Perry gets $27m slice of Rubicon

By CHRIS DANIELS

The proud new owner of nearly 16 per cent of Rubicon has been confirmed as US hedge fund Perry Corp.

Perry, a New York-based investment management firm, spent $27 million on its Thursday night buy-up of shares in the forestry and biotech company.

A potential showdown is now looming between Perry and Guinness Peat Group, which last week became the owner of a 19.9 per cent stake in Rubicon.

GPG director Tony Gibbs has so far refused to say if he will support the Fletcher Challenge Forests/Rubicon/Citic $1.3 billion deal to buy the Central North Island Forest (CNIF).

Gibbs and fellow GPG executive director Gary Weiss are about to join the Rubicon board.

Perry, on the other hand, issued a statement as soon as it bought its 16 per cent stake that was full of praise for Rubicon and its management.

"Perry believes Rubicon's board and management team have done an excellent job of creating value for shareholders and continues to support them and the direction of the company," it said.

"Perry Corp intends to vote its Rubicon and Fletcher Challenge Forest shares in favour of the CNIF transaction and believes the transaction creates enormous value for both companies."

Speculation in the broking and investment community is focusing on what, if any, deal may have been done between GPG and Perry, particularly involving the potential breakup of Rubicon.

The mystery party in this whole arrangement is US forestry investor Xylem, which owns 7.6 per cent of Fletcher Challenge Forests.

Fletcher director Stephen Hurley, representing Xylem, resigned from the board once the CNIF deal was announced, saying it was a bad deal for minority shareholders.

Hurley has yet to say whether Xylem will be voting against the deal. Some minority Fletcher shareholders are unhappy at the good deal Rubicon is getting from the plan, which values its shares at 37c each, despite them trading around 25c.

If the CNIF deal is approved, Rubicon gets the 11,874ha Tahorakuri Forest Estate, valued at $131 million, in return for surrendering 355 million of the 492 million Fletcher shares it owns. This values the shares at 37c each, compared with the recent 20c to 25c range.

In a separate transaction, Rubicon will sell 131 million of its Fletcher shares to the Citic vehicle SEAWI for $48 million in cash.

Fletcher shareholders will receive an independent review of the deal next week, before being asked to vote on the deal next month.

Perry, which has billions of dollars invested around the globe, specialises in "events and opportunities" investments.