Forests' rights have 61% uptake

By Phil Boeyen, ShareChat Business News Editor

Monday 11th December 2000

Fletcher Challenge says a $67 million underwriting bill for Fletcher Forest (NZSE: FFS) shares will be well within the financial capacity of its new company, Rubicon.

Rubicon, due to be established in March next year, is required to take up to 40% of any underwriting shortfall in FFS rights. The rights closed last week with 61% taken up by shareholders, leaving 39% to be mopped up by CS First Boston and Rubicon.

Under the Fletcher restructuring process Rubicon is also set to subscribe for $90 million of Forests' shares by way of a placement.

Despite the rights shortfall Fletcher chairman, Rod Deane, says it has been pleasing to see the strength of support from existing shareholders.

"This recapitalisation will provide $414 million of new equity capital that will enable Fletcher Challenge Forests to reduce its debt, building a strong equity base for the implementation of the market-based strategies the company has developed."

The recapitalisation of Fletcher Challenge Forests undertaken through the rights offer is part of the Fletcher Challenge separation programme, and was approved by shareholders last month.

Further stages in the separation programme, including a sale of the Energy division to Shell and Apache, and the establishment of Building as a stand-alone company, will be voted on by shareholders in March next year.

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