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Rubicon Acquires Tahorakuri Forest

AUCKLAND, 17 June 2002 – Rubicon Limited has agreed to exchange most of its shareholding in Fletcher Challenge Forests (FCF) in return for a standalone forest estate in the central North Island. This exchange is one of a series of transactions announced today that will facilitate FCF in acquiring the assets of the Central North Island Forest Partnership (CNIFP) from the Receivers.

Rubicon has agreed to acquire the Tahorakuri freehold forest estate from FCF for US$64 million, in return for surrendering US$64 million of the FCF shares it holds (i.e. 355 million out of its current holding of 492 million FCF shares), at a valuation of 37 cents per share. For the purpose of this transaction (which is subject to due diligence), the Tahorakuri forest estate has been valued using similar assumptions to those employed by FCF in the purchase of the CNIFP assets.

In a separate transaction, Rubicon will sell 131 million FCF shares to SEAWI (a publicly listed Hong Kong company in which CITIC is a major shareholder) at a price of NZ37 cents per share, realising NZ$48 million in cash.

FCF announced its proposal to acquire the CNIFP assets from the Receivers earlier today. The proposal involves SEAWI acquiring FCF shares in a US$200 million placement. In conjunction with the purchase of FCF shares from Rubicon, the placement would result in SEAWI taking a cornerstone shareholding of 35 per cent in FCF. The transactions between Rubicon, FCF and SEAWI are all mutually interdependent, and in particular are conditional on FCF’s acquisition of CNIFP proceeding. Shareholder consents from Rubicon, FCF and SEAWI, together with regulatory approvals, will also be required.

Both companies took measures to ensure proper governance procedures were in place throughout the negotiations. This involved the appointment of Board committees to oversee the process. These committees excluded Mr Michael Andrews and Mr Luke Moriarty, who are members of both the Rubicon and the FCF Boards.

Finalisation of these transactions will clearly represent a good outcome for Rubicon in that the Company will crystallise a portion of its FCF shareholding at 37 cents per share. Ultimately, however, the overall price per share at which Rubicon will have exited its total FCF shareholding will be dependent upon the value it can bring in the future to the Tahorakuri forest estate.

Closure of these transactions will see Rubicon retain a significant interest in the plantation forestry sector, but with full operational control over its physical estate and in a good market environment. Tahorakuri is a forest area of 11,874 hectares, planted in Pinus Radiata, located north-east of Taupo, in the central North Island of New Zealand. The quality and age profile of the trees, along with the freehold nature of the land, will provide Rubicon with considerable flexibility in managing the estate. The collective experience of Rubicon’s Board and management in dealing with large-scale forestry assets, both in New Zealand and internationally, will stand the company in good stead in bringing value to the asset.

The Board of Rubicon endorses the transactions as being in the best interests of all shareholders. An Information Memorandum which will outline the transactions, and which will also include an independent appraisal report, will be sent to shareholders in approximately six weeks. A special Rubicon shareholders’ meeting to consider the transactions is planned for mid-August.

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