Beijing Delegation Unable To Negotiate Settlement

CITIC NEW ZEALAND LIMITED

MEDIA STATEMENT
26 February 2001

BEIJING DELEGATION UNABLE TO NEGOTIATE SETTLEMENT
AND LEGAL CLAIM TO BE PERSUED

Statement made by Cui Peisheng, Managing Director, CITIC New Zealand

CITIC New Zealand sincerely regrets that it has been unable to reach agreement with Fletcher Forests that would have prevented the Central North Island Forestry Partnership being placed in receivership by its bankers.

CITIC has the capacity to meet its financial obligations to inject new capital.

However, as stated on many occasions in the past, we were not prepared to put additional capital into the partnership unless we made progress on the contractual differences we have with Fletcher Forests.

In an attempt to resolve our differences a delegation from CITIC Beijing spent the last few days in New Zealand trying to negotiate a settlement, but all negotiations have now broken down.

The delegation has returned to Beijing.

Our dispute with Fletcher Forests revolve around management of the Forest Partnership, over cutting of the forest, the favoured status given to Fletcher Forests’ mills in relation to purchasing logs and the value of tax benefits.

CITIC will continue with its legal claims against Fletcher Forests as Manager of the Forest Partnership. These claims, excluding tax issues total NZ$155 million made on behalf of CITIC, will survive Receivership.

CITIC believes that we have a strong case and we are confident of significant damages being awarded.

For further information please contact

Mr Greg Molloy, CITIC New Zealand, Tel 025 449 110

Issued on behalf of CITIC by Dennis Lynch, Network Communications
Tel 0-9-379 3154, 025 963 733.

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