GPG leads in forests battle

By Nick Stride

Friday 16th August 2002

All eyes are on Sir Ronald Brierley's Guinness Peat Group following the defeat of Fletcher Forests' plan to buy the Central North Island Forests.

Fletcher Forests shareholders narrowly voted down the $1.3 billion deal on Tuesday and the finger-pointing started almost immediately.

"GPG's entry was another complication to the CNI deal, which shareholders didn't know how to read," Fletcher chairman Sir Dryden Spring told Dow Jones Newswires.

"They (GPG) introduced a concept called consolidation which implied they had some better plan, which I don't think they have." GPG has kept its intentions to itself, saying only that it sees the CNI forests being part of a "broad consolidation" of the New Zealand forestry industry.

The deal's defeat means potential buyers will once again be taking their proposals to receiver Michael Stiassny, who told the Dominion Post he had "some contingency plans" and was moving them forward quickly.

Sir Dryden rejected calls for Fletcher's board to "fall on their swords", saying the 70% shareholder vote in support of the deal indicated directors still had a mandate. There has been speculation GPG will now seek board control of Rubicon and even Fletcher but the raider has only a 19.9% stake in Rubicon, which in turn has 17.7% of Fletcher. Sir Dryden conceded the 37c a share exit price for Rubicon was the decisive factor in the deal's defeat.

The price attracted vociferous opposition from the deal's opponents, who claimed Fletcher's remaining shareholders would be impoverished by Rubicon's "preferential treatment."

Fletcher has pointed out many times that the banks for whom Mr Stiassny is acting are getting their interest, penalty interest, and the forests' excess cashflows.

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