NZ group in rival Fletcher bid

By PAUL PANCKHURST

The much-rumoured New Zealand-based consortium emerged from the shadows yesterday with a $750 million cash and shares bid for Fletcher Challenge Forests' 106,000ha forestry estate.

That is $65 million more than the clean, cash-only deal Fletcher Forests struck on Monday with The Campbell Group, a United States timber management company.

The new bid is from Kiwi Forests Group, a company representing investment interests associated with high-profile businessmen Ross Green, Trevor Farmer, Adrian Burr and Mark Wyborn.

Investment bank First NZ Capital is advising on what Fletcher Forests terms "an unsolicited bid".

Kiwi has signed term sheets to flick on large portions of the estate to a global forest management company, Prudential Timber Investments, and a listed New Zealand forestry investment company, Evergreen Forests.

The payment to Fletcher Forests would be $550 million in cash plus $200 million of new shares in Evergreen, a company that yesterday had a market capitalisation of just $68 million.

Green said the consortium was "surprised" by the announcement that Fletcher Forests had signed a letter of intent to do a deal with The Campbell Group.

That agreement includes a break fee that, according to market speculation, could be up to $10 million.

"We felt that we were still in negotiations and that we were waiting to get a response," said Green.

A brief statement from Fletcher Forests said the board and management were "evaluating the bid and are considering what action to take in relation to it".

Green described the bid as "a compelling alternative".

The idea is that shares in the expanded Evergreen could be distributed to Fletcher Forests shareholders.

Kiwi Forests said the cash and shares offer was equivalent to $1.54 per Fletcher Forests share - or 12c more per share than the existing deal.

A source said it would also lead to significantly lower redundancy costs for Fletcher Forests.

Green highlighted how far the consortium had gone down the track - including due diligence work, work on supply agreements with Fletcher Forests, and an initial period when Kiwi Forests was the sole party in talks.

The offer was subject only to: due diligence, regulatory approvals, and final approvals from consortium member boards and shareholders.

"Our offer is not conditional on financing."

In a written statement, Green said: "We do not seek exclusivity at this point and we have not sought to impose any conditions on FCF that would compromise the competitive nature of this sales process.

"We will work in parallel with any other competing proposal to ensure the best outcome for FCF and their shareholders."

He described the bid as offering "a clear path to a closing of the sale by year-end".

Asked about the estate's attraction, Green said forestry values were at a cyclical low.

Farmer, Burr and Wyborn are known for ventures including the Viaduct Harbour development in Auckland.

They featured on the National Business Review "Rich List".

Kiwi Forests Group

* Adrian Burr 25%

* Tappenden Holdings 25% Trevor Farmer, Roger France, Michael Ratcliffe, Amanda Gibbs, Barking Ltd (Channel Islands)

* Tramco Equities 25% David Muller, Michael Foley

* Riverside Trust 25% Ross Green , Peter Macky