New Zealand prosecutors have dropped a murder-for-hire charge against AC/DC drummer Phil Rudd, saying there was not enough evidence to proceed.

But the 60-year-old member of the popular Australian band still faces a charge of threatening to kill, which comes with a maximum prison term of seven years. He also faces charges of possessing methamphetamine and marijuana.

Tauranga Crown Solicitor Greg Hollister-Jones said his office became responsible for prosecuting Rudd after he had been charged by police and had appeared in court.

"The file was obtained today and reviewed," Mr Hollister-Jones said, adding he "made the decision that there was insufficient evidence to proceed with the charge of attempting to procure murder".

Rudd's lawyer Paul Mabey said the decision to charge him was made by police without consulting prosecutors.

"The charge alleging an attempt to procure murder should never have been laid," Mr Mabey said.

"Mr Rudd has suffered unnecessary and extremely damaging publicity as a result of widespread and sensational reporting of a very serious allegation, which on any basis was never justified. The damage to Mr Rudd is incalculable."

Attempting to procure murder carries a maximum 10-year prison sentence.

AC/DC said the arrest of its drummer would not affect its upcoming tour or album release. The band released a statement through publicist Benny Tarantini, saying band members had "only become aware of Phil's arrest as the news was breaking".

"We have no further comment. Phil's absence will not affect the release of our new album Rock Or Bust and upcoming tour next year," the statement said.

Rock Or Bust is due to be released on December 2 and will be the band's first new studio album in six years. AC/DC plans to promote it during a world tour next year.

Mr Mabey said Rudd would defend the other charges against him.

Bill Hodge, a law professor at the University of Auckland, said the events suggested police had overreached.

"Usually you'd expect police to lay a basic charge, a holding charge," he said. "Then, maybe when they've got more witnesses and evidence they could go for a more complicated charge. I don't understand the rush."

Prof Hodge said Rudd could have a good case for seeking financial damages if the case against him fell apart altogether, but may have little recourse if convicted on the threatening to kill charge.

Fans noted Rudd's dishevelled appearance and gaunt face in media images of his court appearance. Many Down Under have listened for decades to the straightforward hard rock of AC/DC, often affectionately called "Acca Dacca".

Rudd was released on bail pending a second court appearance later this month. He has yet to enter a plea.

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