NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / New Zealand

<i>Brian Gaynor:</i> An unhappy legacy of weakness

Brian Gaynor
By Brian Gaynor
Columnist·
23 Jul, 2002 08:21 PM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

The Rubicon annual meeting was an incredibly sad and depressing occasion for anyone viewing the event from a long-term perspective.

Two of the meeting's main participants, chairman Michael Andrews and fellow director Hugh Fletcher, once had great dreams and ambitions. Their objective was to turn Fletcher Challenge into an excellent international
company, which, according to the Statement of Purpose contained in each annual report, would "always be New Zealand-controlled".

Fletcher took the company into North America in 1982 when it bought a 96 per cent stake in Crown Zellerbach Canada. He then acquired a 68 per cent holding in British Columbia Forest Products, 19.9 per cent of NZ Forest Products and 100 per cent of Australian Newsprint Mills and UK Paper.

New Zealand analysts and institutional fund managers proudly travelled to North America to inspect world-class forestry and manufacturing operations owned by one of their own companies. Every analyst wanted to cover forestry because he or she could then write about New Zealand's most exciting company and industry.

One of Fletcher Challenge's last big deals was the purchase of state-owned Fletcher Forests for US$1.092 million ($1.6 billion at the time) in September 1996. This was in conjunction with Citic and Brierley Investments.

Andrews, who was chief executive of Fletcher Challenge Forests at the time, was extremely positive about the purchase. He pointed out that the forests would remain in New Zealand control for the benefit of New Zealanders.

The dreams and ambitions of Andrews and Fletcher have evaporated and the two individuals have sold some of the country's most important commercial assets to overseas interests.

Fletcher Energy is gone, Fletcher Paper is gone and Andrews and Fletcher want to sell a big stake in New Zealand's largest forest estate owner to a small and unknown Hong Kong company.

The sale of Energy and Paper was forced on shareholders because Fletcher Challenge was sinking in a sea of debt, but Rubicon is under no financial pressure to sell.

When asked by a persistent shareholder at the annual meeting why Rubicon was selling out of Fletcher Forests, Andrews said: "It was never Rubicon's intention to be a long-term holder of Fletcher Challenge Forests".

But what about the Statement of Purpose, endorsed by both Andrews and Fletcher?

South East Asia Wood Industries (Seawi), which will be Fletcher Challenge Forests' new controlling shareholder, is an unproven and unknown organisation. It has been suspended from the Hong Kong Stock Exchange, pending the release of details of the Rubicon/Fletcher Forests transaction, since June 17.

In June 2000 Seawi, which is registered in Bermuda, issued 1.44 billion new shares (adjusted for a subsequent five-for-one share consolidation) to United Star International for 7.5HKc each.

United Star is incorporated in the British Virgin Islands and is jointly owned by Peter Kwok Viem and Ma Ting Hung.

In April last year, Seawi issued 200 million new shares to Keentech, an indirect wholly owned subsidiary of Citic, at 75HKc each. Keentech is also incorporated in the British Virgin Islands.

In January, Seawi shareholders approved a HK$1 billion ($270 million) convertible loan from Keentech that will convert into ordinary shares at 85HKc each. After the conversion, Kwok and Ma will own 43.7 per cent of Seawi, Citic 41.4 per cent and the public 14.9 per cent.

Who are Kwok and Ma? Why have United Star and Keentech been incorporated in the British Virgin Islands? Why has Citic invested through a structure that has enabled Kwok and Ma to achieve a book profit of $540 million? What contribution can Seawi, which operates a small plywood mill in China at a loss, make to Fletcher Forests?

But the big question is: how will future generations view the sale of the last remaining major New Zealand-controlled forestry asset to foreign interests?

Will they praise Andrews and Fletcher for selling out to Seawi and returning a few cents a share to Rubicon shareholders? What about the dreams and ambitions of future generations to control and manage a major New Zealand forestry operation?

Maori are making a strong stand against the sale of Young Nicks Head to foreign interests, yet the proposed Fletcher Challenge Forests deal has huge implications for New Zealand's economic sovereignty.

Do we want our largest forest resource coming under the control of a Bermuda-registered company, which is listed in Hong Kong, controlled by two British Virgin Islands-registered companies and has no apparent forest expertise?

Rubicon shareholders have an important decision to make. They should think carefully before endorsing the Seawi deal because, unlike Energy and Paper shareholders, they are under no financial pressure to do so.

Carter Holt Harvey

Chris Liddell, Carter Holt Harvey's chief executive, has a totally different attitude to the Rubicon directors.

Although Carter Holt is 50.5 per cent owned by International Paper, one of the 30 companies in the Dow Jones Industrial Average, Liddell has lost none of his dreams and ambitions for Carter Holt and the New Zealand forestry sector.

Since he was appointed chief executive in 1999 Liddell has:

* Sold the group's Chilean assets for US$1280 million ($2700 million).

* Built a $132 million laminated veneer lumber plant near Whangarei.

* Acquired CSR's Australia-based panel business and a sawmill for A$330 million ($338 million).

* Purchased the Kawerau pulp mill, once owned by Fletcher Challenge Paper, from Norske Skog for $285 million.

* Bought 25 per cent of Pacific Millennium Paper, a Hong Kong-based paper distribution and converting business with a strong focus on China.

* Purchased the Brown & Dureau sawmill in Victoria for an undisclosed sum.

The big difference between Liddell and Fletcher and Andrews is that he has been willing to sell assets to pay for his acquisitions, whereas Fletcher Challenge relied heavily on debt.

Carter Holt has a strong balance sheet but Liddell has resisted calls for a capital repayment. He continues to believe that there are excellent wood-based investment opportunities in Australasia.

But it hasn't been an easy three years for the Carter Holt chief executive. Commodity prices have been depressed and the group has struggled to achieve any earnings or share-price momentum.

But there are signs that the tide is turning. Last week the company announced a net profit of $73 million for the half-year to June 30, the best six-month result for two years.

Analysts are expecting the company to report a net profit of more than $150 million for the year to December year and some are predicting $300 million for the following year.

Commodity prices are notoriously difficult to predict, but if they continue to go in the right direction, Liddell's dreams and ambitions will begin to produce positive returns for shareholders.

* Disclosure of interest: Brian Gaynor is a Carter Holt, Fletcher Challenge Forests and Rubicon shareholder.

* bgaynor@xtra.co.nz

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from New Zealand

New Zealand|crime

Police investigate "serious firearms incident" in Chartwell, Hamilton.

New Zealand

Armed police cordon off Hamilton street after serious firearms incident

09 Jul 11:42 AM
Politics

Jacinda Ardern says she'll provide evidence to Covid Royal Commission

09 Jul 08:35 AM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.

Latest from New Zealand

Police investigate "serious firearms incident" in Chartwell, Hamilton.

Police investigate "serious firearms incident" in Chartwell, Hamilton.

Police maintain a visible presence as they investigate a serious firearms incident in Chartwell, Hamilton, this evening. Video / NZ Herald

Armed police cordon off Hamilton street after serious firearms incident

Armed police cordon off Hamilton street after serious firearms incident

09 Jul 11:42 AM
Jacinda Ardern says she'll provide evidence to Covid Royal Commission

Jacinda Ardern says she'll provide evidence to Covid Royal Commission

09 Jul 08:35 AM
Lotto numbers revealed in giant $10m Powerball draw

Lotto numbers revealed in giant $10m Powerball draw

09 Jul 08:32 AM
Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP