Tarawera right sale falls over

By PAM GRAHAM

Part of Fletcher Challenge Forests' $725 million forest sale has fallen over, slicing the size of the first capital repayment to shareholders.

Auckland property investors Trevor Farmer, Mark Wyborn, Adrian Burr and Ross Green did not confirm finance for the $165 million Tarawera Forest right by yesterday's deadline, so it is back on the market.

Fletcher said on December 18 that the men's company, Kiwi Forests Group, had expressed confidence in satisfying the finance condition.

They typically own land that others develop but have not articulated plans for the foray into the central North Island beyond saying it was a long-term investment.

They joined Ontario Teachers' Pension Plan and Prudential Timber Investments to buy Fletcher's entire estate, minus Tarawera.

Kiwi is believed to have onsold some cutting rights on the freehold land to help finance the deal.

Tarawera was a "jewel" in Fletcher's estate but only the right to harvest and replant was for sale. Maori Investments and the Government, who own Tarawera jointly with Fletchers, are considering swapping their equity for the land.

There was speculation yesterday that Kiwi had unsuccessfully tried to onsell the cutting right.

Tarawera will now be offered to The Campbell Group, a US-based company linked to Harvard University's endowment fund. Campbell had a deal to buy Fletcher's forests before Kiwi gazumped its bid.

Bruce Sheppard of the Shareholders' Association said it was not the end of the world if Fletcher got stuck with Tarawera because it was one of its best blocks of timber - a valuable resource for its new identity as a processing company.

Grant Samuel said in an independent report on the whole deal that if the Tarawera land swap did not proceed Fletcher would be left with a $29 million investment in land earning $1 million a year.

Fletcher Forests chief executive John Dell said it was disappointing the Tarawera right had not sold.

A total capital return to shareholders of $1.20 a share is planned and the first payment in March will now be reduced to 62.5c a share from 93.75c.

The whole sale is still subject to shareholder approval.