Seal of approval for $5b Fletcher deal

By GEOFF SENESCALL

Fletcher Challenge met little shareholder resistance yesterday in gaining approval to sell its paper division to Norway's Norske Skog for $5 billion.

Up to 450 people across all four Fletcher divisions turned out at the group's usual Ellerslie Convention Centre venue to have their say at a special meeting and to vote on the 250c a share offer.

But with a flood of proxies - some 4 1/2 times normal - the decision to sell had been made even before Fletcher's new chairman, Roderick Deane, uttered his first words to the audience.

The sale is on track to take place on July 28, with payment to shareholders by August 2.

With Fletcher Paper sold the group can now continue the process of unshackling the other three divisions from their respective letter stock structures.

Mr Deane said the group was taking indicative bids from potential buyers for Fletcher Building, Energy and Forests.

"We are going through an identical process for each of the other three divisions," he said after the meeting.

"In that sense we have appointed merchant bank advisers for each of those divisions and we have done stand-alone, base-case plans for them.

"We are preparing those base-case plans against propositions that other parties are putting to us."

Mr Deane said it was too early in the process to make a decision one way or the other on what would happen to each of the three assets - whether they were sold or became stand-alone businesses.

"It would be fair to say that on each of the other three divisions the board still remains open-minded.

"We are really going through that process of assessment at the present time and we are still collecting information from other parties, and bids are still coming in."

However, Mr Deane acknowledged that the recent rally in Fletcher Energy's shares made it a more viable stand-alone business.

"Certainly [share price] is important in weighing the options but how those options might turn out is too early to say."

Mr Deane also said recapitalisation was still an option for the forestry division. It was one of the options which was being considered.

"Indeed, some recapitalisation would need to be addressed in order to have that operate as a separate stand-alone business."

He said the dispute between Fletcher Forests and China's Citic over their Central North Island forestry joint venture was no longer an impediment.

"There is a determination for us to move forward on separation of each of the three divisions including forests, regardless of the Citic issue, [and this] should not be underestimated," he added.

Fletcher chief executive Mike Andrews said he expected the dispute with Citic to be resolved by the end of the month.

Overall, the company said it was trading well.

It estimated that earnings before interest and tax for the June year would be about twice that recorded in the previous financial year.