Tenon ups profit forecast as Rubicon sweetens takeover offer

1.00pm

Takeover target Tenon today upped its profit forecasts for the current financial year to approximately $64 million before "recoverable partial takeover offer costs", up from the $58-$60 million previously forecast.

The company said the upward revision of ebitda (earnings before interest, tax, depreciation and amortisation) for the year to June 2004 incorporated actual results to the end of April.

The revision was also due to better than expected moulding and lumber prices, improved efficiency at its Taupo processing plant, continuing sound performance from its North American businesses and an improvement in its structural products business.

The company also raised its forecast for the next financial year to $64 million from the $58 million earlier indicated.

"The updated 2005 projection will be further discussed in the company's recommendation to shareholders on the partial takeover offer received from Rubicon Forests Ltd, which is expected to be issued later today," the company said in a statement.

Earlier today it was reported that Rubicon had sweetened its takeover offer for Tenon, introducing an opt-out clause to its $1.85 a share bid if a higher one comes along.

The opt-out clause was included in the formal offer Rubicon sent to Tenon shareholders at the weekend.

The offer outlines the final terms of Rubicon's $156 million play for control of the wood processing firm, once known as Fletcher Challenge Forests (FCF).

Rubicon is seeking to increase its 20 per cent cornerstone stake to 50.01 per cent.

It would be the first time such a clause has been used in New Zealand, and was intended to counter any reluctance to accept the bid.

Market speculators have talked of another bidder, perhaps an offshore one, emerging, although that has not happened as yet.

Rubicon director Hugh Fletcher, the former FCF chief executive, said it meant his company's offer had "no downside".

For example, should a bidder seek to gain 100 per cent of Tenon on terms no less favourable than Rubicon's, Tenon shareholders would be free to accept it.

Tenon shares were 5c higher at $1.93 by 11am today.

- NZPA