The Fletcher Forests rally brings riches for Rubicon

Friday 19th January 2001

By Nick Stride

Fletcher Challenge's yet-to-be-created vehicle Rubicon has emerged as the largest shareholder in Fletcher Forests in the wake of last month's rights issue.

The parent group has called, on Rubicon's behalf, 267.1 million of the shares left with underwriter Credit Suisse First Boston after the issue closed undersubscribed.

Along with the 225 million shares placed with Rubicon as part of the Forests recapitalisation that takes Rubicon's stake to 17.6%.

Forests' share price has rallied in the New Year. At Wednesday's closing price of 34c Rubicon has already made a $44 million paper profit.

CSFB may, after consulting FCL, sell some or all of those shares before Rubicon is created in mid-March. Gains or losses on the 25c a share exercise price will go to Rubicon.

CSFB has sold a further 100 million shares as part of its sub-underwriting arrangements, leaving it with 156.5 million shares or 5.6%.

Other underwriting institutions have been allotted 147.7 million shares or 5.3%.

Meanwhile, the share price of Capstone Turbine, a key element in the dismantling of the Fletcher group, has rallied strongly.

After reaching a high of $US94.37 on September 1 last year the shares fell steadily to a low of $US18.50 at the end of November.

They have since almost doubled, to $US36.25, but that is still well below the June 2000 listing price of $US47.98.

As part of the sale of Fletcher Energy to Royal Dutch/ Shell Energy shareholders are entitled to one Capstone share for every 70 shares held. At the current Capstone price and exchange rate that deal is worth $1.16 an Energy share.

The bankers to the Central North Island Forests Partnership between Fletcher Forests and China's Citic are still considering their options following the partnership's breach of debt covenants on December 31.

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