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Fletcher Forests And CITIC Form CNIFP Alliance


STOCK EXCHANGE LISTINGS: NEW ZEALAND, AUSTRALIA, NEW YORK (FFS).


Fletcher Challenge Forests And CITIC Form CNIFP Alliance

Auckland, 20 May 2002 – Fletcher Challenge Forests announced today that it had reached understandings with CITIC to pursue a potential acquisition of the Central North Island Forest Partnership (CNIFP).

Sir Dryden Spring, Chairman of Fletcher Challenge Forests, said “We are progressing arrangements with CITIC which envisage an injection of approximately USD$200 million of new equity into the Company at an issue price of NZ37 cents per share. This will enable the Company to fund a purchase of the CNIFP should the current sale agreement between the Receivers and the Vela Forestry not proceed and the Company is able to conclude a new purchase agreement with the Receivers.”

“We are also progressing with Rubicon, our largest shareholder, as part of the overall transaction, the buy-back of most of their 17.6% shareholding interest in the Company in return for Rubicon acquiring part of our forest estate, “ he said.

Sir Dryden noted that the arrangements being finalised would result in CITIC becoming the Company’s cornerstone shareholder with a shareholding of 35%.

He added that any acquisition of the CNIFP by Fletcher Challenge Forests, and the proposed issue of new capital to CITIC, would be dependent on finalisation of legal documentation in relation to these matters. It would also require various shareholder and regulatory approvals.

He said, “Both parties have worked hard over the past eighteen months to re-establish our relationship. We are delighted to have this opportunity to work together with CITIC to pursue an acquisition of this asset, should it become available. The joint resources of our organisations are considerable, and China is New Zealand’s fastest growing market for Radiata Pine.”


Ends

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