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Offer For Opio Forestry Fund By City Forests Ltd

Takeover Offer For Opio Forestry Fund By City Forests Limited

City Forests Limited (“City Forests”) today announced its intention to make a full takeover offer for the Opio Forestry Fund at 85c per unit.

The Offer is expected to be posted to unitholders later this week and is conditional on obtaining acceptances of no less than 75% of the units.

City Forests, a wholly owned trading company of the Dunedin City Council, has been harvesting forests in the Otago region for more than 60 years. It currently owns and manages approximately 15,300 hectares of forests in the region.

The chief executive of City Forests, Phil Taylor, said that it had full council approval for the offer.

“Opio’s estate is well known to us, with much of its forests sitting adjacent to ours,” he said. “It therefore makes perfect sense for us to be interested in acquiring an interest in the estates.

“We have a track record of managing our forests in an environmentally sustainable manner. In doing this we ensure the long-term productivity of the forest lands and their ongoing contribution to the social and economic wellbeing of the Otago region.

“At 85c per unit, our offer provides holders with a very attractive premium over recent market prices.”

The Offer price represents:

a 52.9% premium to 55.6 cents, the average closing price for units in the 90 days prior to announcement of the Offer; a 46.6% premium to 58 cents, the closing price for units on the day before the Offer was announced; and, a 41.7% premium to 60 cents, the highest price that the units in the Fund have traded over the past four years.

Mr Taylor noted that the Fund had not paid a dividend and was unlikely to declare a distribution to unitholders until harvesting of its forest crop commences. The Offer, therefore, provides unitholders with an opportunity to realise their investment for cash now, removing the uncertainty of future returns, he said.

“Certainly, the forestry sector is currently facing a number of significant challenges that may have negative implications on the future value realised from Opio’s forest crop.”

Opio comprises three main forest areas – the original Opio forest in Southland and two forests in South Otago. It presently has 14,964,000 fully paid units on issue. The Offer relates to 100% of the units on issue.

The timing in respect of the Offer is as follows:

notice of the Offer is given to the Fund on 3 August 2004; offers will be sent to all unit holders of the Fund on or about 4 August 2004;

and, the Offer will be open for acceptance for four weeks and will close on 3 September 2004 subject to the right of City Forests to extend the date for acceptances.

Forsyth Barr is advising City Forests on the takeover.

Details on City Forests are available on its website: http://www.cityforests.co.nz

© Scoop Media

 
 
 
 
 
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