COMMERCIAL Fletcher sponsors novel company

Press, Volume CXIII, Issue 33381, 13 November 1973, Page 20

COMMERCIAL Fletcher sponsors novel company

(Hew Zealand Press Association) AUCKLAND, November 12. Fletcher Holdings, Ltd, will offer the public a 75 per cent interest in a new company which will plant 10,000 acres in exotic trees in the Bay of Plenty and Hawke’s Bay. The new company, Forest Investments, Ltd, has several novel features.

Paid capital will be s3m, but the 100 c shares are payable in three instalments. I No dividends will be paid in the first 20 years, but it is expected that dividends I in the years 21 to 30 will be more than 40 per cent a {year, and that in the next 10 years more than 80 per cent. The issue is aimed to exploit section 21 of the Estate and Gift Duties Act, 1968, which says that when valuing the shares in a company such as forest investments for estate duty purposes, no account shall be taken of ,any value which the trees ,may have for their wood. This means that only the lvalue of the land at the time of the shareholder’s death .will be subject to estate 'duty— until the company 1 begins to earn income from i tree cropping. The land, which will be 'revalued every three years, will take only $489,000 out i of a total estimated ex--1 penditure by the company of ; $5,635,000. | Because of this, the shares Iwill not be listed on the I stock exchanges, as this (would put a market value on them. However, they will be freely transferable, and Fletcher has undertaken to arrange the sale of shares, held for at least three years and with a maximum of

[5OOO shares per shareholder, (at a price equal to the net (tangible asset backing as 'shown in the last balance (sheet. With Fletcher holding 1750,000 shares, or 25 per (cent of the capital, the pub(lie is offered 2,250,000 shares. These are payable to 50c on application, with two calls of 25c at intervals of not less than 12 months. It is expected that the first call will not be before October, 1975, and the second call not before October, 1977. The issue has been underwritten by the Fletcher Trust and Investment Company, Ltd. Daysh Renouf and Company is acting as broker. The offer opens on December 3, and will close on May 12, 1974, unless earlier subscribed in full.

No shareholder or group of related shareholders may hold more than 10 per cent of the capital. Fletcher has contracted to sell the company, at independent valuation, three blocks of land, on 1500 acres of established farm land. The company will graze stock under growing trees. Of the estimated expenditure of $5,635,000 (of which $4,602,000 is on the forests), s3m will come from the issue, $1,025,000 in short-term loans, $350,000 in long-term loans, and $1,260,000 from Government forestry grants. It is not the company’s intention to establish processing facilities. Fletcher Timber will establish and manage the forests under contract, and will also look after the harvesting and marketing of the timber. The trees will be grown for export as logs. Tenders will be called when timber becomes available. Fletcher timber will have a prior right to buy all merchantable material at a price giving the company an equal return. The company has concluded a minimum price contract with Fletcher Timber for 40 years after the planting of the first trees. Under this, Fletcher Timber guarantees minimum prices for the first crop.