UPDATE: Tenon shareholders back sale of Taupo mill, winding up

Monday 20th March 2017

Tenon shareholders have overwhelmingly backed plans to sell the firm's Taupo wood processing mill to a consortium of US and New Zealand investors and wind up the business.

At a special meeting in Auckland, investors were almost unanimous in their support of measures to sell the Clearwood mill in Taupo to interests led by Tenon's controlling shareholder Rubicon for US$55 million, which would then see two capital returns expected to generate $2.12 per share for investors, followed by a de-listing from the NZX and ultimate liquidation of the business.

"If shareholders approve the resolutions put to the meeting today, there can be no doubt that the strategic review will have delivered considerable value to our shareholders," director Mark Eglinton said in speech notes published to the stock exchange. "More than US$125 million (including dividends) will have been returned to shareholders, which will equate to a total shareholder return in US dollars of approximately 50 percent since we started the strategic review process in 2015."

Last November, shareholders approved the US$100 million sale of the US operations to New York-based buyout firm Blue Wolf Capital, allowing the company to make a US$71 million capital return via a share cancellation. The Rubicon-led purchase of the Clearwood mill in Taupo trumped seven other competing offers.

Rubicon owns about 60 percent of Tenon and wasn't allowed to vote on a component of the transaction to approve the related party transaction, nor the de-listing resolution.

Tenon started turning a profit in 2014 after more than a decade of losses as the US home-building sector began to recover, supporting demand for its wood mouldings which it largely sold into the world's biggest economy via Home Depot outlets. The company looked at other ways to cash in on the US housing market, before attracting bidders when it ran the ruler over its businesses.

The shares last traded at $2.05 and have gained 7.5 percent over the past 12 months.

BusinessDesk.co.nz

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