GPG directors oppose Rubicon accounting change

By NZPA

Tuesday 17th December 2002

Two of Rubicon's directors said today they voted against an accounting policy change that boosted the forestry and biotech company's half year result.

Tony Gibbs and Gary Weiss of Guinness Peat Group (GPG), which owns 19.9 percent of Rubicon, said they opposed the decision to equity account Rubicon's 17.6 percent holding in Fletcher Forests Ltd.

"Neither Mr Gibbs nor Dr Weiss considers that the circumstances are such as to require Rubicon to alter its previously adopted accounting treatment and to account for Forests as an associate," the pair said in a statement to the Stock Exchange.

Rubicon yesterday reported a profit of $9.38 million for the six months to September 30, compared with $30.75 million a year earlier, but avoided a much worse result by changing its accounting policies.

Rubicon limited a decline in the value of its investment in Fletcher Forests by moving to equity accounting, which means it includes its share of earnings in its income statement.

Previously, Rubicon treated the shareholding as an investment which meant changes in value flowed through the income statement.

The accounting change allowed Rubicon to book $8.3 million of Fletcher Forests earnings in its own result.

Today's statement from Gibbs and Weiss adds another twist to the tangled relationship between GPG and Rubicon.

Earlier in the year GPG was instrumental in defeating a plan for Fletcher Forests to buy the Central North Island Forest Partnership -- a move that would have allowed Rubicon to exit its Forests stake at 37 cents a share.

Rubicon blames the loss in Fletcher Forests' value on GPG.

"We were both surprised and disappointed when GPG campaigned and voted against the proposed transaction," Rubicon said yesterday.

Adding to the tension, GPG recently failed in an attempt to take control of Rubicon through a partial takeover offer. GPG is also locked in a high court battle with United States hedge fund and fellow Rubicon shareholder, Perry Corporation.

Perry, an investment fund of at least $US5 billion ($NZ9.8 billion), has been accused by GPG of breaking New Zealand securities law by hiding a 16 percent stake in Rubicon.

Rubicon said it had the agreement of its auditors to change the accounting treatment of its Fletcher Forests investment, valued at $141.2 million in its latest accounts and comprising 75 percent of its non-cash assets.

Rubicon valued Fletcher Forests shares at 28.7c a share, above the 19c they are trading at if a recent five-for-one consolidation is unwound.

"The directors are comfortable with the carrying value in Rubicon's accounts, and are strongly of the opinion that Fletcher Forests is worth well in excess of the 19c per share level at which it shares are currently trading," the company said.

Comments from our readers

No comments yet