Forest dominates Rubicon meeting

By CHRIS DANIELS

The future of the Fletcher/Citic deal to buy the Central North Island Forest dominated Rubicon shareholders' first annual meeting yesterday.

Rubicon, born of the break-up of the Fletcher Challenge empire, has made its millions in its first year selling assets.

Now it is left with one huge asset and a few small ones. The big asset, accounting for two-thirds of Rubicon, is its 17.6 per cent stake in Fletcher Challenge Forests.

This stake might be transformed into cash and a big stretch of forest if the Fletcher proposal to buy the $1.3 billion assets of the defunct Central North Island Forest Partnership (CNIF) is approved by its shareholders next month.

Despite this prospect, directors told a seemingly contented group of Rubicon shareholders at yesterday's meeting that the only focus of the company was value.

Chairman Michael Andrews said he foresaw another "capital restructuring event" in the coming year. Rubicon spent $60 million on a share buyback last year.

One less-than-contented shareholder was Gerard Pimm, who challenged the board on its role in the past 18 months of negotiations surrounding the sale of the CNIF.

Rubicon directors had told shareholders that the falling value of shares could be blamed on their exposure to Fletcher.

But Pimm said the Fletcher shares were dropping in value because Rubicon had been standing in the way of a successful CNIF sale, wanting only to get out of its holdings at a good price.

Rubicon described itself as a forestry and biotech company, he said, so a continued ownership of Fletcher Forests shares would fit perfectly with this aim, while also earning income.

This line of questions brought into the picture Rubicon director Hugh Fletcher, who shone some light on the birth of the whole CNIF deal.

Fletcher was head of the Rubicon directors' committee that investigated the best way of selling its Forests' shares, since Andrews and chief executive Luke Moriarty are also directors of Fletchers.

Fletcher said Rubicon was approached by the Hong Kong company Seawi, which Citic is using as a vehicle to buy into the CNIF. Seawi offered to buy all of Rubicon's stake for cash, then buy into Fletcher Forests in order to get the forest.

The Fletcher board turned down this deal, as it would have meant Citic obtaining more than 35 per cent of the company.

The impasse was broken when Rubicon agreed to accept payment for its Fletchers stake partly in cash and partly as the Tahorakuri Forest, which it now hopes to sell.

In response to a shareholder's question, Fletcher said his Rubicon committee was never approached with details of an earlier offer for the CNIF, rumoured to have involved US forestry company Hancocks.

Rubicon was not the reason the Hancock deal fell over, he said.

Rubicon shares closed up 1c at 77c each yesterday. Fletcher Challenge Forests shares closed up 1c at 25c.