Forum Archive Index - June 2000
Please note usage of the Forum is subject to the Terms & Conditions.
[sharechat] FLC
Below is copy of midday FLC announcement. It seems to allay fears of
things turning to custard. FFS holders should be heartened too. All
letter stocks up a fraction on this news.
My pick for best gains is still FLB.
GEN: FLP: FLETCHER'S MAKING FURTHER PROGRESS WITH RESTRUCTURING
Fletcher Challenge is continuing to make significant progress with its
restructuring programme. This week documentation, including independent
reports by investment banker Grant Samuel, has been mailed to
shareholders in
the run up to the 04/07/2000 SGM to consider the Paper sale.
In its report Grant Samuel states that Norske Skog's offer of NZ$2.50 per
share for Fletcher Challenge Paper is "fair and reasonable" and "reflects
the
full underlying value of FC Paper", and concludes that, "the sale of the
business to a substantial industry participant, such as Norske Skog, is
probably the best opportunity for shareholders to capture the strategic
value
of FC Paper's businesses."
In a separate report for Fletcher Challenge Building, Energy and Forests
shareholders, Grant Samuel found that the specific arrangements agreed
with
Norske Skog "are fair and equitable as between divisions." The Paper
separation would strengthen the overall financial position of the Fletcher
Challenge Group and facilitate the subsequent complete dismantling of the
targeted share structure.
In relation to the fibre supply arrangements to the Tasman Pulp and Paper
mill, the CEO of Fletcher Challenge, Mr Michael Andrews said: "Our
agreement
with Norske Skog requires either the consent of the CNI forest
partnership to
the assignment of the current fibre supply arrangements or the execution
of
an agreement with Fletcher Challenge on substantially the same terms as
the
current supply arrangements. We believe that the CNI forest partnership
will
agree upon appropriate supply arrangements with the Tasman mill as such an
agreement is also in their interests. Regardless, we can assure Paper
shareholders that the need to satisfy this term of the agreement with
Norske
Skog will not prevent the closure of the Paper sale," he said.
In a further move aimed to simplify the Group's balance sheet and assist
the
restructuring, Fletcher Challenge and the trustees of the Fletcher
Challenge
Employee Educational Fund have agreed to resettle the fund's assets into
four
new funds which will provide continuing educational assistance to
employees
of the four divisions.
Mr Andrews said that the Fletcher Challenge Employee Educational Fund,
which
had assets worth $116 million, as at 31 March, consisting of shares in
Fletcher Challenge Building, Energy and Forests and a Fletcher Challenge
Paper note, would be resettled on four new funds according to the employee
numbers in each division. Using 31/03/2000 share prices the new Energy
fund
would have assets valued at approximately $7m, Building $51m, Paper $46m
and
Forests $12m.
Together with administrative changes to the Trust Deed, the resettlement
removes the Fletcher Challenge Employee Educational Fund from being an
insubstance subsidiary of Fletcher Challenge.
The impact on net equity is minimal, with an earnings impact of $30m for
Fletcher Challenge Building and $54m for Fletcher Challenge Energy almost
offset by increases in Reported Capital of $27m and $51m respectively.
There
is no impact on Fletcher Challenge Forests' financial statements. With the
removal of the Trusts from insubstance subsidiary status, distributions
from
the funds will no longer be a charge to the earnings statements of the
divisions or the Group.
The move also has an impact on equity and debt for the Paper division, but
this is fully covered in the proposed Norske Skog transaction.
Mr Andrews said the continuing progress on the separation process was very
satisfying. "We anticipate that the establishment of the four new trusts
would be completed shortly. We remain committed to our December deadline
for
completing the restructuring of the Company. We will of course continue to
keep shareholders informed of any significant developments."
END
----------------------------------------------------------------------------
http://www.sharechat.co.nz/ New Zealand's home for market investors
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/forum.shtml.