Ann: Response to ASX Query, page-21

Good Grief! Is all I can say for so many reasons on so many fronts to list but I see others have offered commentary as well. So here is mine.

1. In my view how the ASX got hold of, or became aware of, the PIM is largely academic as the ASX queried PDF and the Executive Chairman of PDF responded which in essence validates what the ASX was querying.

2. The stunning item I picked up is the dates as quoted and the events or documents signed on what dates and the lack of correlation of keeping the market informed.

3. The disclosed farms they were proposing to acquire had a purchase value around the $32m mark, so why has the Board supposedly arranged a facility over 4.5x greater than the capital required at this stage before relisting and before a shareholder update or even better an EGM to get approval from the shareholders. I wonder if this is outside the shareholder delegation levels granted to the Board and could well be a contestable matter if shareholders choose to do so.

4. The Securities are irrevocably and unconditionally guaranteed on a joint and several basis by Pacific Dairies Limited; AYB Properties Pty Ltd and Pacific Dairies Fiji Limited (together the “Initial Guarantors.”) - WOW!!! Oh hang on - Pacific Dairies Fiji Limited??? That's new...and either they have plenty of silent backers or it is not an Australian company.

5. Hard to tell what currency the bond is in so will assume it has been adjusted to AUD but at what rate and is the coupon rate also in AUD or in location of it being raised and where does any exchange rate risk reside for interest payments on the coupon.

6. I have no idea what a fixed rate floating note is either...in my limited world of understanding about notes is it is either one (a fixed rate or floating rate), does this mean it is a perpetual note which would contradict the quoted maturity date in 2023 or does it mean the coupon rate is partially fixed and part floating? A coupon rate of 8% on the international market is a premium and it smells like this one is coming out of the US so that is a great premium (for the lender) in this current market? I am going to offer a guess it is a syndicated bond issue done in the US as a 5 year floating rate bond with a current coupon rate of 8% (subject to change) and the full interest rate of the bond is triggered the minute PDF take $1 or more from the facility as a syndicated bond provider for $150m isn't going to want to have funds sitting around earning nothing. It is a sophisticated bond issue not a bank loan.

7. This brings me to the future for current shareholders as they cant recover their capital in the current state of PDF and and if and when PDF ever relisted on the ASX it starts off with a $150m debt provision and this reminds me of MGC all over again with the Unit Trust. Better still I wonder if the bonds can be converted even though they have a maturity date which indicates not a convertible note don't bet on it not being an available option for a variation in the event PDF cannot paid or is perceived as not being able to pay the outstanding monies on or before the maturity date...you get a debt provision over your head on relisting from day one and/or possible substantial dilution of value

8. If they exercise the acquisition of the 5 small dairy farms supplying milk to local processors the current or even short term forecast for the FGMP wont cover the interest bill if they use the full line of credit available under this supposed bond issue and Fiji wont help them either as it will take at least 36 months to get that up and running let alone provide a yield.

9. The notes appear to have been created, issued and settled if the commentary in the announcement is correct which means PDF has committed to them....or at least your current Board has committed to them on your behalf.

Good luck to whomever still holds shares in this one but with a potential $150m debt facility hanging over your heads I cannot see a very exciting Chapter 1 & 2 relisting any time soon. Maybe they will use the debt facility to offer minority shareholders a paltry buy-back off-market and never relist on the ASX. I doubt this is the case but if PDF is thinking about using the debt facility to pursue opportunities they became aware of under any CA or NDA then that may well not end well for them either.

Other than that I cannot fathom why the need for such a large bond instrument at this stage in the absence of a market update other than their commentary about securing debt to acquire the 5 farms for around $32m and vaguaries about a Fiji deal.

This is all in my opinion of course, others may well have their own.