Fletcher Building poised for new direction

By PAULA OLIVER

Fletcher Building bosses will reveal the first results of a major strategic review of the company's operations this week, in a move which could kickstart the sale of some assets.

The direction of the diverse company is tipped to be announced tomorrow, but it is understood that many of the details analysts are keen to hear will not yet be available.

The board of Building has made no secret of the fact that some non-performing, or non-core assets could be sold after the review, which began in tandem with the separation of the Fletcher Challenge conglomerate. It is intended to make Building a lean company with fewer interests.

One of the most eagerly awaited decisions concerns the future of the Fletcher Steel division - which is being lined up for purchase by Steel and Tube.

Steel and Tube chief executive Nick Calavrias said yesterday that receiving Commerce Commission approval to do the deal simply put his company in a position to react if Fletcher Steel made a decision soon.

"I guess they may announce something on that, or they may not. It's really in their court at the moment," he said.

Brokers say Building's share price has held up well in recent weeks, in what has been a tough market. A broker told the Business Herald that Building's price has been partly fuelled by longstanding rumours that a consortium - which includes corporate raider Guinness Peat Group - is lining up to take over Building and split it. GPG's recent move to raise $250 million had reopened the speculation.

But others say the strategic review itself could have caused some interest. Major institutional shareholder AMP Henderson Global has said that, if done correctly, the review could add tens of millions of dollars to Building's pre-tax profit, and boost its market value by more than $100 million.

But perhaps one of the most awaited pieces of news will be the appointment of a new chief executive. Fletcher stalwart Michael Andrews has led the company since the sudden departure of the highly regarded Alexander Toldte in January. The board maintains that good progress is being made towards an appointment, but it is not clear if an announcement is pending.

The rumour and speculation surrounding Building is just as strong around its former sister-company Fletcher Challenge Forests and newcomer Rubicon.

Analysts say Rubicon bosses are likely to wait to see what happens with the receivership of the Central North Island Forestry Partnership before they sell any non-core assets. A development in the receivership saga is expected in three weeks.

Rubicon holds a 17.6 per cent interest in Forests, but has always said it intends to sell the Challenge petrol station network. Some analysts also point to the company's holding in Nasdaq-listed Capstone Turbines as a cash generator.

Potential buyers for the Central North Island Forestry Partnership assets are being discussed in the market, with the next move of Chinese investment party Citic the most keenly anticipated.

Receiver Michael Stiassny said yesterday that there is no legal impediment to a sale.