US fund tipped as Rubicon buyer

By CHRIS DANIELS

An American hedge fund is rumoured to be the new owner of 16 per cent of Rubicon, setting the stage for a possible showdown over the impending sale of the Central North Island Forest.

Two large parcels of shares in the local biotech and forestry company were traded for $27 million after market close yesterday.

The Business Herald understands the new owner of the shares is a multibillion-dollar fund, buying into Rubicon in the hope of earning a good return once the impending Fletcher Challenge Forests deal to buy the Central North Island Forest (CNIF) is approved.

The shares, sold in two parcels, of 17 million and 19 million shares, changed hands for 75c each.

This move follows last week's late-night raid by investment company Guinness Peat Group (GPG) when it also paid 75c a share for a 19.9 per cent stake in Rubicon.

The entry of the US fund as Rubicon's second biggest shareholder sets up the possibility of an interesting battle with GPG, which bought in anticipating the CNIF proposal falling over.

GPG director Tony Gibbs said last week that if the Fletcher Challenge Forests deal to buy the CNIF went ahead, it would be a good one for Rubicon shareholders.

But Gibbs said the complex series of interlinked deals around the sale of the forest meant it was unlikely to proceed.

If this happened, GPG would still be happy staying on as a shareholder.

Gibbs has been unwilling to say how GPG would vote when it is asked to endorse the whole CNIF deal next month.

It is thought the new owner of the 16 per cent stake is keen for the CNIF deal to go ahead and will vote to approve it.

Fletcher Challenge Forests yesterday asked competition watchdog the Commerce Commission to give its blessing to its CNIF purchase.

The forest and associated plants, primarily the huge Waipa sawmill near Rotorua, were previously owned by a joint venture partnership between Fletcher and Citic. Under the planned new structure they would be owned by Fletcher alone.

Fletcher has continued to manage the forest for the past 18 months, during which time it has been in receivership, awaiting sale.

Shareholders in Fletcher are preparing to receive information about the deal, including a report from valuation company Grant Samuel next week.

Rubicon shares closed up 2c at 75c each. Shares in Fletcher Forests closed unchanged on 24c.

The FletcherForests deal

* Fletcher Challenge Forests will pay $1.3 billion for the assets of the Central North Island Forest Partnership, which it owned as a joint venture with Citic.

* The partnership went into receivership 18 months ago, amid much acrimony over the way Fletcher managed the 163,000ha forest estate and three associated sawmills.

* Citic will buy into Fletcher, through Hong Kong-listed South East Asia Wood Industries Holdings, paying $413 million for new shares at 37c each.

* Citic will become, through Seawi, the owner of a 35 per cent stake in Fletcher, with two seats on the six-person board of directors.

* Fletcher will borrow a further $880 million from banks.

* Rubicon gets out of its 17.6 per cent stake in Fletcher in exchange for 11,874ha of forest and $48 million in cash coming from Seawi.

* An information memorandum, including an independent expert report, will be sent to Fletcher shareholders. A shareholders' meeting is due in mid-August. If approved, the purchase should go through by the end of September. Various regulatory approvals, including the assent of the Overseas Investment Commission, are needed.