Forum Archive Index - October 2000

["Geoff Ewert" <gewert@wai.quik.co.nz>]

Hi Margie
I can tolerate(just) a long wait,it goes into the draw with all my other
long waits!!
What I,m concerned about is a  takeover @ .55-.60c
RegardsG
(should have stayed in property all winter)

----- Original Message -----
From: "richard hermans" <r.m.hermans@xtra.co.nz>
To: <sharechat@sharechat.co.nz>
Sent: Wednesday, October 11, 2000 10:18 AM
Subject: Re: [sharechat] Full text of FCL Press release - Very Long!


> Thankyou for that Mike, Whats your feeling re FFS ???It was aluded to me
> by a broker that they felt the payment by Rubcon for the biotech/Sth
> American portions of FFS was grossly undervalued ??? Any comments on
> this ?? It certainly seems we FFS shareholders have been shafted c/f to
> other sectors  its been a LONG HOLD awaiting what is now a very
> deppressed share price (from highs of 1.14 , some time last year,)&
> along with it a very deppressed NZSE !!!!!! I can now only see a LONG
> wait yet for some return on ones initial outlay !!!!all very SAD for
> want of a better word !!!******
> Disc own too many FFS & ought to have headed comments of some
> sharechatters weeks ago !!!!     Margie
>
> Mike Hudson wrote:
> >
> > This is the full text of the Fletchers News Release. It is very long but
you
> > may find it interesting, especially the FFS pro forma balance sheet.
> >
> > Fletcher Challenge sets course for its three Divisions
> >
> > October 10, 2000
> >
> > A programme to complete the Fletcher Challenge Group restructuring and
> > separation of the remaining three targeted share Divisions was announced
> > today by Dr Roderick Deane, Chairman of Fletcher Challenge Limited.
> >
> > In announcing the outcome, Dr Deane said "We indicated when we announced
the
> > sale of the Paper Division in April that the Board would continue to
> > evaluate all potential outcomes for the Building, Energy and Forests
> > Divisions, and this has now been completed. The Directors, together with
the
> > senior management and external advisors, have been involved in a
> > comprehensive review and evaluation process to determine the
announcements
> > we are making today.  Our over-riding goal in the process has been to
> > maximise value over time for shareholders whilst adhering to a tight
> > timeframe.  I can say unequivocally that the Board is unanimous in
> > recommending these restructuring outcomes, as the best value for
> > shareholders, and a good outcome for New Zealand."
> >
> > Recommendations to Shareholders:
> >
> > Building Division
> > *       Will be separated as a stand-alone publicly listed entity named
> > Fletcher Building
> >
> > Forests Division
> > *       Will be a stand-alone publicly listed entity named Fletcher
> > Challenge Forests
> >
> > Energy Division
> > *             Will be sold to Shell and Apache Corporation for total
> > transaction value of $4.6 billion (US$1.84 billion)
> >
> > And a new New Zealand-based company, Rubicon
> > *            Will be established to commercialise selected emerging
> > technologies
> > *            Will play a key role in facilitating the Group
restructuring
> > process
> >
> > To:     BUSINESS EDITOR                 From:   GINNY RADFORD
> >                         TRANSITION COMMUNICATIONS MANAGER
> > Fax:    AUTO    Telephone:      64-9-571 9812 - Office
> >                 Mobile: 021 968 935
> >                 Fax:    64-9-571 9871
> > Please Note: If you do not receive  page(s) including this page, or if
any
> > page is not readable, please call the sender immediately on telephone
> > 64-9-525 9000. Further information on Fletcher Challenge Limited can be
> > viewed at the Fletcher Challenge World Wide Web site, at
> > http://www.fcl.co.nz
> > It is intended that full information and disclosures on each of the
> > recommendations will be provided to shareholders in December in
preparation
> > for the shareholder approvals in late January, 2001.
> >
> > Impacts:
> >
> > For Building Division shareholders
> >
> > *       A stand-alone listed company, with a clear focus on the New
Zealand
> > building arena
> >
> > *       Realignment of the portfolio towards core activities, including
'new
> > growth' opportunities refocused on New Zealand
> >
> > *       A final dividend of eight cents per share is declared to
> > shareholders of record on 27 October, payable on 9 November, 2000
> >
> >         For Forests Division shareholders
> >
> > *       A stand-alone listed company, targeted to the marketing,
processing
> > and management of  New Zealand-grown Radiata plantation forestry
> >
> > *       A re-capitalisation of the company, through a fully underwritten
> > pro-rata 2:1 rights issue of Forests preference shares at $0.25 per
share,
> > raising $427 million of new equity, with cash to be paid in full in
December
> > 2000.
> >
> > *       Rubicon will also subscribe for a placement of $90 million of
> > Forests ordinary and preference shares
> >
> > *       Forests' biotechnology and South American assets will be sold to
> > Rubicon for $80 million
> >
> > For Energy Division shareholders
> >
> > *       Receipt of
> >                 NZ$ value
> > -       US$3.34 per share (NZ$8.30 at Monday's foreign exchange rate of
> > 0.4025) in cash         8.30
> > -       An entitlement to receive 1 Capstone share for every 70 Fletcher
> > Challenge Energy shares held (equating to $1.72 per Fletcher Challenge
> > Energy share at a foreign exchange rate of 0.4025 and Friday's Capstone
> > share price of US$48.50)                1.72
> > -       1 share in the new entity - Rubicon - for every Fletcher
Challenge
> > Energy share held (valued at approximately $1.20 each)          1.20
> >
> >         Total value
> >         11.22
> >
> > The total value of the transaction represents a premium of 43% over
> > yesterday's Fletcher Challenge Energy closing share price.
> >
> > *       There will be no final Fletcher Challenge Energy dividend
> >
> > *       The acquisition by Shell and Apache is subject to regulatory
> > consents in New Zealand (including the Overseas Investment Commission
and
> > Commerce Commission), Australia, Canada, the United States, and Brunei.
> > The new company, Rubicon
> >
> > *       Will be established, on separation, as an active business with a
> > defined strategy to commercialise emerging new technologies that have
> > high-growth, high-margin potential.
> >
> > *       Will play an important role in the restructuring process, by
> > supporting the recapitalisation of the Forests Division, and acquiring
some
> > Energy assets.
> >
> > *       Will initially consist of:
> > *       The biotechnology assets and South American forestry assets
acquired
> > from the Forests Division for a combined price of $80 million
> > *       The Challenge! service station network of strong New Zealand
small
> > businesses, and the Brisbane, Timaru and New Plymouth terminals which
> > support them, acquired for $20 million
> > *       14% of New Zealand Refining Company shares
> > *       $20 million in cash
> > *       An alliance with Genesis Research and Development in relation to
> > bioremediation
> > *       Commitments to subscribe for a placement of $90 million of
Forests
> > shares and also to sub-underwrite $170 million of the Forests rights
issue
> >
> > Timetable:
> >
> > The indicative timetable, which may change as regulatory and Court
processes
> > require, is shown below.  Shareholders will be kept informed of any
changes.
> >
> > Mid-October     Commerce Commission decision on the Shell application in
> > relation to Energy
> >
> > 2 November      Annual Shareholders' Meeting, which will also consider
> > Forests rights issue
> >
> > Mid-November    Rights trading commences
> >
> > Early December  Rights offer closes
> >
> > Late December   Documentation mailed out for Separation meeting
> >
> > Late January    Shareholder separation meeting and vote on
recommendations
> >
> > Early February  Separations completed
> >
> > The entire separation programme, which is subject to shareholder
approvals,
> > will be undertaken by way of a Court-approved plan of arrangement, as
was
> > the case with the sale of the Paper Division to Norske Skog.
> >
> > "The Board and management are pleased and satisfied about the outcomes
> > announced today," said Dr Deane.  "We believe they will provide the best
> > value to shareholders, will retain some key New Zealand activities, and
will
> > establish successful and effective New Zealand-based businesses in
building,
> > forestry and the new economy.  It will also establish our energy
business in
> > a position of scale for the future.  Importantly, this outcome will
retain a
> > New Zealand focus for activities which have been a part of the New
Zealand
> > economy for many years, and also provide the catalyst for
commercialisation
> > of exciting new technologies from a New Zealand base. You have had a
glimpse
> > of the future. And it is bright"
> >
> > Details follow
> >
> > Fletcher Challenge Forests Limited
> >
> > A full range of Forests ("FFS") alternatives was canvassed with leading
> > international forestry players - both industry and financial. The value
> > implicit in those alternatives was compared with the value that could
> > reasonably be expected to be achieved through a stand-alone Fletcher
> > Challenge Forests.
> >
> > "It is clear that several issues have been impacting Forests Division's
> > value, both in terms of its current share price trading range and also
the
> > value ascribed to it by financial and trade buyers, " Dr Deane said
today.
> > "However, as long as these issues are addressed quickly, we have no
doubt
> > that the stand-alone value of Fletcher Challenge Forests will be well in
> > excess of all of the alternatives we have considered."
> >
> > These issues are:
> > *       Excessive financial leverage
> > *       The need to narrow the business focus
> > *       Concerns as to the future of the Central North Island Forest
> > Partnership (CNIFP)
> > *       An improved cost / operational improvement focus
> > *       A key management appointment outstanding
> >
> > In terms of management appointments, Terry McFadgen will take up the
> > position of Chief Executive of Fletcher Challenge Forests, filling the
role
> > that has been vacant since July of this year. Mr McFadgen has been Chief
> > Executive of the Building Division for the past five years, and will
bring
> > to Forests a track record of successful leadership in a closely related
and
> > aligned industry.  Mr McFadgen's skills and experience are particularly
> > suited to the issues Fletcher Challenge Forests is addressing, and he
will
> > take up his new role immediately.
> >
> > In relation to the financial leverage of the Division, the Board's
> > recommendation is that Fletcher Challenge Forests be re-capitalised by
way
> > of a fully-underwritten pro-rata 2:1 rights issue of preference shares
at
> > $0.25 each, raising approximately $427 million.  In addition, Rubicon
will
> > subscribe for $90 million of Forests ordinary and preference shares at
an
> > ex-issue price of $0.40 per share which is equivalent to $0.70 per share
cum
> > issue (see rider).  These new capital raisings will have a positive
impact
> > on the financial position of the Division, improving the debt to total
> > capitalisation from 34.7% to 13.5%.  (Refer attached proforma balance
> > sheet).
> >
> > Fletcher Challenge Forests may consider using part of the proceeds
arising
> > from the recapitalisation to reduce the senior bank debt of the CNIF
> > Partnership, provided that CITIC makes the same reduction.  Receipt by
the
> > banks of these payments should allow them to grant a waiver of the event
of
> > default in respect of an earnings/interest ratio covenant which is
otherwise
> > expected to occur in December 2000.
> >
> > "Having completed a comprehensive evaluation process, the Board strongly
> > believes that more value will accrue to shareholders by re-capitalising
> > Fletcher Challenge Forests in this manner, rather than by selling the
entire
> > Division to an industry buyer or, alternatively, by selling part or all
of
> > the forest estate to effect the re-capitalisation. The price environment
for
> > timber and other Fletcher Challenge Forests' products is currently at a
> > relatively low level in historical terms, and this was reflected in the
> > offers received from third parties.  The Board is not prepared to
recommend
> > to Fletcher Challenge Forests' shareholders, asset sales at current
prices,
> > " Dr Deane said.
> >
> > In terms of narrowing the business focus, Dr Deane explained: "Moving
> > forward, Fletcher Challenge Forests will focus on its core operations
and
> > strategies surrounding:
> > *       expansion of its existing marketing and distribution activities
in
> > New Zealand, Australia, North America, Japan and Asia
> > *       its value-added processing operations
> > *       New Zealand forest management activities
> > *       its New Zealand Radiata resource
> > Current strategies and assets that fall outside these activities,
including
> > our biotechnology assets and our activities in South America, are deemed
to
> > be non-core and are being sold to Rubicon."
> >
> > However, the recently-achieved certification by the Forest Stewardship
> > Council is a globally-recognised benchmark for the sustainable
management of
> > forests.  This will provide a significant marketing opportunity in those
> > markets which demand environmental responsibility.
> >
> > The Directors have agreed that Fletcher Challenge Forests will sell its
> > biotechnology and South American forestry assets to Rubicon for $80
million.
> > "We believe this reflects excellent value for the intellectual property
that
> > the Division has developed to date.  In addition to achieving value in
the
> > sale, Fletcher Challenge Forests will be relieved of an existing and
> > on-going financial commitment of some $40 million necessary to fund our
> > share of ArborGen's cash requirements over the next 4 years.  As part of
the
> > sale, Rubicon will agree to continue to make available to Fletcher
Challenge
> > Forests, at market value, the superior clonal resource developed out of
the
> > Te Teko laboratory in the Bay of Plenty.  Overall this is an excellent
value
> > outcome for Forests Division shareholders, and also brings with it an
> > important first step in the recapitalisation of the company," Dr Deane
> > confirmed.
> >
> > In relation to continued partner issues in the CNIFP, Dr Deane said:
> > "Despite best endeavours, to date we have been unable to reach agreement
> > with CITIC on outstanding issues. These issues are complex and difficult
to
> > resolve, particularly with the overhang of the Group restructuring
process.
> > We are determined to resolve these issues with our partner, either by
way of
> > mutual understanding, binding arbitration or if necessary through court
> > proceedings.  If we are not able to achieve that, then clearly moving to
> > split the assets in the partnership  - again either by mutual agreement
or
> > by way of court proceedings - is another alternative open to us," Dr
Deane
> > continued.
> >
> > In relation to operational improvement, as the Forests Division is
narrowed
> > down to the core operations identified, there will continue to be
> > opportunity for both cost reduction and operational improvement,
building on
> > the successful record of the past few years.  " We are targeting a
further
> > reduction in annual non-forest operations costs of $15 million to be
> > achieved over an 18 month period.  These reductions will align the
company
> > closely with best-practice international benchmarks in this area as well
as
> > in its forest operational areas.  In addition, a sustainable reduction
in
> > working capital will be targeted over the next six months, and a capital
> > productivity program introduced." Dr Deane confirmed.
> > Rider:  Rights issue
> > Approval for the rights issue (which will require an affirmative vote
from
> > more than 50% of all Fletcher Challenge shareholders voting together)
will
> > be sought at the Annual Shareholders' Meeting on 2 November 2000.  As
part
> > of that rights issue, Rubicon has agreed with the underwriter to acquire
a
> > portion of any rights issue shortfall up to a maximum of $170 million.
> > Normal conditions apply to the underwriting agreement.  Included is a
> > "market out" condition if there is a decline of 10% or more in the
NZSE40
> > Gross Index over five consecutive days.   In addition, upon the
separation
> > of the Energy Division, Rubicon will subscribe for $90 million of
Forests'
> > shares by way of a placement.  If separation does not proceed and
Rubicon is
> > not established, FCIL has agreed to compensate the underwriters for
losses
> > incurred arising from the underwrite and share placement up to a maximum
of
> > $200 million (such liability to be shared by the Energy Division as to ¾
and
> > by the Building Division as to ¼)
> >
> > Fletcher Building Limited
> >
> > The Building Division ("FCB") will stand alone as a separate publicly
listed
> > entity.  The Board is convinced that Fletcher Building has the potential
to
> > be a high performing company.  After full analysis, the Board's clear
view
> > is that the value which can be achieved by operating Fletcher Building
as a
> > stand-alone company, with the implementation of a new performance focus
and
> > strategic direction, far exceeds that offered by interested industry and
> > financial buyers.
> >
> > The new direction of Fletcher Building will focus on earning the right
to
> > growth through three key themes:
> >
> > *       Portfolio re-alignment, and the exit over time of
under-performing
> > and non-core assets. In particular, it is intended that the Division's
> > current activities in both India and South America will be exited at the
> > appropriate time, and the focus will move back to New Zealand-based
> > businesses
> >
> > *       An aggressive cost/operational programme, with an emphasis on
> > achieving international best practice in all operations in terms of
cost,
> > efficiency and working capital usage
> >
> > *       A increased involvement in "new-growth" opportunities within the
> > building industry template in New Zealand
> >
> >                                 Examples of this growth will include
greater
> > participation in e-commerce initiatives and extending Fletcher
Building's
> > existing research and development activities into composite building
> > materials.
> >
> > These changes will be initiated with the appointment of a new Chief
> > Executive Officer for Fletcher Building - Alexander Töldte, who brings a
> > broad experience in implementing performance improvement and growth
> > strategies to this role.  Mr Töldte was previously Chief Executive of
the
> > Paper Division.
> >
> > "Expressions of interest were received for the whole of the Building
> > Division from financial buyers", said Dr Deane.  "However their view of
> > value reflected the fact that they were unable to bring any significant
> > industry synergies to a potential acquisition.  While the restructuring
> > process had generated significant trade buyer interest in the Building
> > Division assets, it was clear that the narrow single-focus operations of
the
> > major global building industry players did not fit well with the
portfolio
> > nature of Building's current operations."
> >
> > Fletcher Building will also play a supporting role in the Group
> > restructuring process, by sub-underwriting to Rubicon up to $50 million
of
> > the Forests' rights issue.
> >
> > The Board has also declared a final dividend of eight cents per share,
to be
> > paid on 9 November to shareholders of record on 27 October 2000.
> >
> > Energy Division
> >
> > The Board of Directors are unanimously recommending to shareholders the
> > acceptance of an offer from Shell and Apache for the acquisition of
Energy
> > Division ("FCE").
> >
> > The transaction, which is conditional on regulatory and shareholder
> > approvals, will involve Shell and Apache acquiring the Energy Division.
As
> > part of this transaction, Fletcher Challenge Energy shareholders  will
> > receive:
> >
> > *       Cash of US$ 3.34 (NZ$8.30 at Friday's foreign exchange rate of
> > 0.4025) per Fletcher Challenge Energy share
> > *       An entitlement to receive 1 Capstone share for every 70 FCE
shares
> > held
> > *       1 share in Rubicon (the new company to be formed) for every FCE
> > share held
> >
> > In addition, Shell will make a payment to Fletcher Challenge Limited,
which
> > will be used to repay all outstanding indebtedness of FCE at closing,
and
> > also cover the Energy Division's share of the total Group restructuring
and
> > separation costs.
> >
> > "At Friday's Capstone share price of US$48.50 per share, and using the
book
> > value of Rubicon's assets, the joint Shell/Apache offer is equivalent to
> > NZ$11.22 per FCE share. This is a 43% premium to yesterday's FCE closing
> > share price on the NZSE of $7.85, and an even higher premium to the
> > prevailing share price of around $6.75 per share in July  - that is, the
FCE
> > share price prior to Shell's application to the NZ Commerce Commission
being
> > made public and any resultant take-over speculation being imputed into
the
> > FCE share price," Dr Deane said.
> >
> > "We recognise that a significant part of the value shareholders will
receive
> > will ultimately depend on the price attributed to the Capstone shares.
> > While we cannot influence that in any way, a very positive aspect of the
> > Shell and Apache offer is that it will ensure shareholders receive
Capstone
> > entitlements as soon as possible, so that they can make their own
investment
> > decision as to those shares.  We hope that shareholders will be able to
> > convert their Capstone entitlements into Capstone shares in just over a
> > month from the settlement of the Shell and Apache transaction in mid
> > February."
> >
> > Commenting on the US dollar nature of Shell's offer, Dr Deane confirmed
that
> > as FCE is a US dollar functional currency business, over time its share
> > price has tracked, and will continue to track, movements in the NZ$ to
US$
> > cross rates. "Because of this, we have moved to protect the offer price
to
> > shareholders from movements in the New Zealand FX rate against the US
> > dollar, by agreeing that Shell and Apache bid in US dollars," he said.
> >
> > The Shell and Apache offer is subject to regulatory consents in New
Zealand,
> > Australia, Canada, the United States and Brunei. The New Zealand
Commerce
> > Commission is expected to rule on any competition issues resulting from
the
> > acquisition shortly.
> >
> > Speaking to the wider review process adopted, Dr Deane said: "There was
> > extensive third party interest in the Energy Division, and all major
> > industry players with an interest in our particular mix of geographies,
oil
> > & gas assets and maturity profiles were contacted as part of the
> > restructuring process."
> >
> > "Given that, we strongly believe that the price offered by Shell and
Apache
> > today represents the best value that can be obtained for shareholders in
an
> > outright sale of Fletcher Challenge Energy.  Further, having reviewed
the
> > stand-alone alternative, the Board is confident the Shell and Apache
> > proposal offers better value today, with certainty, than could
reasonably be
> > expected to be achieved over time, were the Division to trade as a
> > separately-listed public entity."
> >
> > Dr Deane went on to say "While we may have liked to have seen an
> > independently-listed Fletcher Challenge Energy, the Shell and Apache
offer
> > is an excellent one, and it is quite clear that it is in the best
interests
> > of Energy shareholders.  In addition to the full cash component of the
offer
> > price - which represents a figure in excess of Friday's closing Fletcher
> > Challenge Energy share price inclusive of the Capstone shares - the
> > availability of the Capstone entitlement and the Rubicon shares as an
> > additional component of the consideration is a significant plus for
> > shareholders.  With Capstone, they will be able to receive freely
tradeable
> > stock in a company that has shown very strong equity market performance
> > since its initial public offering in June of this year."
> >
> > "The outcome would not have been possible without the restructuring that
> > Greig Gailey and his team have carried out over the past 18 months, and
the
> > tight focus on operational performance that all employees have been
> > responsible for," Dr Deane confirmed. "For our valued employees,
customers
> > and stakeholders in FCE, we are satisfied that we have been able to turn
the
> > business over to two leading players in the global E&P business.  It is
also
> > very pleasing that both Apache and Shell have acknowledged the
capabilities
> > of many of our people."
> >
> > Rubicon
> >
> > Commenting on the formation of Rubicon, Dr Deane said: "The Board is
excited
> > about the establishment of a new company as part of the separation
process.
> > Rubicon will be an on-going, active business, with a defined strategy to
> > commercialise new technologies that have the potential to capture
> > high-growth, high-margin opportunities in emerging industries.  Rubicon
will
> > be a New Zealand-based publicly-listed entity, and will form alliances
with
> > New Zealand's universities, Crown research institutes and other research
> > groups to work with them to develop and commercialise the intellectual
> > property and knowledge that exists in selected industries."
> >
> > The initial mix of business will reflect not only the future direction
of
> > Rubicon but also the need to facilitate the separation process through
this
> > vehicle. The business mix will be refined rapidly and constantly to
ensure a
> > focus on the core long-term strategies of Rubicon while looking to
extract
> > shareholder value from the non-core assets.
> >
> > On its establishment, Rubicon will consist of:
> >
> > *       The forestry biotechnology assets (acquired from the Forests
> > Division) consisting of: -
> >
> > *       An active investment in ArborGen  (the biotechnology joint
venture
> > between the Forests Division, Westvaco, International Paper and Genesis
> > Research and Development Corporation, formed earlier this year to
produce
> > and market tree seedlings that will improve forest health and
productivity)
> >
> > *       The tree technology operations at Te Teko in the Bay of Plenty
> >
> > *       A 2.9% investment in Genesis Research & Development (Genesis)
> >
> > *       The South American forestry assets of the Forests Division
> >
> > *       The Challenge! network of retail petrol operations, and related
> > terminals in Timaru and New Plymouth, plus the Brisbane terminal
(acquired
> > in total for $20 million)
> >
> > *       A 14% interest in NZ Refining Company
> >
> > *       A strategic alliance with Genesis, to commercialise research and
> > development of bio-remediation
> >
> > *       A commitment to the Forests Division's recapitalisation by
providing
> > up to $170 million of any shortfall on the rights issue, and taking up a
> > placement of $90 million of new Forests ordinary and preference shares.
> >
> > All the shares in Rubicon will be received by Energy shareholders as
partial
> > consideration for the acquisition of the Energy Division by Shell and
> > Apache.
> >
> > New Board and Management
> >
> > Dr Deane also announced the appointment of Mr Luke Moriarty to the role
of
> > Chief Executive Officer of Rubicon.  "Luke is an ideal candidate for
this
> > position. He has lived, studied and worked internationally, in both
> > financial and strategic leadership roles.  He has been a member of the
> > Executive Office of Fletcher Challenge for several years with his
current
> > responsibilities encompassing the direction of the Group's strategic
growth
> > initiatives."
> >
> > Referring to Rubicon's mandate, Dr Deane continued:  "Clearly, we have
been
> > extremely successful in this type of endeavour in the past.  For
example, a
> > clearly defined vision of the future for distributed power generation,
> > combined with a minimal US$20 million investment in Capstone Turbine
> > Corporation, has generated some $900 million of value for shareholders
> > today.  We believe we can pursue  promising similar future
opportunities,
> > including our current investment in ArborGen."
> >
> > To ensure Rubicon moves forward quickly, a Board and management team
with
> > broad international experience will be appointed.  They will not only
> > provide the key strategic and commercial governance required, but they
will
> > also enable the forging of relationships and alliances necessary to
access
> > opportunities and move the company forward.  Key Board appointments will
be
> > announced immediately following the establishment of Rubicon.
> >
> > First alliances in place
> >
> > Rubicon will also establish a strategic alliance with Genesis Research
and
> > Development Corporation in relation to the commercialisation of research
and
> > development into industrial biotechnology and bio-remediation (the clean
up
> > of contaminated soil and groundwater through the use of microbes, fungal
or
> > plant-based organisms). "Environmental management is a US$500
> > billion-industry internationally, and soil and water remediation
represent a
> > large proportion of this figure", said Dr. Deane.  "Genesis and Rubicon
will
> > jointly fund research into the discovery of organisms that not only
assist
> > in the speed of natural remediation, but also increase the toxicity
levels
> > that can be handled.  We see this as a natural extension of the type of
work
> > we are carrying out in ArborGen," he said.
> >
> > Role in restructuring of Fletcher Challenge Limited
> >
> > Dr Deane also explained that in addition to the value which will be
derived
> > from the implementation of Rubicon's on-going strategy, the company will
> > play a critical but shorter-term role in the immediate dismantling of
the
> > Group's targeted share structure announced today.
> >
> > "First, its presence will help to complete the re-capitalisation of
Fletcher
> > Challenge Forests.  By acquiring Forests Division's biotechnology and
South
> > American forestry assets at fair value and at the same time removing
> > Forests' $40 million R&D cash commitment to ArborGen over the next 4
years,
> > Fletcher Challenge Forest's focus is not only refined to its core
business,
> > but future free cashflow projections are improved.  In addition, as
Rubicon
> > will support the rights issue by providing up to $170 million of any
> > shortfall and also $90 million by way of new Forests share placement, it
is
> > providing increased certainty to Forest Division shareholders, and also
to
> > all Fletcher Challenge shareholders, that the overall Group separation
will
> > be successful.
> >
> > "Secondly, Rubicon will act as the acquirer of those Fletcher Challenge
> > Energy assets which did not match with Shell's vision for the Division.
> > Challenge! retail petroleum operations and their related terminals in
New
> > Zealand, and the Brisbane terminal in Australia and the New Zealand
Refining
> > Company shares all fall into this category.  These will be non-core to
> > Rubicon's outlined strategy, and will be disposed of as and when value
can
> > be achieved for shareholders.
> >
>
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