MOODY'S CONFIRMS RATINGS OF COMPANIES THAT BID FOR THE FORESTRY CORPORATION OF NEW ZEALAND
New York, 9/10/1996 -- Moody's Investors Service confirmed the credit ratings of Fletcher Challenge Limited, Carter Holt Harvey Limited, and Weyerhaeuser Corporation. Carter Holt's consortium and Weyerhaeuser's consortium were not successful in their bids to acquire the Forestry Corporation of New Zealand (FCNZ). Moody's said that Fletcher Challenge, the successful bidder, will see limited impact on its net cash outflow from the acquisition.
Rating confirmed: Fletcher Challenge Industries Limited--Guaranteed Notes and debentures Baa2; shelf registration at (P) Baa2.
Fletcher Challenge Capital Canada Inc.--Guaranteed Notes and debentures Baa2; shelf registration at (P)Baa2.
Fletcher Challenge Finance Canada, Inc.--senior Shelf (P)Baa2.
Fletcher Challenge Finance U.S.A., Inc.-- senior Shelf (P)Baa2.
Fletcher Challenge Industries Finance U.S.A., Limited.-- senior Shelf at (P)Baa2.
Fletcher Challenge Finance Limited--senior shelf at (P)Baa2.
Fletcher Challenge Finance Netherlands B.V.-- senior Shelf (P)Baa2.
Fletcher Challenge Finance Services Netherlands B.V.--senior shelf at (P)Baa2.
Carter Holt Harvey Limited--senior notes and debentures at Baa2; commerical paper at Prime-2.
Weyerhaeuser Company--senior notes, debentures, industrial revenue bonds, medium term note program, and counter party rating at A2; shelf at (P)"a3", (P)"a2", (P)A2; and commercial paper at Prime-1.
A consortium comprising Fletcher Challenge Ltd. (37.5%); CITIFOR, a subsidiary of China International Trust and Investment Corporation (37.5%); and Brierly Investments Ltd. (25%) will purchase FCNZ for NZD 2.026 billion. Fletcher Challenge will manage the assets. Because Fletcher Challenge will contribute to the consortium as its equity investment, other assets, mainly the elimination of deferred tax liability, the cash flow impact on Fletcher Challenge is negligible. Furthermore, FCNZ has an ongoing business with a history by which its financial performance can be judged and Moody's believes that it will essentially be self-sustaining in its cash needs to finance expansions and service its debt. Therefore, the impact of the purchase, which will likely generate dividends and could free up other timberlands for sale, could be a net positive for Fletcher Challenge over the medium term.
Carter Holt Harvey will not have any cash needs as a result of their unsuccessful bid; therefore its rating outlook has stabilized and the negative outlook is removed, Moody's said.
Moody's expects that Weyerhaeuser Company will make further timberland acquisitions over time (possibly using its World Timber Fund vehicle). Assuming acquisitions are moderate-sized and well-timed, the company's ratings should remain in place.
Fletcher Challenge Limited is a large paper, forest products, building materials, and energy company headquartered in Auckland, New Zealand.
Carter Holt Harvey Limited, headquartered in Auckland, New Zealand, produces timber, forest products, paper, pulp, and board.
Weyerhaeuser Company has a broad range of paper products and is one of the largest sellers of wood products in the United States. It is headquartered in Tacoma, Washington.
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