Opio Forestry says 85c share offer below fair value

12.00pm

Opio Forestry Fund's trustees today recommended its long haul investors not accept an 85c a share offer by City Forests, saying it is below fair value.

City Forests, which is 100 per cent owned by Dunedin City Council, launched in early August a $12.7 million takeover offer to secure 75 per cent of Opio.

Opio owns 1360ha of mainly radiata pine forests in South Otago and Southland.

A valuation by Chandler Fraser Keating found Opio was worth 93.4c a share at "fair market value", Opio's trustees said in a statement to NZX.

Shareholders, who had invested in Opio for the long term and "who are prepared to wait for their investment to mature in the period 2008 -- 2013 the Trustee recommends that you do not accept (the offer).

"For unitholders who plan to liquidate their investment prior to harvesting commencing in 2008, City Forest's offer may provide an opportunity to do so at a price that may be otherwise hard to achieve."

However, in making their recommendation, the trustees said there were a a wide range of possible financial outcomes when harvesting started.

"A combination of a strong New Zealand dollar, low log prices and high shipping costs could see returns to unitholders lower than the offer by City Forests," they said in the statement.

"At the other end of the spectrum, a weaker New Zealand dollar, higher log prices and lower shipping costs could see returns that are substantially higher."

Last week City Forests' offer hit a stumbling block when Opio declined to release its register of 1600 shareholders.

- NZPA