CHH cuts forests into pieces

Carter Holt Harvey is slicing and dicing 30,000ha of freehold land in its forest estate sell-off - trying to grab some of the spoils that might otherwise go to property investors.

The land is being offered in 39 parcels and separately from cutting rights for 95,000ha of trees.

The trees are about one-third of the company's forest estate by area.

The company yesterday asked for expressions of interest in the trees and the land.

The contrast is with Tenon, the former Fletcher Challenge Forests, selling its estate as one package - and leaving property investors Ross Green, Adrian Burr, Trevor Farmer and Mark Wyborn to do the carve-up.

Carter Holt's chief operating officer, Devon McLean, said: "Recent experience is that there are parties out there interested in trees and parties out there interested in land."

However, the freehold land is a small part of the value of the estate - a back-of-an-envelope calculation yesterday suggested $75 million, compared with a pre-tax book value for the trees of about $400 million.

The trees for sale are "non-strategic", those not required for the supply of current or planned processing facilities.

The company says it is jettisoning all of its Canterbury and Hawkes Bay trees, as well as parts of the estate in Auckland, Coromandel and the Bay of Plenty.

One exception - where the trees go despite the company owning a processing plant in the region - is Canterbury, where Carter Holt has a medium-density fibreboard (MDF) plant. "But we're confident that we can write a suitable supply contract for that mill," said McLean.

The company's largest estate, which also generates the highest cash-flows, is Kinleith. It is not included in the sale. Nor are forests in Northland and Nelson.

McLean said "more than 40" potential bidders had made approaches, "some interested in the whole lot, others in specific components". The likely buyers include the so-called "Timos" - global timber management companies that invest money for clients and rich institutions such as Harvard University.

A flyer for the sale was available to potential bidders yesterday, and an information memorandum will be out next week.

Deutsche Bank, the investment bank that advised Fletcher Building on the purchase of the Amatek building products group, is handling the sale and Colliers International will help with land sales.

Alternative uses for the land include dairying, other farming, and lifestyle blocks. McLean expects final bids by the end of June and a sale in the second half of the year.

The Fletcher Challenge forests sold for $725 million and the Central North Island Forest Partnership forests, including Kaingaroa, were sold for close to US$650 million.

The buyers were the biggest timber funds in the world and Harvard University's endowment fund, which is now the second biggest forest owner in the country.