Arborgen could be sticking point in GPG-Rubicon bid

By NZPA

Monday 4th November 2002

Independent directors of Rubicon Ltd have advised major shareholder Guinness Peat Group that its partial takeover bid for Rubicon could be hampered by the other partners in ArborGen, a forest biotechnology joint venture.

Rubicon owns 31.67 percent of ArborGen. The other major shareholders are International Paper (31.67 percent) and United States pulp and paper company Mead-Westvaco (31.67 percent), with Genesis Research and Development owning 5 percent.

Rubicon says legal advice sought by the ArborGen partners is that a change of control of Rubicon from a successful GPG partial takeover offer, would require their consent in relation to the joint venture.

"The partners have indicated that the giving of that consent would depend, amongst other things, upon the willingness of GPG to allow Rubicon to meet the remaining ArborGen five-year funding requirements," chairman Michael Andrews said in a statement.

As ArborGen gave Rubicon up to half its value, its potential expulsion from the ArborGen partnership could be a major consideration, he said.

"As Grant Samuel & Associates valued ArborGen at between $49 million to $98 million, or 18 to 35 cents per Rubicon share, this is a highly material issue that needs to be addressed by GPG," Mr Andrews said.

Rubicon's own legal advice is that the ArborGen partners' consent was not required for a change of control in Rubicon.

"Given that one of the conditions of the GPG partial offer for Rubicon is, in effect, that there are no prejudicial change of control issues arising out of the offer, we have alerted GPG to this new issue and will be discussing with them how they wish to proceed."

GPG is seeking 50 percent control of Rubicon from its current 21 percent, including recent acceptances.

However, GPG is fighting an uphill battle for its 75c-a-share offer. Rubicon is currently trading at 72c a share, and an independent valuation by Grant Samuel & Co values the stock at 98c to $1.28 a share.

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