Forests says Hurley voted in favour of CNI deal in March

By NZPA

Friday 2nd August 2002

Xylem Investments, which has criticised Fletcher Forests' proposed purchase of the Central North Island Forestry Partnership (CNIFP), voted in favour of the deal in March, Forests said today.

Forests chairman Dryden Spring said in a letter to shareholders that Stephen Hurley, president of 7.6 percent shareholder Xylem, voted in favour of the company acquiring the CNIFP assets, before talks with Citic subsidiary Seawi began.

A former Forests director Mr Hurley, who resigned from the board when the deal was announced, this week urged shareholders to oppose the deal, saying it was unfair to small shareholders and will see Forests take on too much debt.

However, Sir Dryden said today that in March Mr Hurley agreed to a CNIFP purchase at $US650 million ($NZ1.42 billion), the current asking price.

Mr Hurley has criticised Forests for agreeing to pay too high a price for the assets, and has also begun court action to prevent fellow shareholder Rubicon from voting on the deal.

"Shareholders need to be aware that the reason Mr Hurley was not a member of the board committee responsible for dealing with CNIFP matters was that Mr Hurley was deemed to be conflicted," Sir Dryden said.

"Xylem was seeking to enter into an agreement with the company to jointly acquire the CNIFP partnership at the same purchase price that Fletcher Forests is now proposing to pay. Xylem also wanted to structure the joint purchase in such a manner that would provide Xylem with an option to substantially increase its shareholding in the company."

Instead, the deal allows Citic subsidiary Seawi to take a 35 percent holding in Forests.

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