Forests deal covered for Kiwi dollar weakness - Fletcher

By NZPA

Wednesday 7th August 2002

Fletcher Forests said today that its bid to buy the Central North Island Forest Partnership was hedged and not exposed to the fall in the kiwi dollar.

An updated financial statement released today showed the company based its deal on cancellable forward exchange contracts to buy $US250 million at US46.50c.

"As a result, the company is not exposed to weakness in the new Zealand dollar below this level...The balance of the purchase price is primarily to be funded in New Zealand dollars."

Fletcher Forests has been under pressure from some of its shareholders, in particular GPG and Xylem which claim the $US650 million ($NZ1.4 billion) purchase price is too high.

The company said it also expected to save about $5 million a year on interest costs projected in its original forecasts, due to a fall in Japanese yen and the global drop in interest rates.

Forests said that at the kiwi dollar's current rate of about US45.10c, operating earnings and free cashflow would increase by about $12 million per annum.

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