Forestry damages stoush in court

By CHRIS DANIELS

A legal fight over the ownership of a $200 million damages claim against Fletcher Forests began in the High Court at Auckland yesterday.

The claim stems from the collapse this year of the Central North Island Forest Partnership, a joint venture between Fletcher and Citic, the Chinese Government's investment company.

In dispute is who now owns the right to bring the damages claim - Citic or the partnership's receiver, Michael Stiassny.

Fletcher is arguing that the damages claim is owned by the receiver and is hoping that if the court agrees, the legal action will be dropped.

UBS Warburg forest analyst Frances Loo said that anything the receiver got for the forest, over and above the money owed to the banks, would go to Fletcher Forests anyway, as it held a large amount of subordinated debt in the partnership.

This debt has a book value of $357 million.

The legal fight takes place against the looming sale of the huge forest estate, with bids for the asset thought to be due in by early next month.

Citic and Fletcher are among the small group of companies bidding for the forest, estimated to be worth at least $1 billion.

The High Court case, being argued before Justice Judith Potter, is expected to continue until at least tomorrow, although any decision is likely to be reserved.