Forest industry hails sale to Harvard fund

By PAM GRAHAM


Forestry industry players have welcomed the sale of the Central North Island Partnership to the endowment fund of Harvard University.

But the sale is seen as just part of a wider rationalisation.

Carter Holt Harvey chief executive Peter Springford said the "Harvard people" would bring stability and would be a good supplier to local processing.

The Timber Industry Federation's Wayne Coffey said the move was healthy for independent saw millers because the new owner would be freer to meet the market.

Rens Bosman, executive director of Trans Pacific Trading, a service provider to small-and medium-sized forest owners, said the sale to a long-term player with no debt and a focus on just "growing the resource" was very positive for the industry.

Harvard University's endowment fund is buying the cutting rights to the CNIFP forests, the Timber Management Company (TMC), CNIFP's investment in the Silva log export marketing joint venture with Carter Holt Harvey, and other assets, for an undisclosed sum through timber management company GMO Renewable Resources.

The transaction, to be settled by the end of the year, has been criticised because the buyer is foreign and has no interest in investing in processing of wood. Carter Holt is itself 50.5 per cent owned by United States-based International Paper.

Renewable Resources spokesman Ian Jolly said it was better than when the forests were part-owned and run by the same company that also bought logs.

The nine forests in the estate, the largest of which is Kaingaroa, were developed in state ownership before privatisation in 1996 and receivership in 2001.

Previous owners Fletcher Challenge and China International Trust and Investment Corp, Citic, failed to buy the forests back last year.

Jolly said New Zealand capital had had ample opportunity to step up to the mark.

The phone had been running hot with former Forest Service staff welcoming the Harvard buy, he said.

Many of the New Zealanders involved in TMC, GMO RR and Harvard trained at Canterbury University's forestry school and started their careers in the Forest Service.

Jolly said it was too early to comment on the access issue raised by the settling of a Treaty of Waitangi claim with Ngati Awa, or on supply contracts.

Fletcher Challenge could fall back on the so-called Tasman contracts running until 2020 if there was any change to its current supply contracts, which have a six-month notice period.

"We would like people who are buying wood from us to feel that they are operating on a level playing field with anyone else that wanted to buy wood from us," Jolly said.

"We are not direct investors into processing because we are not expert in that area. We like to remain independent.

"We are not here on a pre-determined time horizon. There is no fixed exit point and we anticipate, in the long term, that things are going to get better than they are," Jolly said.

GMO RR's role will be largely governance and strategy advice. TMC will manage the forests.

Work on the deal started more than 12 months ago and the past three months had been intensive, Jolly said.

US pension funds have been using timber management companies to find and manage timber investments for either groups or single clients. GMO RR has seven funds and the CNIFP deal is its first single client fund.

Timber manager the Campbell Group is believed to be representing Harvard in the sale of the Fletcher Challenge Forests' estate in competition with Prudential Timber Investments and local investors in the Kiwi Forests grouping.

What is not known is how serious Harvard is about pursuing the Fletcher estate.

They are at present offering less than Kiwi and buying both would be a large exposure to plantation forestry even by global standards.