Tenon payout late but large

By PAM GRAHAM

Tenon's shareholders wil soon receive their second payout from the $725 million sale of the Fletcher Challenge forest estate in the centre of the North Island.

It will not arrive in time to provide seasonal cheer but it is the maximum amount promised.

Tenon said yesterday it expected to pay $321 million to shareholders by the end of February.

Half goes to majority shareholder Rubicon, which moved from a 20 per cent holding to 50 per cent during the year in a controversial partial takeover.

The second payment from the forest sale, which was supposed to be this year, follows a payment of $350 million in March.

The company said it had applied to the High Court for approval for the second capital return. Shareholders also still had to approve the payment at a meeting on December 22 and a tax ruling was pending.

The second payment will be made by cancelling three out of every four shares and paying $1.533 for each share cancelled.

Based on the number of shares before the first payment, the total paid out will be the promised $1.20 a share.

Tenon is the former Fletcher Challenge Forests. It has sold all of its forests and has put its structural sawmills and plywood plants on the market.

The price for them could be higher than a Grant Samuel valuation of between $123 million and $144 million because investment in equipment at the Kawerau sawmill increases revenue.

Shareholders will be updated on the sale of the processing assets at the annual meeting. The deadline for final bids is now in the second week of December.

Tenon held a board meeting yesterday but there was no news about the sawmill sale process.

Speculation has centred on Carter Holt Harvey or private equity funds as buyers.

Rayonier, which owns forests and a medium density fibreboard plant in New Zealand, has declined to comment on whether it is interested.

Industry observers are waiting to see if Carter Holt can get a purchase past the Commerce Commission, particularly in the market for supply of plywood.

Carter Holt argues for wide definitions of markets in its application, that imports provide competition and that there is plenty of wood supply in New Zealand for new entrants.

It wants to make itself more efficient by having larger processing sites in the centre of the North Island.

The global funds that bought Fletcher's forests and the neighbouring Kaingaroa estate have an interest in promoting a vibrant and diverse processing industry.

Tenon is concentrating on processing appearance grade timber and better marketing of wood products out of New Zealand. It has a distribution chain in North America.

Rubicon was yesterday not commenting on what it will do with its share of the capital return. It is expected to repay debt taken on during the bid for control of Tenon and hold cash left over.