'Not now, maybe later' says CHH

By PAM GRAHAM

Carter Holt Harvey is not ruling out selling forests or buying processing assets from Fletcher Challenge Forests in the future.

But neither focus of market speculation is under contemplation now, according to chief financial officer Jonathan Mason.

On selling trees, he said: "There are no current plans to sell all, or any part of, our forest estate and we have not engaged any third parties to initiate any type of sale process."

And on buying mills: "Wood processing in both Australia and New Zealand is certainly an area that we are interested in, and have done well in. If Fletcher's assets were for sale we would certainly want to look at those, like we look at other assets."

Fletcher Challenge Forests is selling its entire forest estate, sparking speculation that Carter Holt will follow and also that Fletchers will go further and sell off processing assets.

The permutations and possibilities have helped their share prices from the doldrums.

Carter Holt's shares were yesterday trading at levels not seen since July 2002 and Fletcher's at levels not seen since November 2001.

Fletchers is returning money to shareholders. A detailed information memorandum on its forest sale is expected any day.

Carter Holt is selling its tissue business to get out of the consumer goods market. Mason said "clarity" on that was expected by April.

Australian media reports have the race down to four private equity firms and Sweden's Svenska Cellulosa, with a price in excess of the $670 million book value likely.

Carter Holt is the country's largest forest owner. The company strives to earn more than its cost of capital and operate its businesses efficiently by global standards.

Its forests were a large, low-returning asset very likely to be reviewed in the future, Mason said.

There were few ideas for them that had not already been thought of and they would be looked at again.

Analysts say the company's forests have a low "cost of bush", similar to a purchase value, that creates taxation issues if ownership changes.

The company has done well out of bargain shopping for processing businesses in Australia for a decade and many wonder if it will make the next step into Asia or move up the value chain by processing more appearance-grade timber.

The company uses Deutsche Bank as an adviser. Its work has included strategy for wood processing.