Forestry Industry not surprised at deal collapse

By NZPA

Thursday 15th August 2002

The collapse of a deal that would have seen the Chinese government buy a significant stake of New Zealand's prime forests has been welcomed by some in the forestry industry.

One has gone as far as to suggest the Government should buy back the forests, rather than investing in Air New Zealand.

Rotorua-based Lockwood Homes executive chairman Joe La Grouw said he was pleased the forests had not gone to Chinese ownership.

"I would like to see the forests stay in New Zealand hands and I don't think that would have happened.

"We have all this resource -- I would hate to see it shipped out in log form rather than processed here in New Zealand. That would have been disastrous."

Mr La Grouw said the forests would have been a good investment for the Government.

"Perhaps the Government would have been better off buying a forest rather than an airline."

However, others in the industry are disappointed, and are hoping the ownership of the forests will be resolved as soon as possible.

The $1.4 billion deal between Fletcher Challenge Forests and Citic would have seen the Waipa sawmill and Waipa remanufacturing plant run under the same management as Fletcher Forests' other assets, including the Kawerau, Rainbow Mountain and Taupo sawmills.

Waipa's on-site manager, Tim Rigter, said it was disappointing the deal fell through.

"There is now still some uncertainty who is going to end up with the forests in the future. But we have been in receivership now for 18 months so it's back to business as usual," he said.

National Distribution Union organiser Ken Young, who represents the bulk of the Waipa sawmill workers, said under the deal there was some doubt surrounding the long-term future of sites such as Waipa.

The deal would have seen Citic take a 35 percent stake in Fletcher Forests, which would have been capped for two years.

"After that it was not clear what would have happened, and the Chinese have always said they would only do processing on the basis it was profitable."

But the collapse had meant workers were again faced with uncertainty. "There is still a very big question mark over the whole thing. Workers have some concerns," he said.

Rotorua-based forestry consultant David Buckleigh said he did not think the region would suffer as a result of the deal collapsing.

"People get a bit too carried away with that emotion. The forests aren't going anywhere. Someone is still going to have to cut down the forests, plant it, prune it, thin it and cart the logs to the port.

"It's a bit like people getting upset with selling land to foreigners. What are they going to do, pack it up in a suitcase and cart it away?"

Mr Buckleigh said shareholders were clearly not happy with the Fletcher-Citic deal and he was not surprised it never went ahead.

Rotorua Forest Haulage general manager Martin Hyde said a decision on the future ownership of the forests, one way or another, needed to happen quickly.

"The industry is just looking for finality so we can all plan ahead."

Yesterday Fletcher Forests said shareholder support was at 71 percent, just below the 75 percent threshold for the deal to proceed.

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