Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Fletcher Building settles with Cerberus over Formica

Fletcher Building settles with Cerberus over Formica milestone payments

Dec. 20 (BusinessDesk) – Fletcher Building Ltd. reached an out-of-court settlement with Cerberus Capital Management LP over $50 million of milestone payments stemming from the 2007 purchase of the Formica laminated board business.

Fletcher paid US$700 million upfront for the Cincinnati-based Formica from buyout firms Cerberus and Oaktree Capital Management. The additional US$50 million was contingent on Formica achieving specific performance milestones.

The Auckland-based construction and building products group had anticipated earnings growth of about 25% from Formica in its first year of ownership though within 12 months it was reporting that the American company’s results were disappointing, with tougher trading conditions in the U.S.

Under the settlement announced today, neither Fletcher nor Cerberus admits any liability. Fletcher paid US$28 million of the milestone payments, though US$18 million of that was held in escrow and the remaining US$22 million wasn’t paid, because of a dispute over achievement of certain cost-saving initiatives.

Fletcher will get back US$12 million of the US$18 million, while Cerberus will receive US$6 million.

No further payments will be made, Fletcher said.

Shares of Fletcher rose 0.7% to $7.78 on the NZX today. The shares traded around $12.35 around the date of the transaction in early July 2007 and shed about half their value over the following 12 months.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Government: Delivering Lower Card Fees To Business

Commerce and Consumer Affairs Minister David Clark has today announced the Government’s next steps to reduce merchant service fees, that banks charge businesses when customers use a credit or debit card to pay, which is estimated to save New Zealand businesses ... More>>

SEEK NZ Employment Report: April 2021

OVERVIEW OF APRIL 2021: STATE OF THE NATION: April, for the second consecutive month, saw the highest number of jobs ever advertised on Applications per job ad fell 9% month-on-month (m/m). SEEK job ads were up by 12% m/m. SEEK job ads were ... More>>

Commerce Commission: Warns Genesis Over Business Billing Errors

The Commerce Commission has issued a warning to Genesis Energy Limited about billing errors concerning electricity line charges to business customers. Genesis reported the errors to the Commission. The Commission considers that Genesis is likely to ... More>>

Stats: Lower Job Security Linked To Lower Life Satisfaction

People who feel their employment is insecure are more likely than other employed people to rate their overall life satisfaction poorly, Stats NZ said today. New survey data from the March 2021 quarter shows that 26 percent of employed people who thought ... More>>

The Conversation: The Outlook For Coral Reefs Remains Grim Unless We Cut Emissions Fast — New Research

A study of 183 coral reefs worldwide quantified the impacts of ocean warming and acidification on reef growth rates. Even under the lowest emissions scenarios, the future of reefs is not bright. More>>

The Conversation: Why Now Would Be A Good Time For The Reserve Bank Of New Zealand To Publish Stress Test Results For Individual Banks

Set against the backdrop of an economy healing from 2020’s annus horribilis , this week’s Financial Stability Report (FSR) from the Reserve Bank (RBNZ) was cautiously reassuring: the country’s financial system is sound, though vulnerabilities remain. More>>