Fletcher Building restructures subsidiary

Chief executive officer of Fletcher Building, Jonathan Ling Photo / Sarah Ivey

Fletcher Building is making changes to subsidiary Fletcher Building Finance to comply with Reserve Bank requirements.

The company said it was restructuring wholly-owned Fletcher Building Finance (FBF), which would no longer lend to companies within the Fletcher Building group.

FBF had borrowed from the public and lent that money on to other entities within the Fletcher Building group.

But recent changes to The Reserve Bank of New Zealand Act, meant FBF - regarded as a non-bank deposit taker by the Reserve Bank - was no longer a preferred funding vehicle for the Fletcher Building group, the company said today.

FBF would now become a holding company, buying 20 per cent of the shares in Fletcher Building Holdings, a corporate holding company which holds most of the shares in Fletcher Building's New Zealand subsidiaries.

The current valuation of Fletcher Building Holdings was $3.42 billion, with total assets of about $4b and shareholder funds of $2.8b.

"The changes to the nature of FBF's business will mean it is no longer a funder or lender to the Fletcher Building group, but is instead an investor in Fletcher Building's New Zealand assets," the company said.

FBF would change its name to Fletcher Building Industries to reflect its new business.

For investors in capital notes, there would be no fundamental change to the company and the underlying credit quality, Fletcher Building said.

Its chief executive Jonathan Ling said the changes had been made to comply, in the most cost effective way, with Reserve Bank requirements.

"Investors can be assured that they will continue to benefit from the strength of Fletcher Building, with the company continuing to guarantee the capital notes obligations of FBF as it has done since 2003," Ling said.

- NZPA