CITIC: Legal Action Inevitable In Forest Dispute

CITIC Sees Legal Action Inevitable In Forest Dispute

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

CITIC New Zealand is of the view that Court action is inevitable as it seeks to resolve the outstanding disputes between itself and Fletcher Challenge Forests in relation to the Central North Island Forestry Partnership.

In the past four months Fletcher Challenge Forests has rejected four proposals from us to resolve outstanding disputes between us, which involved Fletcher Challenge Forests being bought out of the Partnership.

Fletcher Challenge Forests has not put one formal counter offer to us.

It is disappointing, but given the lack of real negotiation that has taken place over a long period of time it appears Court action may be the only way to resolve the disputes.

Fletcher Challenge Forests has suggested that if a resolution of the disputes is not found, a split of the Partnership’s assets may be necessary.

CITIC is not agreeable to this as it will destroy value and will not resolve the disputes.

On a more positive note we are pleased by news of Fletcher Challenge Forests’ restructure by way of a rights issue which will enable it to contribute further capital to the Partnership. It is essential to ensure the Partnership meets its financial obligations.

We are also pleased that Fletcher Challenge Forests has agreed in principle to the appointment of an independent manager for the Partnership as part of the restructuring process.

The disputes between CITIC and Fletcher Challenge Forests involve financial and management issues.

For further information please contact
Mr Greg Molloy, CITIC New Zealand, Tel 0-9-309 1528. Cell phone 025 449 110

Issued on behalf of CITIC New Zealand by Dennis Lynch, Network Communications
Tel 0-9-379 3154

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