By Michele Simpson
Friday 2nd June 2000
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|FLETCHER ENERGY: Searching for reserves|
Last week the division, considered FCL's jewel in the crown, took a roadshow to core retail investors attempting to lift the share price and its chances of staving off foreign ownership.
The move contrasts with Fletcher Energy management's stated position under chief executive Greig Gailey, that it is backing the corporate restructuring plan, which has already seen the paper division sold off to Norway's Norske Skog.
Restructuring proposals for Fletcher Challenge building, energy and forests divisions are to be presented to its board by August.
The options for Fletcher Energy are a trade sale, recapitalising, a cash injection from another party or the company being left alone as a New Zealand listed entity.
With time running out, Fletcher Energy management has just finished a nationwide roadshow with Forsyth Barr, one of the country's largest chains of retail investment advisers to try to keep the stock listed here.
"Going on the multiples that Fletcher Energy's global peers trade on, we think a trade sale price will be substantially above where Fletcher Energy is trading now and that means for [it] to continue on as a New Zealand-listed company, [it] has to get out into the investment community, shout out the story, highlight the underpricing and get the share price re-rated," Forsyth Barr investment analyst Ian Graham said.
Mr Gailey, investment relations manager Annabel Cotton and communications director Stephen Jones took part in last week's roadshow, which included Napier, Wellington and Christchurch.
Figures quoted in the presentation showed domestic ownership of Fletcher Energy had increased from 35% a few years ago to over 50% today.
Energy analysts believe Fletcher Energy's share price is undervalued and it would be hard for the Fletcher board not to accept an attractive offshore offer.
"I guess [management] would like the opportunity to trade as an independent company and get the idea of what the true value of the company is," one analyst said.
Merrill Lynch is recommending Fletcher Energy as a buy.
It said the company was likely to have strong cash flows over the next few years, an extensive exploration programme planned for 2000 and the FCL group restructure and potential for mergers and acquisitions made it an attractive stock.
In the past three months Fletcher Energy's share price has risen from $4.40 to $5.75.
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