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Fletcher hopeful FEG sale still on

By Phil Boeyen, ShareChat Business News Editor

Friday 13th October 2000

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Fletcher Challenge has defended the timing of its restructuring announcement earlier this week and has reaffirmed its commitment to the company's separation process.

Market investors have been critical that the company announced the restructuring -- which included selling Fletcher Energy to Shell - before the Commerce Commission had decided if the Energy sale could go ahead. The Commission yesterday declined Shell's application to buy FEG.

Fletcher chairman, Rod Dean, says the company is extremely disappointed with this rejection because it believes the Shell and Apache offer represents outstanding value for Fletcher Challenge Energy shareholders.

He says in addition, it is very positive for New Zealand in that Shell brings both the global expertise and the necessary financial resources to develop oil and gas exploration and production opportunities in this country.

"We would still like to see the Shell and Apache transaction completed, and are hopeful that Shell and the Commission can find a way forward so that we complete the deal we announced earlier this week."

"We remain of the view that the wider reorganisation of Fletcher Challenge is also in the best interests of all shareholders, and are determined to press ahead with the restructuring. In this regard, the rights issue for Fletcher Challenge Forests is not dependent on the Shell transaction and will continue as announced," he confirmed.

The rider over the rights issue for FFS stated that if separation of the company did not proceed FCIL would compensate the underwriters for any losses up to a maximum $200 million, with the liability shared between Energy at 75% and Building at 25%.

Commenting on the much-criticised timing of the Fletcher Challenge separation, Mr Deane says that once the transaction with Shell and Apache had been agreed, and the Underwriters of the Fletcher Challenge Forests rights issue had been put in place, the company was bound to immediately inform shareholders and the market.

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