Fletcher's Laminex exits 10-year investment in Southland MDF plant with sale to Daiken
By Jonathan Underhill
May 31 (BusinessDesk) - Fletcher Building's Laminex NZ unit has exited a 10-year investment in a Southland medium
density fibreboard plant with Tokyo Stock Exchange-listed Daiken getting clearance to buy the 124ha site at Mataura,
Southland.
Daiken convinced the Overseas Investment Office with a plan to increase capacity at the facility, which was likely to
increase New Zealand's exports and drive up demand for pulp logs. Daiken has an existing MDF plant in Rangiora, north of
Christchurch. It has acquired Dongwha New Zealand from South Korea's Dongwha International and Laminex, gaining its
Patinna subsidiary that owns the Southland site.
The sale price was withheld, however, last September, the Nikkei Asian Review reported that the deal was thought to be
worth about 10 billion yen (US$89.7 million). Daiken already has production centers in New Zealand and Malaysia and is
hoping to expand operations through Dongwha's sales networks in Oceania and North America, the Review wrote at the time.
Alongside the release of the OIO decision, Daiken released Dongwha NZ's 2017 report, providing a snapshot of returns at
the Southland plant. It made sales of $87.6 million in calendar 2017, up from $91.6 million the previous year but costs
ate up most of the gains and net profit actually fell to $4.8 million from $7.7 million.
Dongwha notes the change of ownership and also discusses its going concern status. As at balance date the company was
reliant on the continuation of bank facilities and related party loans. One has subsequently matured in April and
another comes up in August. However, Dongwha International had provided a letter of support for the NZ company valid for
12 months from the date the 2017 financial statements were approved and another member of the group has guaranteed its
external bank funding, notes to the accounts show.
"The directors expect the funding arrangements of the company to be updated with the new owner upon completion of the
sale of shares to Daiken," the notes say. Interest-bearing debt was about $21 million at Dec. 31, down from about $32
million a year earlier.
Sales to related parties were a big part of its income. Dongwha International bought $34 million of goods last year.
Laminex Group, which acquired 20 percent of the company in 2007, bought $14.8 million of goods in 2017.
Fletcher is retaining its Laminex business in a strategic overhaul led by chief executive Ross Taylor that includes a
stronger balance sheet. At the same time, it is seeking buyers for its two main businesses outside Australasia - Formica
and the Roof Tile Group. Taylor said in April that restructuring poorer performing Australian businesses was part of his
turnaround plan, although "Laminex and Stramit [steel products] are performing well."
Taylor hasn't completed his strategy for Fletcher and plans to make a substantive announcement in June.
(BusinessDesk)