Evergreen considers quitting NZX in wide-ranging review

By PAM GRAHAM

Forest owner Evergreen Forests is reviewing all options for its future, including whether it should remain listed.

Chairman Peter Wilson told shareholders at the company's annual meeting to expect change.

He said after yesterday's meeting that "any and all options" to deliver improved shareholder value were being looked at in a review that would consider the implications of changing forestry ownership for a listed entity.

"There is a body of investors that prefer the transparency and currency of the listed market and the obligations that the market imposes in the interest of investors," he told the meeting.

But he added: "It remains an open question as to whether these features can be translated into shareholder value."

After 10 years on the local market Evergreen is 80 per cent foreign owned. Ohio Public Employee Retirement System owns 42 per cent of Evergreen's ordinary shares, according to the annual report.

Globally US pension funds and private equity partnerships are buying forests from integrated forestry companies.

To achieve growth, Evergreen needed access to capital to reduce debt and be in a position to acquire "assets at these current historically low values".

Forest valuations have plunged this year because of low commodity prices, the high dollar and high freight rates.

The interest of US pension funds in the Fletcher Challenge Forests and Central North Island Forest Partnership forest sale processes could reflect the quality of the New Zealand estates and the skills of the industry participants.

"It could also be that the opportunity to get the best risk-adjusted forestry sector return is here and right now," Wilson said.

Evergreen was battening down the hatches for a difficult year in 2004 and taking out costs where it could.

"The period to June 30, 2004, will be a watershed," Wilson said.

Evergreen adopted valuation accounting and accounting for deferred tax this year, meaning writedowns in forest valuations and potential tax liabilities if forests were sold were run through the earnings statement.

This helped turn a $7.07 million operating profit into a $36.48 million bottom-line loss and required shareholders to be aware of forest valuations.

"Sales in process for the CNIFP and Fletcher holdings may result in a further forest value writedown and shareholders should not be surprised if this occurs," Wilson said.

"The positive element of concluded transactions for both is that a significant overhang of properties for sale could be eliminated."

The shareholder meeting was attended by about 50 shareholders. Only one question was asked, and afterwards three directors were reappointed.