Fletcher Forests opts for dual leadership

By PAM GRAHAM

Fletcher Challenge Forests is ramping up the sale of forest assets, pulling out of the Waipa sawmill in Rotorua and replacing chief executive Terry McFadgen with two internal candidates.

The flurry of news from the country's third-biggest forest owner yesterday provided further insight into the company's strategic rethink since its shareholders stopped it buying Central North Island Forest Partnership back from receiver Ferrier Hodgson last year.

Plan B was revealed at last year's annual meeting as the sale of forest assets in ways that preserve wood supply to the processing, marketing, and distribution businesses that the company bets will boost its languishing share price and return on capital.

Macquarie Bank has been appointed to advise on the next step, including the sale of more forests.

For that, securitisation - a process where assets are turned into bonds for local and international sale - is being considered.

Macquarie will report within eight weeks to the two executives who will replace McFadgen on April 1 as joint CEOs.

The company abandoned a search for a new chief executive and instead chief financial officer John Dell will oversee corporate issues and the financial restructuring, and chief operating officer Ian Boyd will run operations.

The company is expanding its remanufacturing business in Taupo and considering expanding its sawmill there as well.

"We are undergoing a shakeup," said chairman Sir Dryden Spring.

He said the business, once "tucked under the wing of big mother Fletcher Challenge", had halved its debt and stood on its own feet in the past two years and was now trying to drive forward.

The company has already sold cutting rights to 8 per cent of its forests to UBS Timber Investors. That deal is settled this week and as part of it Fletcher Forests still manages the forests and has the right to 50 per cent of the wood supply and the right to bid on the other 50 per cent.

Spring said the company had decided not to pursue the purchase of the Waipa sawmill from the CNIFP's receiver, after saying initially that it was interested, because it had other investment options.

Fletcher Challenge has managed the mill since it was privatised.