Warning for Fletcher Forests 'no' voters

By CHRIS DANIELS forestry writer

Fletcher shareholders should not get too excited about getting a healthy 37c a share by voting against the impending Central North Island Forest deal, says a leading commercial lawyer.

Chapman Tripp partner Brigid McArthur, in an article written for the Business Herald (see page E5, opposite), says shareholders cannot expect to gain any benefit from the successful completion of the CNIF deal, if they have already voted against it.

The Shareholders Association is urging Fletcher shareholders to vote against the proposal to buy the $1.4 billion forest, then invoke their rights for a minority buyback.

It is offering a form that can be downloaded from its website allowing shareholders to ask for their shares to be bought back from the company.

The association believes that since Citic, through Seawi, is buying into Fletcher at 37c a share, and that is the same price that 17.6 per cent shareholder Rubicon is getting out of the company at, then small shareholders should seek the same price.

In essence, the association believes that if Fletcher has agreed with Seawi and Rubicon that 37c a share is a fair price to buy into the company, then a determination of fair value would start at that level.

Fletcher, on the other hand, would be more inclined to start the debate from the market price of the shares.

The Shareholders Association is collecting proxy votes from shareholders to use in an attempt to sink the deal when it goes to a vote at a special shareholders' meeting next Tuesday.

The first successful use of the minority buyback provisions of the Companies Act occurred in July last year, when Infratil won an extra $10 million from Natural Gas Corporation after its $830 million purchase of the 75.8 per cent controlling interest in TransAlta NZ.

Having voted against the takeover, Infratil was entitled under the minority buyback provisions to force NGC to buy back its shareholding, which then stood at 6.7 per cent.

NGC assessed fair value at $1.30 a share and paid Infratil $34.6 million for 26.6 million shares.

An arbitrator later decided that the fair value was $1.68 a share, and NGC had to pay Infratil the difference.