Fletcher Forests falls after consolidation

By PAM GRAHAM

Fletcher Challenge Forests shares fell 7.6 per cent yesterday on the first day of trading after a five-for-one consolidation.

Shareholders who had five shares worth 21c each on Friday held one share worth 97c by the close of trading yesterday. The company consolidated the shares to comply with rules for minimum trading prices of its American Depositary Shares.

An analyst who declined to be named said that historically shares that were consolidated weakened, though it was too early to say where Fletcher shares would settle.

The company said on Friday that if it lost the contract to manage the forests of the Central North Island Forest Partnership (CNIFP), the financial impact would be at the bottom end of a $10 million to $20 million range.

The existing management contract dates back to when Fletcher Forests owned the forests in a joint venture with Chinese investment company Citic. Under that contract Fletcher's own forest estate and the CNIFP forests were treated as one.

An independent management company will allow CNIFP to make its own decisions about forest management, while contracting the work resulting from those management decisions.

Fletcher Forests said it was in discussions with the receiver about the contract.