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Fletcher to restructure self-funding finance unit

Friday 27th August 2010

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Fletcher Building has announced that it is restructuring its self-funding vehicle into an investment company with a 20% stake in its New Zealand subsidiaries.

Recent changes to the Reserve Bank of New Zealand Act, which regards Fletcher Building Finance as a non-bank deposit taker, mean that it is no longer efficient for the unit to act as the preferred funding vehicle for the group, the company said in a statement today.

The finance unit currently borrows money from the public in the form of unsecured, subordinated notes, and then lends to various entities within the Fletcher group.

Fletcher said the changes will not affect existing holders of capital notes or the underlying credit quality.

“Investors can be assured that they will continue to benefit from the strength of Fletcher Building, with the company continuing to guarantee the capital notes obligations of (Fletcher Building Finance) as it has done since 2003,”said Fletcher CEO Jonathan Ling.

The changes Fletcher Building Finance mean it will no longer be a funder or a lender to the group.

It will instead buy a 20% a stake in Fletcher Building Holdings, a corporate holding company that housed most of the shares in Fletcher’s New Zealand subsidiaries.

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