Citic looks at taking on forest purchase alone

By CHRIS DANIELS and REUTERS

China International Trust and Investment Corp (Citic) said yesterday that it might consider buying the $1.4 billion Central North Island Forests Partnership (CNIF) assets alone after a bid with Fletcher Challenge Forests failed.

The deal, vetoed by Fletcher shareholders at a meeting on Tuesday, involved Citic injecting US$200 million ($438.21 million) of equity, through subsidiary South East Asia Wood Industries (Seawi), for a 35 per cent stake in Fletcher Forests to help it buy the partnership.

Citic Forest NZ deputy managing director Charlie Tian said his company was now reviewing investment prospects, including buying the 163,000ha forest estate by itself.

"That has always been one of the options available," he said.



Citic, the Chinese Government's flagship investment company, had not yet talked to Fletcher Forests about becoming partners in an alternative deal, Tian said.

He was reluctant to comment on speculation that Citic might still buy a stake in Fletcher Forests through buying Rubicon's 17.6 per cent holding.



Official receiver Michael Stiassny must now start looking again for someone to buy the forest, so his clients - the banks who lent money to Fletcher and the Chinese company Citic - can get paid.



Stiassny would not comment yesterday on how he might now try to sell the CNIF, which has been in receivership since the joint venture between Citic and Fletcher collapsed more than 18 months ago.

"We are looking at some options," he said. "That's about all I'm going to say."

"We currently have Fletcher managing the forest, surpluses go to pay our costs, including interest. Any surplus above that would be returned to the debenture holders."

"We are meeting interest and creating a surplus."

One piece of good news for Fletcher shareholders is that the whole failed exercise of trying to buy the CNIF is not likely to cost the company money - all thanks to a lucky foreign exchange deal.

Despite the expense of advertising, public relations, printing and posting documents and the cost of holding a public meeting, the company had won out in the foreign exchange cover taken out in anticipation of a successful purchase of the CNIF, said chief executive Terry McFadgen.

The Commerce Commission yesterday cleared Fletcher to buy the CNIF.

Fletcher earns a management fee of around $30 million a year for running the forest, and any profit made from it goes to the receiver.



McFadgen said that one party which he knew was interested in the forest would not want Fletcher to manage it. Another would have no problem with Fletcher staying on.