Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Fletcher Challenge Forests Writes Down Value

Fletcher Challenge Forests Writes Down Value
OF HOLDING IN CENTRAL NORTH ISLAND FOREST PARTNERSHIP

AUCKLAND, 25 January 2001 – Fletcher Challenge Forests today announced that it had written down the carrying value of its interest in the Central North Island Forest Partnership (CNIFP) from US$478 million to US$225 million as at 31 December 2000. The reduction in carrying value will result in a charge to earnings in the six months to 31 December 2000 of US$233 million after tax (NZ$529 million at 0.4405).

The new carrying value assesses the realisable value of the partnership estate (100%) at US$865 million, or US$225 million net of senior bank debt of US$640 million. As a result, all the company's equity in the Partnership has been written off (US$206 million at 31 December 2000), together with a portion (US$47 million) of the company's subordinated loan to the Partnership. Fletcher Challenge Forests’ investment in the Partnership is now represented exclusively by subordinated debt principal and net accrued interest totalling US$225 million. This investment is secured over the assets of the Partnership, ranking behind the senior bank debt.

The company also announced that, as from 31 December 2000, it would cease to recognise as income interest accruing on its subordinated debt, and it noted that equity accounting would also cease at that date.

The Chief Executive of Fletcher Challenge Forests, Terry McFadgen, said today: "These impacts on our accounts reflect the economic status of the Partnership. The loss of value is very disappointing but log prices have not recovered significantly since the 1997 Asian crisis, and in US dollar terms, are 30-40 per cent below those prevailing when the Partnership acquired the forest from the New Zealand Government in 1996. As a result, both the Partnership's financial performance and the value of this asset have been severely affected."

He added "These changes reflect the Partnership's financial performance and are not related to the legal disputes between us and our partner, CITIC New Zealand Limited. We have fully reviewed CITIC's claims and confirm they lack real substance. They will be vigorously defended." The company advised that it had established a provision of NZ$5 million to cover the costs of a full legal defence.

Mr McFadgen also noted that the loss incurred in relation to the Partnership had no current impact on Fletcher Challenge Forests other activities. "We have a strong business of our own outside the Partnership, based on our own forest estates and well established processing and marketing infrastructure”, he said. “The Partnership's debt facilities are separate and there is no recourse to Fletcher Challenge Forests." He emphasised that the changes had no cash impact on Fletcher Challenge Forests.

Fletcher Challenge Limited confirmed that the write-down would have no effect on the Fletcher Challenge Group restructuring. "We have put in place a capital structure for Fletcher Challenge Forests as a stand-alone entity which is robust and not dependent on any particular outcome in relation to the Partnership," said Fletcher Challenge CEO, Michael Andrews. The company confirmed that documentation for the shareholder meetings to approve the separation process is expected to be despatched to shareholders in mid February 2001.

A separate release is available on other unusual items which will be included in the Information Memoranda being sent to shareholders in mid-February.
Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

ALSO:

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news