Greymouth price increase has no substance

AUCKLAND, 2 March 2001 – The move today by Greymouth Petroleum to increase the cash component of its proposal to acquire Fletcher Challenge Energy, should Greymouth make an offer in the future, serves to highlight the fact that it has still not actually made an offer to Fletcher Challenge Energy shareholders.

“Any suggestion that Greymouth has offered US$3.85 or any other amount is entirely illusory. Greymouth is currently free of any formal obligation or commercial contract, and is therefore able to suggest any dollar figure that may have the effect of seducing shareholders,” said Fletcher Challenge Chief Executive, Michael Andrews.

“As Greymouth has still to secure committed debt and equity financing in order to make any credible offer, the mentioning of enticing-sounding figures is only likely to mislead some shareholders into believing that an offer has been made when, in fact, none has,” said Mr Andrews.

Fletcher Challenge today responded to Greymouth’s repeated claims that it has the necessary finance capability to back their proposal. In a statement to the New Zealand media today, Mr. Bill Birnie of FR Partners asserted that Greymouth has all the necessary funding in place and that a major Australasian bank had written to the Fletcher Challenge Board to confirm this. This is totally incorrect. Fletcher Challenge has not sighted or received any letter that gives the Board any comfort that Greymouth has anything other than very tentative suggestions of potential funding.

Fletcher Challenge was today sufficiently concerned by these reports that it made contact with one of the banks named in today’s media, for clarification. The National Australia Bank provided Fletcher Challenge with confirmation that it has not given Greymouth any firm commitments with respect to any funding for the purchase of Fletcher Energy assets. Further, the National Australia Bank stated clearly that Greymouth’s request for funding is still subject to due diligence and the Bank’s internal credit approval process, and that they would not expect to provide any formal response to Greymouth until 22 March 2001.
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“It goes without saying that if there was any possibility that Greymouth did have the capacity to deliver a credible offer with certainty for shareholders, and without risking losing the Shell and Apache offer, we would be actively courting them,” Mr Andrews said.

“The sale of Fletcher Energy is an issue that requires very serious and proper consideration by our shareholders, the Board of Fletcher Challenge has been intent on providing clear, factual, and well-considered information to assist shareholders in making up their minds on how to vote for the only formal and certain offer that is currently before us”, Mr Andrews continued.

In this respect, it is very important that shareholders understand that the only firm offer on the table today is that of Shell and Apache. In addition, Shell and Apache have made it quite clear that 23 March is the termination date for their offer, and that they will not be raising their offer price.

Mr Andrews reiterated that the Fletcher Challenge Board’s unanimous recommendation to shareholders was to vote in favour of the Shell and Apache offer that is being put to shareholders at a Special Meeting on Tuesday, 6 March.

The timing of this meeting has been confirmed at the High Court in Auckland today.

Ends

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