Fletcher shares climb amid partnership-sale speculation

By CHRIS DANIELS

As the countdown to a sale of New Zealand's biggest forestry company draws ever nearer, sharemarket speculation around the value of Fletcher Forests shares is mounting.

It has been nearly 10 months since the Central North Island Forest Partnership, jointly owned by Fletcher Forests and the Chinese Government-owned Citic, went into receivership.

The value of Forests' shares is steadily climbing, in anticipation of a sale announcement of the resource.

Fletcher Forests shares closed up 1c at 27c each yesterday, after more than 3.2 million shares were traded.

The preference shares gained 2c to 27c on volume of almost 6 million shares.

Since last Tuesday, Fletcher Forests shares have gained 17 per cent.

Fletcher spokesman Paul Gillard said he was not aware of anything happening that could prompt market speculation.

Citic, despite the past acrimony of its relationship with Fletcher Forests, still wants Fletcher to manage the Central North Island forest if Citic was the successful buyer.

It is thought to be comfortable with Fletcher running it, but not owning it.

Carter Holt Harvey, Fletcher Challenge Forests, American firm Hancock Timber Resource Group and Citic are believed to be the only bidders for the huge forest, worth about $2 billion.

Receiver Michael Stiassny has made no comment about progress in the sales procedure for the partnership, but it is understood that due diligence is now over, and potential buyers are working on deals with each other as they try to stitch together a winning bid.

Market rumours this year centred on a joint bid from Fletcher Challenge Forests and Carter Holt.

Fletcher Forests said in July that it was talking to several parties with a view to bidding for the asset, but would not say who they were.

Credit Suisse First Boston analyst Andrew Mortimer said he was unaware of any new developments in the partnership sales process, but everyone knew there could be a resolution within six weeks.

Mr Mortimer said he thought Fletcher would salvage some value out of the partnership, in some shape or form, and it appeared the market was becoming aware of that,

The company holds its annual meeting on November 14.