FCL boss quits in forest cut

Paul Fowler's resignation signals Forests sale imminent, reports LIBBY MIDDLEBROOK.

One of Fletcher Challenge's top executives, Paul Fowler, has resigned amid a crucial restructuring programme.

The Fletcher Forests chief executive said yesterday that he would leave the company by July, after four years in the division's top job.

Fletcher Challenge is slap-bang in the middle of dismantling its letter stock structure and spinning off its divisions into stand-alone companies. Fletcher Paper has already been sold and Fletcher Forests is tipped to be the next one on the block.

One market player said: "One theory is he [Mr Fowler] was pushing for a rights issue and spinning it into a stand-alone company, but he wasn't getting anywhere with it because [Fletcher Challenge chief executive] Michael Andrews wanted a clear asset sale. I'd take the view that he's leaving because the company's going to be sold off."

Several parties, including Japan's Juken Nissho and US company Weyerhaeuser, are understood to be completing due diligence on Fletcher Forests, which has struggled to generate high returns from log exports since the 1997 Asian economic downturn.

While Mr Fowler's decision surprised the market, he said he had been considering a change for some time.

"My goal was to establish a strong performance culture and set the company firmly on the way to realising its strategy of adding value to its forest resources through local manufacturing. I am confident I have achieved this."

The market speculated that uncertainty over the restructuring process and Fletcher Forests' future had driven him out of his job.

"He's been quite frustrated for some time. It's been difficult for him to make things happen with the restructuring process," said one market player.

While Fletcher Forests is expected to be sold off by the end of the year, other industry sources said Mr Fowler was keen to recapitalise the division through a rights issue rather than selling it to a foreign party. Fletcher Forests, which has $700 million in debt, is understood to have planned for a cash issue this month but it was suspended by the group's board.

Mr Fowler, who has not announced any future plans, held senior positions in the oil and minerals sectors of BP before joining Fletcher Forests in 1996. His plans for expanding Fletcher Forests' production capacity for manufactured wood products were thwarted by the Asian crisis.

The Asian economic downturn crippled log prices and the value of its Central North Island partnership, a 165,000ha plantation jointly owned by Citic and Fletcher Forests.

Market players were disappointed to see Mr Fowler resign.

"He's done a really good job with the business in difficult conditions. I can understand him leaving though, he's a bright man and he wouldn't be interested in a caretaker position," said one market analyst, citing Mr Fowler's cost improvement programme Project Max.

Fletcher Forests NZ's chief operating officer, Ian Boyd, is understood to have been appointed the division's interim chief executive.

Meanwhile, Fletcher Challenge is understood to be still pursuing the sale of its forestry division, although its turbulent partnership with Chinese Government-owned company Citic is believed to have put off some bidders.

Citic, a wholly owned subsidiary of China International Trust & Investment, is unhappy with the way Fletcher has been managing the four-year-old joint venture and is pursuing court action.