Fletcher and Peak battle for support

By PAULA OLIVER Energy writer

In a last-ditch attempt to sway Fletcher Energy shareholders, Fletcher Challenge and Peak Petroleum are mounting publicity offensives urging voters to turn out and support them at tomorrow's crucial meeting.

The meeting will decide the future of all three Fletcher divisions - Building, Forests and the high-performing Energy - in a vote that many analysts say is too close to call.

Fletcher needs 75 per cent of Energy voters to support a sale to Royal Dutch Shell and Apache Corporation to complete its separation.

Yesterday, Fletcher chief executive Michael Andrews said Peak Petroleum's late, increased proposal to buy Energy for $US3.85 ($8.84) a share - in competition with Shell's increased offer of $US3.55 a share - lacked substance and carried too many risks.

"It's the uncertainty of the Peak bid, that's where the issues lie for Fletcher Challenge - the uncertainty and the timeframe," he said. "Greymouth [part of the Peak consortium] is currently free of any formal obligation or commercial contract, and is therefore able to suggest any dollar figure."

Since Peak made its "friendly" proposal last week, the battle for Fletcher Energy has heated up.

Fletcher Challenge's directors refused to put off the shareholder vote for the Shell deal, and did not give access for due diligence because it would put the Shell contract at risk.

The fight entered court on Friday and Justice Anderson turned down Peak's requests for due diligence and a meeting postponement. Peak plans to appeal today.

Fletcher Challenge directors say Peak's funding is subject to conditions and timing, and that it is not a firm offer. Nothing could be settled until at least June.

Late on Friday, Mr Andrews said that Peak's lead funder, the National Australia Bank, had not given any confirmation of a firm commitment to Peak. It was not likely to do so until at least March 22.

Peak head Mark Dunphy said last night that that seriously misrepresented Peak's position.

"None of us has ever been in the game of making proposals and not closing. It's unfair they are seeking to discredit our financial ability," he said. "We're as keen as you can imagine to own the assets, and we're deadly serious."

Yesterday, Mr Andrews said Peak's proposal was fundable, but it would take too much time.

"It takes more time than we have got. We can't hold Shell and Apache long enough to give anyone else time to go out and get financial approvals.

"It's uncertain. We don't know what price Peak will actually offer, and to be fair they don't either until they have done due diligence."

He said the risk associated with the uncertainty cancelled out any difference in the prices being discussed.

Mr Dunphy yesterday continued to point at Shell's offer as too low.

His team has been seeking support among Energy shareholders, and is said by some analysts to have around 10 per cent of the register on Peak's side.

In the High Court on Friday, Peak's lawyer submitted that 6 per cent shareholder support could be proven for Peak's legal moves. Guinness Peat Group, a backer of Peak, was said in court to hold 2.8 million Energy shares - less than 1 per cent of the company.

Fletcher Challenge says it has no indication of how tomorrow's vote will go. Its directors are sure to want more voters than the average 40 to 50 per cent turnout, because a low turnout would give Peak a better chance of stopping the deal.

Mr Andrews said it was important to remember that Energy had agreements with third parties that a buyer would have to honour. Partners had seen Shell as able to honour them, but Peak was a much smaller company, he said.

Some of the deals are with Shell.

Mr Dunphy is certain his team can meet any third party obligation.