TOWER Proposes Geographic Separation

Hello Everyone,

Today we are making an announcement that we are proposing to change TOWER from one combined trans-Tasman company (TOWER Limited) into two separate TOWER businesses - one in each of NZ and Australia.

This is a “geographic demerger” of the TOWER New Zealand and TOWER Australian businesses. A copy of the release is available here for your information. The reasons for the proposal are set out in the release. I encourage you to read the release in detail.

The intention to demerge is still a proposal as it will need shareholder, Court and regulatory approval. Assuming the proposal goes ahead, the existing TOWER Limited will comprise the current TOWER New Zealand operations, and will remain listed on the Australian and New Zealand Stock Exchanges. It is intended that TOWER Australia will be separately listed on the Australian Stock Exchange. Existing TOWER shareholders will be distributed shares in TOWER Australia and, accordingly, will hold shares in each company.

Most importantly, it is not intended that the demerger will affect any of the business operations in either Australia or NZ. The Board believes that there will be no material effect on you, our clients and business partners, on staff, or on our underlying businesses.

If the demerger proceeds I will from December 2006 be appointed overall Chief Executive Officer of the new Australian Company. John de Zwart, our current Group Chief Financial Officer, will be Chief Financial Officer in of the listed company in Australia. In NZ there will be a new overall Chief Executive Officer appointed.  We hope to announce that appointment in coming weeks. Both companies will continue to use the name TOWER. The Australian business will be clearly identified as TOWER Australia Group Limited to avoid confusion with the New Zealand company.  The three existing business Chief Executive Officer roles in Australia will be retained, along with other Senior Management Team management positions.

It is anticipated that the timing for this would see the separate listing of TOWER Australia in December 2006, if shareholders and the Court approve it.

There are not expected to be any changes to our business activities. We want to be market leader as a specialist risk business in Australia with a niche investment business and will continue to work hard to achieve that. We want to lead in our business areas and are committed to partnerships with advisers as the way forward for growth. We also remain committed to delivering quality service to our advisers, customers and business partners.

More information is on our website www.towerlimited.com

We believe the demerger will be seen as a positive move and I will communicate regularly. I will continue to spend time in each country until this is completed.

During the course of this process if you have any questions, please email me and we will get back to you as quick as possible.

Jim Minto
Group Managing Director

Disclaimer
This document has been prepared to be used by financial planners and advisers only. It is not to be provided to individual clients. The information contained in this document is general information only and cannot be considered to be financial advice. The information does not take account of the investment objectives, financial situation or particular needs of any particular client. To the extent permissible by law, TOWER Australia Limited (ABN 70 050 109 450, AFSL 237848) and its related companies (TOWER) specifically disclaims any liability that may arise for any direct, indirect, incidental, consequential or special damages that may arise from the access to or use of this document. No liability is accepted by TOWER for errors and omissions or for loss or damage suffered as a result of reliance on this document.

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TOWER Australia Ltd
A.B.N. 70 050 109 450
AFSL Number 237848