Fletcher Forests to split divisions, appoint joint CEOs

By NZPA

Monday 24th March 2003

Fletcher Forests will partition its business and appoint two new joint chief executives.

The company will separate its forest ownership activities from its added value processing, marketing, distribution and forest management activities, chairman Dryden Spring said in a statement today.

The change is expected to reduce the capital employed in its forests by channelling external investment into its forest estates. Surplus capital will be returned to shareholders, Sir Dryden said.

Upon the retirement of Terry McFadgen at the end of the month, chief financial officer John Dell and chief operating officer Ian Boyd will be appointed joint chief executives.

The company's focus would move to access and supply from forest ownership.

Sir Dryden said the decision resulted from last year's statement of strategic direction to run the business efficiently to world best standards; invest in high margin added value processing and distribution; reduce investment in trees where appropriate; and return surplus capital to shareholders.

"The announcement today that the company's forest estate will be partitioned is the logical next step in ensuring that the company is structured in a manner which assists our objective of introducing new investors into the ownership of our forest estate.

"This will allow the company to increase its focus on improving the margin at the value-added processing, marketing and distribution segments of the value chain."

Fletcher Forest was keen to extract a higher value from its forest estate than is currently reflected in the company's share price.

Fletcher Forest shares last traded up 2c at $1.03.

Details are yet to be finalised but "the matter is proceeding with urgency", Sir Dryden said.

Macquarie New Zealand has been appointed as advisor in the restructuring process.

Mr Dell will be responsible for corporate strategy, restructuring initiatives and group financial performance, in addition to his responsibilities as chief financial officer.

Mr Boyd will take responsibility for operational activities, growth strategies and external commercial relationships.

Both will report directly to the board. The appointments will become effective from April 1.

Fletcher Forests posted a half-year net profit last month of $4 million against a $302 million loss in the year ago period but warned the second half would be less buoyant.

Fletcher Forests said earlier this month it had finalised the sale of $US65 million ($NZ120.2 million) in cutting rights contracts to two entities managed and advised by UBS Timber Investors.

The sale will result in the return to shareholders of $140 million in capital.

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