GPG raid opens door to board

By CHRIS DANIELS forestry writer

A successful raid on Rubicon may open the door for Guinness Peat Group to gain two seats on the Fletcher Challenge Forests board.

GPG is trying to lift its 19.9 per cent stake in Rubicon, the biggest shareholder in Fletcher Challenge Forests, to 51.9 per cent via a $67 million partial takeover offer to all shareholders.

This involves buying 40 per cent of the Rubicon shares GPG does not already hold. GPG has said it would be content with a stake between 30 and 50 per cent if it did not reach the 51 per cent mark.

But analysts say the offer of 75c a share is low, citing Rubicon's higher asset backing and its strategic importance for GPG.

GPG director Tony Gibbs has spoken of a desire to see more consolidation and co-operation in the forestry industry, but has yet to give many details.

He has repeatedly called for a clean-out of the board of Fletcher Challenge Forests and might, if successful in obtaining a controlling share of Rubicon, be able to send GPG people on to the board to replace the current Rubicon representatives, Luke Moriarty and Michael Andrews.

First NZ Capital analyst Andrew Mortimer said value was to be found in some consolidation of the forestry industry.

"There is certainly value there; how much value is open to analysis. But there is without doubt the value. The consummation of any consolidation is not going to be an easy task."

Mortimer said less than a month ago GPG had used its influence to help stop the Fletcher Forests plan to buy the Central North Island Forest Partnership (CNIFP), which would have allowed Rubicon to sell its 17 per cent Fletcher stake at 37c a share.

The market price of Fletcher shares has been below 25c for the past few months.

" [They] are now coming in, offering shareholders 75c, when they've effectively wielded influence over [turning] down a deal with a net asset value of $1.06."

During the battle for the CNIFP, Fletcher chairman Sir Dryden Spring and chief executive Terry McFadgen argued that buying the forest was the necessary first stage of any forestry industry consolidation.

If Fletcher did not buy the CNIFP, Mortimer said, then someone else would, meaning one of the best, and largest, New Zealand plantation forests would be owned by a new player in the forestry industry.



Under the Takeovers Code, GPG must send its offer to all Rubicon shareholders between September 11 and September 27, and then hold the offer open for 30 days.

To assess the offer, Rubicon has set up a committee of the whole board except for Gibbs and his fellow GPG director Gary Weiss.

This committee will appoint an independent adviser to outline the merits or otherwise of the offer.

* Rubicon shares yesterday closed up 4c at 73c each. Fletcher Challenge Forests shares finished up 2c at 25c.