Wood Chip Giant Plans to Sell Forest Holdings
4/28/99
*******************************
RELAYED TEXT STARTS HERE:
Title: Wood Chip Giant Plans to Sell Forest Holdings
Source: The Mercury
Status: Copyright 1999, contact source for permission to reprint
Date: April 28, 1999
HIT by a plunge in woodchip prices, forestry giant North Forest
Products has set out to sell its Tasmanian forests.
NFP insists the move does not spell the beginning of the end of its
presence in Tasmania, quelling speculation that it parent North Ltd
might be planning to pull out of the state.
NFP chief executive officer Mike Beardsell said the company had
appointed the Macquarie Bank a couple of weeks ago to explore finance
options for running the forests without
using shareholder money.
The process would take months, Mr Beardsell said, and came as a drop
in commodity prices had forced cost-cutting reviews of all North
Ltd's mining and resource operations.
NFP intended to continue managing the forests and using the timber,
so its preferred buyer would be a passive investor, such as AMP.
"It's an approach across the whole of North to look at all its
infrastructure products - power stations, railways, forests - that
they don't have to own directly to manage," Mr Beardsell said.
"All resources are down, and any resources company at the moment
would be reviewing its operations to improve their value.
"We've appointed Macquarie Bank to have a look at our forests and
test the market to see if a more efficient way of financing them can
be found, and look at what financial arrangements might be attractive
to investors."
NFP owns about 126,000ha in Tasmania, most of it contained in the
vast Surrey Hills estate south of Burnie and at Woolnorth in the far
North-West. About half is planted in eucalypt and pine plantations.
The move to offload its forests follows a concerted program by NFP of
land purchase and lease for plantations after the abolition of
woodchip quotas in the Regional Forests
Agreement.
But the Asian economic slump has cut woodchip returns for NFP, with
its Japanese customers paying 6.4% less in 1999.
Mr Beardsell could not rule out the loss of jobs as a result of the
review of NFP, which employs 300 people around the state and sub-
contracts hundreds more.