Hart could capitalise on ugly CHH result

Forest products company Carter Holt Harvey today revealed a 77 per cent drop in annual profit, likely to entice straggling shareholders to accept a sweetened, fresh share takeover offer at $2.75 per share from billionaire Graeme Hart.

Carter Holt posted a net profit after tax of $130 million for the year to December 31.

That was down sharply on the $569m reported a year earlier, which was boosted by forest sales, and well below analysts' forecasts of $155.7m.

The dividend was suspended and the new management refused to say why. Nor would chief financial officer Michael Falconer give any outlook.

Chief executive Peter Springford today announced his resignation and he too refused to answer questions on why he quit or his terms.

Given that Carter Holt reported a $139m profit for the nine months to September, today's full year figure effectively meant the company recorded a bottom line loss in the final quarter.

Carter Holt, a long-time poor performer with assets ranging from forests to pulp, paper and wood products, is now about 86 per cent owned by New Zealand's richest man, Mr Hart, after he closed a $3.3 billion bid last Friday.

Today, Mr Hart said he would launch an "all or nothing" bid for the remaining shares in mid-February at $2.75 per share, a 10 per cent premium to the earlier offer.

The fresh bid was conditional on Mr Hart reaching the 90 per cent required to trigger a compulsory takeover of all remaining shares within seven business days.

It showed Mr Hart was losing patience with stalwart shareholders hoping to cash in on his reknowned ability to turn failing companies around.

The offer was structured in two parts. The initial offer was for $2.70 per share, with an additional 5c payable if Rank achieved a 90 per cent shareholding within seven business days.

Last year's final dividend was 5c.

"This provides a tangible incentive for shareholders to act promptly," Mr Hart said.

Carter Holt shares jumped 16c, or about 6 per cent, to $2.73 on the fresh takeover news.

Market commentators had expected Mr Hart to throw anything ugly on Carter Holt's books into today's result, in the hope of unsettling remaining shareholders into selling.

The result included restructuring and non-recurring charges of $171m, compared with a charge of $51m in the previous period.

There was $50m of goodwill written off and $143m of impaired assets including the company's recently acquired plant in China.

It also included $35m in redundancy payments, relating largely to its corporate, Australian packaging and wood products groups.

Finance costs and taxation charges also increased sharply to $52m and $43m respectively.

Before unusual items, equity earnings, interest and tax, Carter Holt's full year profit was $207m, in line with an October profit warning.

The tone at a media briefing following the result release was reticent, with management refusing to comment on Mr Springford's resignation, the lack of dividend payout, or any potential future redundancies.

The company said it was inappropriate to comment given the advanced stage of Mr Hart's takeover.

Carter Holt's independent directors previously unanimously backed Mr Hart's $2.50 per share offer, which was rated by valuers Grant Samuel as "fair".

- NZPA