Fletcher bank loan explained

Shareholders in Fletcher Challenge Forests are about to receive another letter from the company about the CNIF deal - explaining why one of New Zealand's biggest banks is effectively lending money to pay itself back.

Fletcher chairman Sir Dryden Spring has written the letter "in the interests of full disclosure". He says he thinks it important that "shareholders are made fully aware of the scope of the National Bank of New Zealand's involvement."

The National Bank, of which Sir Dryden is also a director, will take part in the new debt funding arrangements for the $1.3 billion Central North Island Forest deal.

These arrangements were made at arm's length, writes Sir Dryden, and on normal commercial terms.

He says the National Bank is also one of the banks owed money by the Central North Island Forest Partnership as a "senior secured lender" to the original partners - namely Fletcher Challenge Forests and Citic.



Sir Dryden writes that the National Bank holds less than 10 per cent of the top ranking debt - which would work out to be a little under $140 million.