $5 million in the first year of statutory management. On the face of it, little has been achieved to justify this expenditure. One of the inherent disadvantages of statutory management is that it must seek legal counsel in all the activities in which it engages. Every issue which they confront requires the input of solicitors. This becomes a bonanza for the professionals at the expense of the investors. To further complicate these matters Allan Hubbard is himself represented by solicitors who constantly run interference in the activities being promoted by the statutory managers. The cost of Allan Hubbard's personal legal representation has been $3 million in the first year of statutory management. Indirectly these costs are also borne by the investors in Aorangi and HMF. It might be assumed that the statutory management expenses will diminish in time, as the initial familiarisation of the affairs under the statutory management regimes is completed. This is unlikely to be the case. Under statutory management every significant dispute will need to be resolved in court. At present, there are eight separate court cases looming, and with time this number will increase. I visualise a statutory management process which will not be concluded inside five years and incur a cost of not lessthan $ 50 million, inclusive of Allan Hubbard's legal representation. If the question whether Allan Hubbard gave away investors' monies in the lead up to statutory management is determined by the ultimate realisations to be received by the investors in Aorangi and HMF, it is likely that these realisations will be greatly reduced by the cost of statutory management for which Allan Hubbard can hardly be held accountable.

8.

The Value of HMF

As at 31 May 2011 the value of HMF investments was estimated by the statutory management to be $49.3 million after adjustment for assetssubject to third party claims. This estimate does not include HMF investment in Aorangi and certain other related parties. The total amount credited to HMF investors as at 31 March 2010 (the last time HMF investors received a detailed statement of individual accounts) was approximately $82 million. At face value, then, the average payout to HMF 7

investors would be 60 cents in the dollar. However, Allan Hubbard estimates that HMF should realise an additional $12 million which would increase the average payout to 74 cents in the dollar. Furthermore, Allan Hubbard argues that since 31 March 2010 investors incurred some genuine diminution in the value of their individual portfolios (not arising from related party transactions) as can happen in any share portfolio. Allan Hubbard estimates this loss in value to be in the order of $10 million which should be allocated to individual portfolios as they were constructed. If the total amount owing to individual portfolios was reduced from $82 million as at 31 March 2010 to $72 million the average payout estimated by the statutory managers from an asset value of $49.3 million would increase to 68 cents and Allan Hubbard's estimate of the payout to 85 cents. These losses are measured against the current values of investors' portfolios and not against the value of their original investment. PriceWaterhouseCoopers undertook an exercise last year which inferred that even if HMF investors were to receive only 60 cents in the dollar, their overall return on investment will have outperformed average market returns by a significant margin In any event, the value of HMF investments will continue to fluctuate in the market place and the precise amount available for distribution to investors can only be confirmed when HMF's share portfolio has been liquidated.

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The Value of Aorangi

The value of Aorangi's assetsis hugely influenced by the issue of whether approximately $60 million of assets are beneficially owned by Aorangi or by Allan Hubbard. If we ignore this issue of ownership, the statutory managers' sixth report issued on 4 March 2011 provides the most reliable information available to Aorangi investors. In this report the statutory managers advise that the total amount due to investors excluding interest is $96 million. The report states that the preliminary estimated reliable value of the assetsof Aorangi is $92 million, suggesting a payout to investors of 95 cents in the dollar. This estimate does not on the face of it take account of statutory management expenses nor does it include income derived from investments. Allan Hubbard updates his valuation of the assets owned by Aorangi on a weekly basis. He produces balance sheets which set out the value of each individual asset to the best of his knowledge. He needs to estimate these values, because he is not privy to the actions taken by the statutory managers in respect of these assets, or the income which is derived from dividends and interest. Allan Hubbard values the assetsof Aorangi at approximately $150 million. He argues that Aorangi is likely to be able to meet its obligations to HMF and leave him with a significant personal investment after all obligations to Aorangi investors have been discharged. I do not have the information to form my own opinion on the value of assets in Aorangi, but I will make some general observations. The largest sector of Aorangi investments is in the dairy industry and related activities. The dairy industry has performed well over the past year. I am seeing evidence of rising values, which may be sustainable. As a generalisation I see Allan Hubbard as a person who is primarily concerned with future values. I see the statutory managers primarily concerned with past valuations. Statutory managers are, sensibly, conservative in the information they supply to creditors and investors. There is no merit in creating expectations which cannot be met. I 8

understand that the substantial valuation gap between the statutory management estimates in March 2011 and Allan Hubbard's on going estimates is exaggerated by the exclusion of certain assets, over which there may be third party claims. I do not have an opinion on the reliability of these exclusions. On balance, I favour the view that the value of the assets set out in the statutory managers' March 2011 report exceedsthe $96 million liability outstanding to Aorangi investors. In any event, the estimation of the value of the assets of Aorangi has now been overshadowed by the uncertainty whether certain assets introduced into Aorangi may in fact have reverted into the ownership of Allan Hubbard. If this is the case, as the 29 June 2011 statutory managers' report seems to indicate, then the position of Aorangi investors is altered dramatically for the worse. Conversely, the position of Allan Hubbard's personal creditors and Allan Hubbard himself will have improved equally dramatically. This issue is fundamental to the outcome of the statutory management. I understand that significant asset realisation have resulted in cash being placed in solicitors trust funds pending resolution of these ownership issues. I have no doubt that these ownership issues will eventually be tested in court at considerable expense and further delay in the distributions to investors. Allan Hubbard has repeatedly stated in public that he will subordinate his personal interests to his obligations to the investors in Aorangi and HMF. This undertaking is at risk if Allan Hubbard were to take the view that he should in the first instance recoup the cost of statutory management.

10. South Island Farm Holdings Limited ( ttSIFHL") Allan Hubbard has under his indirect ownership a group of 21 dairy farms which were apparently sold into SCFas part of his endeavours to support the financial position of SCFbefore that company was placed in receivership. For reasons I do not fully understand these dairy farms were sold back to Allan Hubbard under a transaction where SCFretained a mortgage over the farms. The validity of these transactions is under dispute. If the mortgage held by SCF(in Receivership) is deemed to be valid, it will require a significant upturn in dairy farm values before benefit will accrue to Allan Hubbard. If in fact the original transaction was invalidated, these assets will be owned beneficially by Allan Hubbard free of SCF(in Receivership) mortgages. This dispute is of such magnitude that it has a critical impact on the outcome of the statutory management. The principal creditor of SCF (in Receivership) is the New Zealand Government. Resolution of the SIFHl dispute could, if so negotiated, drive a negotiated solution to the statutory management of Allan Hubbard's private affairs. If not, it will be some time before the dispute is settled in the court of law.

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11. The Serious Fraud Office The Serious Fraud Office (tiSFO") laid SO fraud charges against Allan Hubbard on 20 June 2011 after a 12 months investigation. A number of these charges are for actions which preceded Allan Hubbard's for that he had the decision to inject some $250 million into SCF. Allan Hubbard has always taken full responsibility his personal affairs, and those of Aorangi and HMF. He did so in the knowledge his decisions to support SCF. Personally, I will be surprised if the SFO charges will result in significant penalties handed down

personal wealth to make good his obligations to investors. This ability to make good was depleted by

against Allan Hubbard in the court's eventual decisions.

12. The New Zealand Government The position of the New Zealand Government was of great receivership concern to the Government is challenging. Obviously the financial position of SCF prior to the decision to place that company into costing $1.6 billion. It is not clear yet how

which resulted in a tax payers funded bailout

much of these monies will be recovered from SCF (in Receivership). However, the decision to place Allan Hubbard's private affairs into statutory experienced by SCF. As previously identified, survival of SCF were generous in the extreme. It cannot be argued that Allan Hubbard was solely responsible for the demise of SCF, which was a company under the governance of a professional of an independent management board and whose activities were under the of SCF will face through management matter team. It may be that the directors management cannot be justified by the problems being the actions taken by Allan Hubbard to support the

Serious Fraud Office charges for the way they conducted their responsibilities for which proper process is of the utmost importance. action taken by the Government to place Allan Hubbard's unilateral

as directors. This is a

It is not to be determined

against the chairman of the board in his private capacity. personal affairs into statutory management can only be on this of the

The decision justified decision. they Hubbard's

in the best interests of the creditors and investors in the companies which were under Allan personal control. with which The value assessments discussed in this report Neither is it clear that place doubt It is by no means clear that investors in Aorangi and HMF will incur losses in the monies Allan Hubbard. they sought the protection led to the decision to place Allan Hubbard's personal affairs into statutory will prove to be

invested

Government management.

The evidence at present

is that this decision by the Government

expensive and to the disadvantage of the investors it sought to protect. This brings into management. of statutory On reflection, focus the question of who should be accountable for the cost of statutory accountable for the costs

If my analysis of the value of the assets in Aorangi and HMF proves to be correct, then management. the decision to place Allan Hubbard's personal affairs into statutory were investors who had enjoyed outstanding management was

clearly both the investors and Allan Hubbard should hold the Government

an extraordinary

action. Neither Allan Hubbard, Aorangi or HMF were insolvent. Quite the contrary. returns on investment for many

The only creditors

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years. The Securities Commissions requirement subject to considerable

for the issuance of a prospectus was, in my opinion, was influenced in its

doubt. There is a strong argument that Allan Hubbard never solicited for the within SCF is inescapable. But how were the difficulties

monies the investors asked him to invest. The possibility that the Government decision by the problems being experienced within SCF related to Allan Hubbard's conduct in his private affairs? These are weighty matters.

13. A Commercial

Solution of a

It is my view that the problems set out in this report are best resolved through the negotiation commercial objective commercial solution structure to the statutory negotiated management in a commercially

of AI & MJ Hubbard, Aorangi and HMF. The of all claims the parties may have

solution is to obtain the agreement by all parties that a new

be accepted to be in full and final settlement

against each other. I have promoted support, and with a commercial the solution to be implemented by the statutory managers with my have been

blessing of the

New Zealand Government.

These proposals

discussed with the statutory of all creditors, can persuade negotiated that attorney he would

managers in detail. I am confident up to $30 million negotiated

that it would be in the best interests

investors and co-venturers a bank to introduce support

involved in the Hubbard private affairs. I believe that we of new funds into such a commercially by giving me his personal power of

solution for the benefit of investors. I have obtained an undertaking from Allan Hubbard a commercially solution to oversee its implementation until all public debt has been discharged. It is my opinion liabilities to investors over

that the implementation management, a 3 year period. In my attempts I have been recommended

of these proposals can be achieved at a fraction of the cost of statutory

and is likely to result in payment in full of the renegotiated

to promote a negotiated supported

commercial solution to the Hubbard statutory Neil Anderson of the highest integrity.

management were

by John Acland,

and Diana Pye, all of whom

to me as South Cantabrians

John Acland is the proposed In this proposal we have

chairman of a new company to be established to take over the affairs of AI & MJ Hubbard, Aorangi and HMF if these companies were released out of statutory Allan Hubbard's full support. management.

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14. Conclusion This report sets out my personal views on the issues and solutions to the statutory of charge. The reason I have done so is because I am affronted perceive as an assault on Allan Hubbard's personal rights. Allan Hubbard's private interests are centred in South Canterbury. South Canterbury interests. based. I believe that given the opportunity, a commercial solution rally around the Hubbards provided The majority of the investors are will by circumstances management of

AJ & MJ Hubbard, Aorangi and HMF. I have made my time available to investigate these matters free
which I privately

the investors and co-venturers

is designed to protect their own best

This report is addressed to whom it may concern.

Tur Barren Managing Director Demi Holdings Limited 26 August 2011

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