Forum Archive Index - October 2001

["greg" <gregoire@paradise.net.nz>]

Gerry, here are the reasons given in the "Notice of 2001 Annual Meeting of Shareholders" I received this week.

 

The Board is seeking approval for the following reasons:

-  the forest assets of the CNIFP are of strategic importance to the company;

-  the Board considers that it must be able to explore fully all means by which the value of the company's investment in the CNIFP may be realised;

-  the board must be able to take commercial action quickly and without undue restriction if the Company is to participate in any transaction involving the assets of the CNIFP; and

-  the Board must not be precluded from taking action that it believes to be in the best interests of the Company by a party making a takeover offer on terms that preclude that action from being taken or continued

 

Effect of passing the resolution

The resolution, if passed, will permit the Board and any director to continue negotiations in relation to the CNIFP with any third party (potentially through to completion and implementation of an agreement) without giving rise to a breach of the Takeovers Code even where the result of doing so could be a takeover offer for shares in the Company being frustrated or shareholders being denied the opportunity to decide on the merits of a takeover offer.

 

The Board would only take such action if it believed it to be consistent with the director's duties to act in the best interests of the company to do so.

 

Looks to me like FFS board are very aware that either Citic or Hancock Timber Resource Group could eliminate FFS from bidding for the CNIFP assets by making it a condition on a takeover bid.  In my opinion FFS will make the highest bid (to recover some of the debt they are owed from the CNIFP.)

 

IMHO, Citic are probably licking their lips at getting FFS and the Kaingaroa Forest at a bargain basement price.  Throw in Citic's litigation against FFS (NZ$319m, which the FFS Board say is baseless) as a bargaining tool, and it is no wonder that they haven't walked away as one journalist said they might.

 

Interesting game of poker.

 

Rgds,

greg