Friday 19th December 2003
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Sources said yesterday the price tag for the 162,000ha forest estate would be significantly higher than speculated.
"Things are still on track for settlement on Friday ... the price is better than most were speculating," the source said.
Harvard University's endowment fund is buying the CNIFP estate through timber management company GMO Renewable Resources.
When the sale was confirmed in late October, market speculation was the estate value had fallen due to a depressed global timber market and would fetch less than $820 million.
When Fletcher Challenge Forests put up a joint bid with Citic last year, receiver Michael Stiassny said the affected banks would not take less than the $US650 million ($1.06 billion) they were owed.
Fletcher Forests and Citic initially overpaid for the forests in 1996.
This saw them go into receivership five years later with the loss of $525 million in FFS' case and $650 million in Citic's.
Last year the pair were back again with a plan to buy the forests back from the banks for $US650 million ($1.4 billion at the time).
Citic was to pump in $US200 million of equity through an FFS share placement and up to $US665 million would have been borrowed to fund the purchase and to refinance existing FFS debt.
The deal struck many shareholders, including, notably, Xylem Investments as highly risky, and both Xylem and the Shareholders' Association lobbied holders to vote it down.
The Harvard transaction, while hailed by some major players as providing stability to the volatile forestry industry, has also been criticised because the buyer is foreign.
With Carter Holt Harvey 50.5% owned by International Paper, the majority of the country's forests are now in foreign hands.
The Overseas Investment Commission has approved the deal, which did not include the underlying Crown-owned land.
Harvard University is also believed to be behind Portland-based timber management company the Campbell Group, which put a bid in for Fletcher Forests' existing estate.
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