Forum Archive Index - October 2000

["G.P.Thompson" <gp.thompson@bitworks.co.nz>]

The answer to my question posed yesterday is now apparent from the following article in the Herald.

It appears that FCL have been in negotiations with CITIC over the sale of FFS all along (as predicted) but have now reached an impasse. Speculation is that now a placement of to a cornerstone shareholder or rights issue to $300M is on the cards. A placement would be the easier to arrange and must be attractive to a US operator given the exchange rate. This would of course dilute the shareholding with NTA reducing from its current $1.69 to say $1.25 or thereabouts. Still makes FFS an attractive proposition at today's prices. Look out for a rocky ride for a few days as the traders get out at any cost.

GPT

 

Fletcher Forest price drops as talks fail

06.10.2000 - By GEOFF SENESCALL

Fletcher Forests' share price was felled yesterday amid speculation that the debt-laden company will undergo a major recapitalisation after sale talks foundered.

Fletcher has been in negotiations with Citic, its Chinese joint venture partner in the Central North Island Forestry Partnership.

But it is understood that the pair - in dispute over the partnership's management contract with Fletcher Forests - have been unable to patch up their differences.

Fletcher is understood to have decided to pull the plug on discussions which included a sale to Citic.

However, Fletcher Challenge spokeswoman Ginny Radford would not comment last night when asked if the deal was dead.

A Citic spokesman said earlier that no progress had been made, and it was moving to a court resolution.

Fletcher Forests' share price yesterday tumbled 6c to 72c as the market started talking about a possible rights issue. But an alternative is for a placement of shares to a cornerstone shareholder.

Brokers estimated Fletcher Forests would need up to $300 million to shore up its balance sheet.

Resolving issues around Fletcher Forests is the key to the restructuring of the rest of the group, which includes Fletcher Energy and Fletcher Building.

Meanwhile, shareholders in Australian oil explorer Petroz have rejected a proposal that would have handed control of the company to Fletcher Energy.

A meeting of shareholders held yesterday to seek approval for a Fletcher Energy proposal that would have seen it take at least a 33.7 per cent stake in Petroz, and underwrite a rights issue, overwhelmingly voted against it.