INDEPENDENT NEWS

CITIC’S $218 Million Offer Rejected

Published: Wed 1 Nov 2000 03:36 PM
Statement made by Cui Peisheng, Managing Director, CITIC New Zealand Limited
CITIC New Zealand is disappointed that Fletcher Challenge Forests has rejected its last offer to buy them out of the Central North Island Forestry Partnership for $218 million.
We saw the buyout as the commercially sensible way of resolving the legal disputes that exist between the partners.
It would also have given Fletcher Challenge Forests greater options in relation to a sale of the remainder of its operations or reducing its recapitalisation requirements as a stand alone company.
However, Fletcher Challenge Forests have an unrealistic view of the value of the forests, and discussions between us, which had been in progress for the past two weeks, have now broken down.
Our assessment is that a value of $218 million is somewhat greater than what Fletcher Challenge Forests’ share is worth today as there is new evidence that over-cutting has occurred. Our offer of $218 million was net of all claims, and inclusive of long-term supply contracts and retention of operating synergies.
CITIC remains committed to remaining in the Partnership, as does our determination to resolve our legal disputes through litigation if necessary.
Recapitalisation of the Partnership is now a priority, and the level required could be in excess of US$200 million.
CITIC is in a position to meet its contribution to recapitalisation.
For further information please contact
Mr Greg Molloy, CITIC New Zealand, Tel 0-9-309 1528. Cell phone 025 449 110
Issued on behalf of CITIC New Zealand by Dennis Lynch, Network Communications
Tel 0-9-379 3154
BUDMR007

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