Norwegian chief: downunder link keeps All Black

By PAULA OLIVER

There was no room for sentiment when Fletcher Paper was signed over to Norwegian paper giant Norske Skog for $5 billion yesterday, but there was confirmation that one Kiwi icon will still remain.

In Auckland to complete the deal yesterday, Norske Skog's chief financial officer Jan Kildal confirmed that former All Black captain David Kirk would be president of the Australasian arm of the company.

Mr Kirk will continue to work from an office in Sydney.

Norske Skog's acquisition of Fletcher Paper doubles the size of the newsprint maker, and marks the first completed sale in the systematic dismantling of the Kiwi mainstay, Fletcher Group. Norske Skog is listed on the Oslo Stock Exchange.

Of the total price paid by Norske, $3.7 billion will go to paying off Paper's massive debt, the root cause of why the company had to be sold.

There was little opposition to Norske's generous $2.50 per share bid, which was 83 per cent above the prevailing share price last year.

After several troubled years, new Fletcher Challenge chairman Roderick Deane has decided to dismantle the group.

Many of the Fletcher group's problems stemmed from being overloaded with debt as the company attempted to gain global critical mass in pulp and paper markets.

The four Fletcher letter stocks will all probably disappear when the rest are either sold or floated as separate companies.

It seems likely that sales of both Fletcher Forests and Fletcher Energy will rapidly follow Paper's sale, possibly leaving Fletcher Building the candidate to carry on the company name.

Mr Kildal said Norske Skog was extremely happy to have quickly wrapped up the sale of Fletcher Paper and would now begin to focus on making the new company profitable.

"The companies are almost a perfect match, there is very little overlapping in their business," he said. "The industry is not that big, so Fletcher was a top priority from our side because it is our core business."

Norske Skog takes control of mills in New Zealand, Australia, Brazil, Chile, Canada and Malaysia as a result of the sale. Mr Kildal said the fact that Fletcher Paper held a huge percentage of the Australian market was an attraction.

At present Norske Skog's main market is Europe, with exports also going to the US and Asia.

Mr Kildal said the company had plans for further expansion into the growing markets of Asia and South America, but its focus would be on profitability.

"It's not important to be big, but it is important to profitable, and while this may not make the company the biggest in the world, we are probably the most profitable," he said.

The deal does make Norske Skog the world's second largest newsprint maker, and means it will have 11,000 employees.

He said it was inevitable there would be cuts in staff as the two companies moved together, but a number of jobs had been found for New Zealand staff. Some of them were in Norway, some in Australia, and some would remain in New Zealand.