FCL third in newsprint

Press, 18 March 1988, Page 12

FCL third in newsprint

PA ( Wellington Fletcher Challenge has consolidated its place as the world’s (third largest newsprint supplier by taking control of Australian Newsprint Mills (ANM) in a $240 million deal confirmed yesterday. Fletcher Challenge (FCL) has bought the 50 per cent of ANM owned by John Fairfax and Sons. Half of those shares will be held on FCL’s behalf by a | trustee pending clearance from the Australian Trade Practices Commission. I •

The ideal comes after speculation that FCL was also the buyer of the 11.6 per cent of | ANM put up for sale by Robert Holmes a Court’s Bell Group, (but yesterday’s announcement ruled that out. I FCL’s: spokesman,: Mr Garry Mace, said it was happy with half ownership and he did not know who had successfully negotiated to buy

Bell’s holding. “I do know who some of the players were ... but now I’m not sure where it is now, frankly,” he said. “We have not tried_for it. We have been single-minded in talking to Fairfax and acquiring their 50 per cent, and we think that is an adequate level for us.” ANM has one other (shareholder — Rupert Murdoch’s News Corporation, with 38.4 per cent. ,f Mr Mace believed the third shareholding would be clarified with a public announcement expected in the next few days. The association with ANM, Which: is Australia’s only domestic newsprint producer, adds to FCL’s ,other overseas newsprint interests in Canada and Chile. The domestic subsidiary, Tasman Pulp and Paper; is a large newsprint supplier to Australia.

Mr Mace, who is Tasman's chief j executive, said FCL would! continue to be the third largest , producer, after Abitivi Price, of Canada, and Canadian Paper Mills. ANM produced 404.000 of newsprint and related grade papers in the last June year, at plants at Boyer, Tasmania, and Albury, New South | Wales. In the same period, Tasman produced 171,000 tonnes of newsprint but output had been hit by industrial disruption (and the 1987 Bay of Plenty; earthquake. . Mr (Mace said FCL’s other interests offered scope for cooperation with the two Australia^: plants. “We I have a range of technologies and a range of people skills,' and we think there are some good fits with ANM/’i He cited the use of pine at Albury!and the expertise built

up by Tasman at Kawarau with ithe same timber. In addition, the Albury plant had a modern paper machine identical to that of the Canadian subsidiary, Crown Forest Industries, at" its Elk Falls plant,, Vancouver, he said. FCL was confident of Trade Practice’s consent for the deal though this clearance was a “big enough question for us to go the way of a trustee.” If the clearance is not granted, the trustee will find a new buyer or buyers for the shares. Mr Mace confirmed the arrangement ensured the price to FCL of that stake was the same as the 25 per cent bought outright — SI2OM. FCL would fund the deal out of its cashflow, he said. The FCL acquisition still requires approval from Australia’s Foreign Investment Review Board.