Rubicon will rule on major Forests stake

One of the first tasks awaiting Rubicon when it is created next year will be to decide the fate of a major stake in Fletcher Forests.

The division's rights issue last week left a shortfall of $167.5 million, or 670 million new shares, in the hands of its underwriters, principally Credit Suisse First Boston. Those shares represent a 24% stake in the recapitalised company.

Sharebrokers say a stake of that size is likely to be attractive to some or all of the trade buyers who ran the rule over Forests earlier this year. They also believe CSFB already has a buyer.

CSFB could not be reached for comment.

The new shares will be allotted tomorrow.

At the time prospective buyers were looking the division over, the shares were trading at 80c and above. Chairman Rod Deane has said none of the parties put forward an offer that met directors' view of the company's value.

He said some had been put off by Forests' legal wrangle with its Central North Island Forests partner, Citic.

CSFB doesn't have complete discretion over its Forests stake. An agreement with Rubicon, the company to be created initially to assist Forests' recapitalisation, over 40% of the shortfall is both a put and a call option.

That means CSFB can put 266 million shares (9.5%) to Rubicon. Rubicon can also call the shares from CSFB.

If either of those options is exercised Rubicon will be Forests' biggest shareholder, with 17.7%, while CSFB's stake will be reduced to 14.4%.

Until Rubicon is created Fletcher Challenge may exercise its legal rights.

A further agreement stipulates Fletcher Building must, at Rubicon's election, take the first $20 million worth of shares put to Rubicon by CSFB. The remainder will be split four-for-one between Rubicon and Building, leaving Building with 117 million shares (4.3%) and Rubicon with 374 million shares (13.4%).

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.

Printable version

Related News

New oil and gas exploration blocks up for grabs under new NZ policy
Solid Energy seeks consent for 5 million tonne coal mine
Mariner flicks on GPG food asset for A$850k
Steel & Tube's first-half profit falls 24%
New Zealanders could be lured to ultrafast broadband
LIC lifts 1H net profit 12.3%
Ports of Auckland wharfies flag 7-day strike
TelstraClear returns to 1H EBIT profit on cost-cutting measures
Staff from Official Assignee move to secure Dotcom assets
NZ unemployment rate drops to 6.3%