Citic says FFS negotiations have broken down

By Phil Boeyen, ShareChat Business News Editor

Wednesday 1st November 2000

Citic New Zealand says it is disappointed that Fletcher Challenge Forests has rejected an offer to buy them out of the Central North Island Forestry Partnership for $218 million and that the two groups are no longer in talks.

The MD of Citic NZ, Cui Peisheng, says his company saw the buyout as the commercially sensible way of resolving the legal disputes that exist between the partners.

"It would also have given Fletcher Challenge Forests greater options in relation to a sale of the remainder of its operations or reducing its recapitalisation requirements as a stand alone company."

"However, Fletcher Challenge Forests have an unrealistic view of the value of the forests, and discussions between us, which had been in progress for the past two weeks, have now broken down."

Citic says its assessment is that a value of $218 million is somewhat greater than what FFS share is worth today because there is new evidence that over-cutting has occurred.

The Chinese-owned company says it remains committed to remaining in the partnership, and is determined to resolve its legal disputes through litigation if necessary.

"Recapitalisation of the partnership is now a priority, and the level required could be in excess of US$200 million. Citic is in a position to meet its contribution to recapitalisation."

FFS has said in the past while a negotiated settlement would be preferable it is prepared to vigorously defend itself if the dispute ends up in court.

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