New company to take on forests

By PAM GRAHAM

The severing of Fletcher Challenge Forests from management of the Central North Island Forest Partnership's estate is progressing.

The partnership's receiver, Ferrier Hodgson, announced yesterday that the new company taking over management of the 165,000ha estate from Fletcher Forests would be called Timber Management Co.

Receiver Michael Stiassny said Timber Management would be based in Rotorua and would employ 80 people.

Recruitment was well underway and more advertisements would be placed from tomorrow.

"The establishment of TMC will ensure stable management of the forests, as well as an increased supply of wood available to independent sawmillers," Stiassny said.

A separate plan for a new company to co-ordinate log exports also progressed, with the signing of an agreement between the receiver and Carter Holt Harvey to jointly develop that company.

Its working title is Export Co.

Independent management of the forests was designed to "maximise their future value", while co-ordination of log exports was designed to maximise log earnings.

Fletcher Forests had no comment yesterday, but the company has previously estimated the cost of losing the management contract as at the bottom end of a $10 million to $20 million range.

It managed the forests in conjunction with its own estate in the area.

The forests, mostly planted between 1908 and 1937, have been sustainably managed for 70 years, according to documents for their failed sale last year.

They have run the full gamut of management regimes, from government department to state-owned enterprise to Fletcher Challenge.

Throughout their history their value has been difficult to assess, in part because plantation forests of such a size are rare.

Only cutting rights were sold in the privatisation. The land remains subject to Waitangi Tribunal claims that seek land as settlement.

The partnership between Fletcher Challenge and Chinese investment company Citic that owned the cutting rights has been in receivership for two years.

A plan by Fletcher Forests and Citic to buy the forests back for US$650 million ($1.18 billion) failed to win shareholder approval last year.

Fletcher Forests has since sold cutting rights to 8 per cent of its own forests to UBS Warburg Timber Resources, although it still manages them.

Carter Holt will advise the new independent management company for the CNIFP assets but this arrangement excluded it from involvement with the new company's customers.

The processing assets of CNIFP, including the Waipa sawmill in Rotorua, are being sold separately and an announcement on that is expected in April.

Fletcher Forests has said it is interested in those assets.

It continues to manage them until their sale.

The ownership saga

Forests planted by the New Zealand Forest Service, a government department, and then managed by them.

- A subsidiary of the New Zealand Forestry Corp takes over management.

- State-owned enterprise Forestry Corporation of New Zealand (FCNZ) picks up the reins.

- Fletcher Challenge buys FCNZ for $2.2 billion and transfers the assets to a partnership with Citic and Brierley Investments.

- BIL sells down leaving a 50:50 partnership.

- FCNZ and Citic NZ placed in receivership on February 26 by bankers to the partnership.