Mystery party in Fletcher proposal

By CHRIS DANIELS

Some light has finally been shone on the sales process for the defunct Central North Island Forest Partnership, with Fletcher Challenge Forests yesterday telling the Stock Exchange it had made a proposal to buy the huge forest.

Chief executive Terry McFadgen said the proposal involved a third party, which he would not name.

Fletcher did "not contemplate the company raising additional equity capital", he said.

There has been a dearth of information relating to the sale of the forest, valued at more than $1 billion, since receiver Michael Stiassny took control of the partnership when it collapsed early this year.

Mr McFadgen said he was constrained by imposed confidentiality rules.

The news release he sent to the exchange was, however, carefully worded, referring to a proposal, not a bid.

The Independent Business Weekly reported this week that Carter Holt Harvey had pulled out of bidding for the forest, leaving Fletcher, US forest investment giant Hancock Timber Resources and Citic, owned by the Chinese Government, in the running.

Carter Holt chief operating officer Jay Goodenbour refused to say yesterday whether it had either entered, or withdrawn, from the sale process.

The newsletter of the Timber Industry Federation said it was unlikely the banks would get back all of the money they were owed by the collapsed partnership.

This made it even less likely Fletcher would get back any of the debt it was owed by the partnership, which has a book value of $357 million.

A person close to the sale process said it was expected bidders would get "some response" before Christmas, though no firm news was expected before mid-January.

The process was entirely in the hands of the receiver, who could tell the parties to re-bid, throw them out of the process or invite them back in.

Mr McFadgen told Fletcher shareholders at the annual meeting a month ago that he expected the process to be finished by early next year.

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

Fletcher has continued to manage the forest since its collapse, though it has said it would not make a huge difference to its profitability if it lost the contract.