Forests bullish on prospects

By CHRIS DANIELS, Forestry writer

Fletcher Challenge Forests was bullish at its annual meeting in Auckland yesterday, announcing an after-tax profit of $7 million for the first four months of the financial year.

Presenting a confident outlook for future earnings and sales, chief executive Terry McFadgen told shareholders that Fletcher directors wanted to share the company's outstanding future with shareholders.

But Mr McFadgen seemed out of sync with chairman Sir Dryden Spring over the company's position on the Central North Island Forest Partnership - the former Fletcher/Citic joint venture that went into receivership this year.

Fletcher Forests is one of the companies bidding to buy the huge forest from the receiver.

Mr McFadgen said the sales process for the CNIFP was due to be finished by early next year.

"We view the CNIFP as a desirable adjunct to our own forest, but not as something which is critical to our operations."

But towards the end of yesterday's meeting, directors asked shareholders to approve a resolution authorising the board to "continue to undertake corporate activity relating to the company's interest in the CNIFP" if a takeover offer had been made, or if they thought one was imminent.

"There is a risk that a takeover offer could impede this activity," Mr McFadgen said.

Sir Dryden said that technically the new takeovers code could prevent directors from continuing to negotiate a purchase of the CNIFP if an offer had been made.

And although his chief executive described CNIFP as "not critical", Sir Dryden added: "The board considers that the importance of the CNIFP is such that the company needs flexibility to continue to deal with the asset notwithstanding the receipt of a takeover offer."

Forests' $7 million profit announcement, which does not include foreign exchange movements and non-recurring items, came from earnings before interest and tax of $18 million between July and October.

Fletcher Forests shares closed unchanged yesterday at 27c.