'Threat' to Trans Tasman's profit

Friday 16th March 2001

By Nick Stride

A High Court judge will rule today on an 11th hour bid to stop the split of Fletcher Challenge.

The owner of FCL's Penrose headquarters, Trans Tasman Properties, yesterday appeared before Justice Noel Anderson in the High Court at Auckland disputing the separation.

It said Trans Tasman's dividend was under threat this year if the Fletcher Challenge separation went ahead.

Bruce Stewart, QC, argued for Trans Tasman subsidiary NZGP that if the FCL separation went ahead FCL would vacate its Penrose headquarters complex, which NZGP owns.

He presented a valuer's opinion showing if that happened the buildings' value would fall by $9.8 million.

As Trans Tasman had no reserves the fall would have to be taken through the profit and loss account. The loss would mean it would not be able to pay a dividend this year.

NZGP bought the buildings from FCL in 1994 for $62 million. Mr Stewart said the rentals over the next eight years under the present arrangements would total $64 million.

The listed property investor was one of two parties disputing the separation arrangements. Also appearing was Greymouth Petroleum, the vehicle of Mark Dunphy who last week failed in a bid to buy FCL's Energy division.

For Greymouth Petroleum Michael Camp QC argued that, if the separation went ahead in its present form, rights FCL had to take action against its advisers on the sale of Energy would effectively disappear.

That was because they would transfer to Fletcher Forests, whose directors would have no interest in pursuing them.

Mr Camp asked the court to keep the legal avenues open against any eventuality that might arise by transferring them instead to Rubicon, the natural successor of Energy.

The hearing was held to consider an application by FCL for the court's final approval of the separation process. Justice Anderson reserved his decision until 9.30 am today.

Counting the cost

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