By Mark Reynolds
Carter Holt Harvey is about to be slapped with a $1 billion lawsuit by its business partners in Chile.
The Santiago-based Angelini family's business interests are finalising plans to sue Carter Holt for more than $US500 million ($1 billion) for an alleged violation of a joint venture that controls
60 per cent of Chilean conglomerate Cia de Petroleos de Chile (Copec).
A Chilean court last year ruled that the Angelini group could seek damages from Carter Holt for breaches of agreement.
The Angelinis have until Monday to file the action and sources have indicated papers are almost ready.
The complex dispute relates to the rights over management of the joint venture.
When the partnership was formed more than a decade ago, Carter Holt agreed to let its Chilean partners look after the venture.
That agreement was made by Carter Holt's then executives, Sir Richard and Kenneth Carter.
But after the Carter brothers were bought out by International Paper of the United States, there was a move to secure a say for Carter Holt in the running of the Chilean business.
The dispute culminated in Angelini interests seeking arbitration last year to try to force Carter Holt out of the joint venture.
The arbitrator declined to force a sale but said there could be a case for compensation.
The arbitrator said Carter Holt might have breached the spirit of the joint-venture agreement, which is due to run until 2007. He said Angelini should quantify potential damages and seek reimbursement.
The Business Herald understands those damages have been put at $US500 to $US600 million.
The alleged costs include the impact on Copec of a decision by Carter Holt to expand from being just a New Zealand forestry business to an international wood products and forestry company.
Angelini interests contend that Carter Holt should not be in competition with Copec interests, which include the largest forestry company in Chile, Arauco.
International Paper's vice president for public affairs, Lyn Withey, who was in Auckland this week for the Apec chief executives summit, said any action would be unfortunate.
Carter Holt was keen to make the most of its Chilean investments and still believed it could bring some value to the operations.
