Hart deal puts mill towns on edge

Provincial New Zealand is holding its breath over an audacious takeover of Australasia's largest forest-products conglomerate by this country's richest man.

Former tow-truck operator Graeme Hart, who at 49 has amassed an estimated wealth of more than $2 billion, has grabbed a controlling interest in Carter Holt Harvey.

Mr Hart's reputation for breaking up conglomerates and laying off workers is making unions nervous, as mill-town mayors reserve judgment on his acquisition.

Carter Holt Harvey employs more than 6000 workers in New Zealand, as well as several thousand in Australia and Asia, and owns four pulp mills and more than two dozen sawmills and board plants.

Bancorp managing director Craig Brownie, whose organisation advises on mergers and takeovers, said Mr Hart had a track record, through food giants Burns Philp and Goodman Fielder in Australia, of selling non-performing assets and restructuring management.

He was also known for cutting employees.

South Waikato District Mayor Neil Sinclair, whose territory encompasses Tokoroa and the nearby Kinleith pulp and paper mill, said his community would be hungry to hear of the new owner's intentions.

"This is the big boys doing things - we will have to watch how it settles down," he told the Herald.

But he expressed optimism that, as a New Zealander, Mr Hart would act with the interests of this country's economy in mind.

Kawerau Mayor Malcolm Campbell indicated a similar sentiment despite uncertainty about Mr Hart's aspirations.

"At the end of the day, if Graeme Hart is there, at least decisions are being made in New Zealand and not in some boardroom in a far-off land where they don't even know where Kawerau and Tokoroa are."

Regional Development Minister Jim Anderton also acknowledged uncertainty about Mr Hart's intentions but said last night he hoped the new majority owner would develop CHH as a New Zealand business.

Despite low international prices for raw timber, Mr Anderton said there appeared to be good long-term prospects for value-added forest products, which he hoped Mr Hart would be keen to develop.

"He seems a smart cookie - and anyone who takes a long-term view of the industry will be looking in the right direction."

Union leaders are not so optimistic that Mr Hart will put patriotism ahead of other considerations.

The deal is one of this country's largest corporate takeovers, equalled only by that of Contact Energy.

Mr Hart's Rank Group announced yesterday that it had paid $1.65 billion to buy out United States-based International Paper's 50.5 per cent holding for $2.50 a share. It must now offer other shareholders that same price in a full takeover bid potentially worth $3.3 billion.

Engineering, Printing and Manufacturing Union secretary Andrew Little said he feared Mr Hart might try to extract short-term value by splitting up his new company, leaving it vulnerable to future downturns.

Dairy Workers Union secretary James Ritchie, who has lost members in layoffs at NZ Dairy Foods under Mr Hart's ownership, said it was "nonsense" to expect patriotic considerations to influence his business strategies.

"Graeme Hart is an international player. He's a very smart operator. He's in it for the money."

But Mr Ritchie said that as long as managers made enough money, Mr Hart appeared happy to leave them to run the business.

Kinleith combined unions committee chairman Graeme Holmes said International Paper's announcement of plans to sell its stake had unsettled some Tokoroa people, but others thought there was little to lose as the mill's workforce had already shrunk to a bare minimum.

- Additional reporting Karen Chan