US fund new major Rubicon stakeholder, in favour of CNIFP deal

By NZPA

Friday 12th July 2002

United States hedge fund Perry Corp, which has held a stake in Rubicon since its inception last year, has increased its stake and will vote in favour of the Central North Islands Forest deal.

Perry Corp, which decreased its 10 percent stake in Rubicon last year to 4.89 percent, increased its holding to 15.98 percent in after-market business yesterday.

The purchase sets the stage for a possible showdown over the impending sale of the Central North Island Forest (CNIFP) partnership.

Two large parcels of shares in the local biotech and forestry company were traded for $27 million after market close.

The shares, sold in two parcels of 17 million and 19 million shares, changed hands for 75c each.

Lawyer for Perry Corp, Kevin Sheridan, told NZPA Perry Corp would vote in favour when Fletcher Forests shareholders voted in mid-August on the future of the huge Central North Island Forest deal.

"Perry's Managed Funds have been investors in Rubicon since its inception in March 2001. Perry believes Rubicon's board and management team have done an excellent job in creating value for shareholders and continues to support them and the direction of the company," Mr Sheridan said.

"Perry Corp intends to vote its Rubicon and Fletcher Forests shares in favour of the CNIFP transaction and believes the transaction creates enormous value for both companies."

Mr Sheridan could not comment on details of the transaction but said it was unlikely there were any options involved.

Perry Corp was founded in 1998, and has holdings in gold mining, forestry and real estate around the world.

The move follows last week's late-night raid by investment company Guinness Peat Group (GPG) when it also paid 75c a share for a 19.9 percent stake in Rubicon.

When the proposed deal was announced in May, American institutional shareholder Xylem, holding 7.6 percent of Fletcher Forests, criticised the deal and called it unfair to Fletcher Forests shareholders.

Part of the deal involves former Forests partner Citic buying Rubicon's 17 percent stake in Fletcher Forests in exchange for a forest in the North Island.

The entry of the US fund as Rubicon's second biggest shareholder sets up the possibility of an interesting battle with GPG, which bought in anticipating the CNIFP proposal falling over.

GPG director Tony Gibbs said last week that if the Fletcher Challenge Forests deal to buy the CNIFP went ahead, it would be a good one for Rubicon shareholders.

But Mr Gibbs said the complex series of inter-linked deals around the sale of the forest meant it was unlikely to proceed.

If this happened, GPG would still be happy staying on as a shareholder.

Mr Gibbs has been unwilling to say how GPG would vote when it is asked to endorse the whole CNIFP deal next month.

Yesterday Fletcher Challenge Forests asked competition watchdog the Commerce Commission to give its blessing to its CNIFP purchase. The commission has 10 working days to decide, although it can extend the deadline.

The forest and associated plants, primarily the huge Waipa sawmill near Rotorua, were previously owned by a joint venture partnership between Fletcher and Citic. Under the planned new structure they would be owned by Fletcher alone.

Fletcher has continued to manage the forest for the past 18 months, during which time it has been in receivership, awaiting sale.

Shareholders in Fletcher are preparing to receive information about the deal, including a report from valuation company Grant Samuel next week.

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