Once bitten, twice shy as Fletcher eyes investor vote

By PAUL PANCKHURST

After a losing encounter last year, Fletcher Challenge Forests may play by different rules when it seeks shareholder approval for the sale of its 106,000ha forestry estate.

The company is examining whether the sale may need only 50 per cent approval from shareholders.

That would contrast with the 75 per cent it sought - and failed to get - for last year's planned purchase of the Central North Island Forestry Partnership's assets.

The issue arises because the estate is owned by subsidiary companies, a fact seen as potentially bypassing Companies Act requirements for major transactions.

Fletcher signed a letter of intent to sell the estate to Oregon's The Campbell Group for $685 million, but a rival consortium, led by Kiwi Forests Group, is making a late cash and share bid said to be worth $750 million.

Kiwi yesterday revealed a little more about the share component of the deal, the $200 million of new scrip to be issued by the listed Evergreen Forests.

It said the split of the forestry estate would see Evergreen acquire about 25,000ha of plantation forests in the Bay of Plenty, Hawkes Bay and eastern and southern parts of the central North Island.

At Evergreen's current share price of 46c, the company would hand over about 435 million new shares.

The actual number of shares would be based on a formula that was "approximately 50 per cent fixed number of shares and approximately 50 per cent fixed dollar value of shares", the latter based on market trading before the Evergreen shareholder vote.

The rest of the estate would be divided between a global player, Prudential Timber Investments, and Kiwi, the investment vehicle of businessmen Ross Green, Trevor Farmer, Adrian Burr and Mark Wyborn.

Observers yesterday noted the important role that the Ohio Public Employees Retirement System could have in either of the rival deals. Ohio is a 7 per cent shareholder in Fletcher Forests - and a 39 per cent shareholder in Evergreen.

Speculation remains about what Green, Farmer, Burr and Wyborn would do with their share of the estate. One view is that theirs could be a play on both forestry values and, over time, the potential for converting land into dairy farms.

Meanwhile, Shareholders Asssociation chairman Bruce Sheppard described the $17 million break fee associated with the Campbell deal as "obscene and stupid".