CNI may be taken off market, says Carter Holt's Liddell

By NZPA

Thursday 15th August 2002

Carter Holt Harvey chief executive Chris Liddell said today he believes the Central North Island Forestry Partnership (CNI), in receivership, may be withdrawn from sale.

This would follow the collapse of the proposal on Tuesday by Fletcher Forests and China's Citic to purchase CNI after Forests failed to muster the required 75 percent approval from its shareholders.

"There is some chance the banks may take it off the market and just manage it until they think it is a better time to sell," said Mr Liddell.

Citic today expressed interest in buying CNI in its own right and Mr Liddell said given China's shortage of wood, it was entirely logical that Citic should pursue CNI.

"Having made the initial investment, they would want to see if they can somehow redeem that."

Citic and Fletcher Forests used to own the mainly pine plantation but the partnership collapsed in debt and acrimonious argument and was put into receivership last year by a syndicate of banks owed $US640 million ($NZ1.4 billion).

Carter Holt has had various discussions with Citic but is not in active talks.

Mr Liddell believed the $1.4 billion price agreed by Fletcher Forests was too high.

"Given current log prices it's a very full price. You would have to anticipate log prices will appreciate to justify it."

Citic Forest NZ Ltd deputy managing director Charlie Tian said he was disappointed the Fletcher Forests proposal had been stymied and the company was now reviewing investment prospects, including buying the 163,000ha forest estate by itself.

"That has always been one of the options available," Mr Tian told Reuters in a telephone interview.

"There are a number of options that are available to us. We just have to evaluate them given the new knowledge that we have." Citic, the Chinese government's flagship investment company, had not yet talked to Forests about partnering on an alternative deal, Mr Tian added.

He was also reluctant to comment on speculation that Citic might still purchase a stake in Fletcher Forests by buying out Rubicon's 17.6 percent holding.

"Anything is possible".

One analyst said Citic had made an unconditional $US650 million bid last year but that was turned down by the receiver who had not yet finalised the tender process.

"I think what we're going to see is Citic making a full bid for the Central North Island (Forest Partnership)," said the analyst, who did not want to be identified.

"It's as clear as blinking daylight that there's not other buyers out there except for Citic and China does need (wood) for its own domestic purposes." The forest estate's receiver could not be reached for comment.

Mr Tian said the asset was attractive given the surge in global demand for plantation forest. Concerns in China about logging of native timber had also coincided with improved living standards, bolstering the number of new houses being built, he added.

Citic, which operates in the financial, industrial investment and service industries, had assets of $US43.5 billion at the end of 2000 and posted an after tax profit of $US320 million for the year.

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