Crunch 'won't stop forest sale'

Matariki Forests says it doesn't expect the credit crunch to dampen enthusiasm for its 140,000 hectare forestry estate - the third largest in New Zealand.

Matariki, a consortium of American forestry company Rayonier, AMP Capital and Deutsche Bank's RREEF Infrastructure, said last week that it was putting its forests up for sale.

It cited the falling New Zealand dollar, the prospect of falling shipping rates and Russia hiking export tariffs on its own logs as reasons why it was a good time to sell.

The current high cost of credit was taken into account by the shareholders when deciding to put the estate on the block, said Rayonier New Zealand managing director Paul Nicholls.

"But they felt, on balance, with these other factors starting to come into play, and also because the process is likely to take many months, that the credit conditions will start to ease during that period." A final sale is not expected to be completed until some time in 2009.

The 140,000ha radiata pine estate is spread throughout New Zealand with around 20,000ha in Northland, 30,000ha in the Bay of Plenty, 20,000ha in Hawkes Bay, 7000ha in the lower North Island, 30,000ha in Canterbury and 30,000ha in Otago and Southland.

Matariki wanted to sell the estate as one lot, Mr Nicholls said.

"The intention is to sell the business as a going concern."

The last similar-sized New Zealand forestry deal was in late 2006 when Carter Holt Harvey sold 187,000 hectares of forest to Hancock Timber Resource Group for $1.6 billion.

If Matariki was able to command a similar price - around $9000 per hectare - its estate would fetch $1.26 billion.

However, a forestry industry source told BusinessDay that it was generally accepted that the CHH estate went for a premium and Matariki would struggle to get a similar price.

"I would be surprised [if Matariki got the same per hectare price] but it's not out of the question," he said.

An estate of the size of Matariki was most likely to attract a foreign rather than local buyer, Mr Nicholls said.

"North America has a lot of buyers that might be interested but it could equally come from Europe, Asia or the Middle East."

A timber industry management organisation - a large fund which invests in forests, also known as a timo - is the most likely buyer.

Timos, including Hancock, Global Forest Partners and GMO Renewable Resources, currently own around 40 per cent of New Zealand's plantation forests. There are around 20 large timos operating out of North America alone.

Matariki would appoint a financial adviser in the next couple of weeks, Mr Nicholls said.

- © Fairfax NZ News