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Irate FCL investors plot court revenge

By Nicholas Bryant

Friday 20th October 2000

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Fletcher Building shareholders are preparing the ground for legal action against the Fletcher Challenge board.

Fletcher Building's share price has slumped from $2.18 to about $1.84 following the board's announcement of its restructuring plans and a group of investors wants to know who made offers, how much they were and whether they still stand.

Members of the group, which includes some QCs and sharebrokers, did not wish to be named yet.

Fletcher Challenge chairman Roderick Deane has said one indicative offer was received for Fletcher Building as well as expressions of interest but the board decided they were too low to be accepted.

Only one figure has been suggested, an offer of $3 a share, but the board will not confirm or deny its validity.

It is understood two sharebroking firms are acting for the investors to gain the support of a Fletcher Building institutional holder to help fund the action.

They want pre-trial disclosure of the board's separation documents affecting Fletcher Building and believe there is sufficient machinery within the law to allow discovery of bidder and price.

If they found an attractive offer, relative to recent prices, and it was still live they would request the right to vote on it.

If the offer had lapsed and could not be revived they would seek compensation under s174 of the Companies Act which covers prejudiced shareholders.

In an unrelated case involving Fletcher Challenge this week, new insider trading claims against Fletcher Energy were made at the High Court in Auckland.

Despite being turned down once, former Southern Petroleum shareholders are back, claiming $23 million over Fletcher Energy's alleged withholding of price-sensitive information during its takeover of Southern Petroleum.

Meanwhile, Fletcher Challenge believes no issues arise for holders of any of the remaining three divisions when it comes to voting on the Fletcher Forests rights issue on November 2, despite the Commerce Commision's decision not to allow Shell and Apache to buy Fletcher Energy.

It says the timetable for the Fletcher Forests rights issue will remain the same and the voting documents are in the mail.

Its reason is that all seperation deals are fully underwritten and no money must change hands before or about the time of the rights issue.

But market analysts argue Fletcher Energy shareholders, who would have received a mixture of Rubicon and Capstone shares as well as cash if the Shell-Apache deal had succeeded, musts know what form the future of their division will take before they can support the rights issue.

If an entirely new bid for Fletcher Energy were to go before the Commerce Commission, as is being tipped, analysts spoken to don't believe the timetable can remain the same.

"It is significant, as the Commerce Commission would take a lot of time to consider a new deal," one analyst said.

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