Xylem seeks court ruling on CNI purchase

By NZPA

Wednesday 31st July 2002

Fletcher Forests shareholder Xylem Investments is seeking a court ruling over fellow shareholder Rubicon's right to vote on the Central North Island Forestry deal.

Shareholders will vote on the $US650 million ($NZ1.4 billion) deal on August 14. Fletcher Forests plans to borrow $US400 million, quadrupling its debt, to help pay for 163,000ha of trees it used to own in a venture with China International Trust & Investment Corp (Citic) that was wound up after log prices slumped and it breached loan terms.

The deal will also see Hong Kong-based Citic subsidiary Seawi come on board as a 35 percent Forests shareholder, while 17.6 percent shareholder Rubicon will exit the company by selling 131 million of its shares to Seawi for $48 million in cash. That values the shares at 37c each, despite them trading around 25c.

"Xylem has advised that it will seek a Court ruling next week on the question of Rubicon's entitlement to vote on the resolutions to be considered at the shareholders' meeting," the company said in a statement to the Stock Exchange.

"The company has taken extensive legal advice regarding the voting entitlements of Rubicon Ltd and looks forward to a judicial ruling on this matter as soon as possible."

Stephen Hurley, former Forests director and president of 7.6 percent shareholder Xylem, this week urged shareholders to oppose the deal, saying it is unfair to small shareholders and will see Forests take on too much debt.

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